Financial Accounting Assignment

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First Name: Corrinne C e
Last Name: Bailey Rae B e
Chapter: 2 - Debits & Credits 2 4 NAME TABLES
Score: 0% 2 4
Exercise 1 Match the following definitions to the appropriate term: factor 4
a) Costs incurred to generate revenues (assets consumed or liabilities incurred to generate revenue) X Dropdown Choices Answ Ran Definition Answer Feedback
b) Assets received for selling a product or performing a service. X Accounts Payable Expenses 1 5 Things of value the business owns (economic resources) Assets
c) Amounts you're owed by customers X Accounts Receivable Revenues 2 6 Snapshot of company's financial position at a moment in time Balance Sheet
d) Amounts you owe suppliers and vendors X Assets Accounts Receivable 3 7 Shares of ownership issued in exchange for cash received Common Stock
e) Things of value the business owns (economic resources) X Balance Sheet Accounts Payable 4 8 Shareholder's claim to assets Shareholder's Equity
f) Snapshot of company's financial position at a moment in time X Cash Flow Statement Assets 5 9 Reports payments and receipts of cash by category Cash Flow Statement
g) Shares of ownership issued in exchange for cash received X Common Stock Balance Sheet 6 10 Income not distributed to shareholders Retained Earnings
h) Shareholder's claim to assets X Dividends Common Stock 7 11 Reports changes in undistributed earnings from net income and dividends. Retained Earnings Stmt
i) Reports payments and receipts of cash by category X Expenses Shareholder's Equity 8 12 Distribution of assets to shareholders Dividends
j) Income not distributed to shareholders X Income Statement Cash Flow Statement 9 13 Detailed accout of company's performance over period of time Income Statement
k) Reports changes in undistributed earnings from net income and dividends. X Liabilities Retained Earnings 10 14 Debts or obligations (creditor's claim to assets) Liabilities
l) Distribution of assets to shareholders X Retained Earnings Retained Earnings Stmt 11 1 Costs incurred to generate revenues (assets consumed or liabilities incurred to generate revenue) Expenses
m) Detailed accout of company's performance over period of time X Retained Earnings Stmt Dividends 12 2 Assets received for selling a product or performing a service. Revenues
n) Debts or obligations (creditor's claim to assets) X Revenues Income Statement 13 3 Amounts you're owed by customers Accounts Receivable
Shareholder's Equity Liabilities 14 4 Amounts you owe suppliers and vendors Accounts Payable
Trial Balance Left Assigned Right Assigned
Exercise 2 For each account, identify the type, normal balance (how you increase it), and on what financial statement it appears. a 1 a 2
Account Type Normal Balance Statement Dropdown Choices Answ Answ Answ Ran Account Statement Type Dr. /Cr. b 2 b 4
a) Service revenue X X X Balance Sheet Equity Income Statement Credit 1 3 Accounts payable (A/P) Balance Sheet Liability Credit c 2 c 4
b) Unearned revenue X X X Income Statement Liability Balance Sheet Credit 2 4 Accounts receivable (A/R) Balance Sheet Asset Debit d 8 d 4
c) Accounts payable (A/P) X X X Retained Earnings Liability Balance Sheet Credit 3 5 Cash Balance Sheet Asset Debit e 9 e 4
d) Accounts receivable (A/R) X X X Asset Balance Sheet Debit 4 6 Common stock Balance Sheet Equity Credit f 2 f 5
e) Cash X X X Debit Asset Balance Sheet Debit 5 7 Dividends Retained Earnings Equity Debit g 3 g 5
f) Common stock X X X Credit Equity Balance Sheet Credit 6 8 Equipment Balance Sheet Asset Debit h 3 h 5
g) Dividends X X X Equity Retained Earnings Debit 7 9 Insurance expense Income Statement Equity Debit
h) Equipment X X X Asset Asset Balance Sheet Debit 8 10 Office supplies Balance Sheet Asset Debit
i) Insurance expense X X X Liability Equity Income Statement Debit 9 11 Prepaid rent Balance Sheet Asset Debit
j) Office supplies X X X Equity Asset Balance Sheet Debit 10 12 Rent expense Income Statement Equity Debit
k) Prepaid rent X X X Asset Balance Sheet Debit 11 13 Repair expense Income Statement Equity Debit
l) Rent expense X X X Equity Income Statement Debit 12 14 Retained earnings Balance Sheet Equity Credit
m) Repair expense X X X Equity Income Statement Debit 13 1 Service revenue Income Statement Equity Credit
n) Retained earnings X X X Equity Balance Sheet Credit 14 2 Unearned revenue Balance Sheet Liability Credit
i 3 i 5
* Retained earnings also appears on the retained earnings statement. j 4 j 6
k 4 k 6
Accounts payable (A/P) l 5 l 6
Accounts receivable (A/R) m 5 m 6
Cash n 5 n 1
Common stock o 6 o 7
Dividends p 6 p 7
Equipment q 6 q 7
Insurance expense r 6 r 7
Office supplies s 7 s 8
Postage expense t 7 t 8
Prepaid rent u 7 u 8
Rent expense v 8 v 8
Repair expense w 8 w 9
Retained earnings x 8 x 9
Service revenue y 9 y 3
Unearned revenue
Utilities expense
3 3
z 9 z 3

3

0 14 poss factor 4
Exercise 3 Given the following transactions, should you debit or credit the account?
Transaction Debit/Credit Feedback Dropdown Choices Answ Feedback Ran Transaction Dr./Cr. Feedback
a) Increase utilty expense Debit Expenses are debited 1 5 To increase land Debit Land is an asset and increases as a dr.
b) Decrease prepaid rent Credit Prepaid rent is an asset 2 6 To increase A/P Credit A/P is a liability and increases with a cr.
c) To increase unearned revenue Credit Unearned revenue is a liability 3 7 To increase dividends Debit Dividends are debited
d) Increase common stock Credit Common stock increases with a cr. 4 8 To decrease cash Credit Cash is an asset and decreases are cr.
e) To increase land Debit Debit Land is an asset and increases as a dr. 5 9 To increase prepaid rent Debit Prepaid rent is an asset
f) To increase A/P Credit Credit A/P is a liability and increases with a cr. 6 10 To increase service revenue Credit Revenues are credited
g) To increase dividends Debit Dividends are debited 7 11 To decrease A/P Debit A/P is a liability and decreases with dr.
h) To decrease cash Credit Cash is an asset and decreases are cr. 8 12 To increase cash Debit Cash is an asset
i) To increase prepaid rent Debit Prepaid rent is an asset 9 13 Increase equipment Debit Equipment is an asset
j) To increase service revenue Credit Revenues are credited 10 14 Decrease wages payable Debit Wages payable is a liability
k) To decrease A/P Debit A/P is a liability and decreases with dr. 11 1 Increase utilty expense Debit Expenses are debited
l) To increase cash Debit Cash is an asset 12 2 Decrease prepaid rent Credit Prepaid rent is an asset
m) Increase equipment Debit Equipment is an asset 13 3 To increase unearned revenue Credit Unearned revenue is a liability
n) Decrease wages payable Debit Wages payable is a liability 14 4 Increase common stock Credit Common stock increases with a cr.

4

Exercise 4 Journalize the following transactions for Joel Company. 0 40 poss
Joel Co. paid $40 to its shareholders Factor 2
Ran Nominal Adjusted Dr. Cr.
General Journal Accounts payable (A/P) 1 3 Joel Co. bought $20 of office supplies on account from Office Depot invoice# 3135 10 20 Office supplies Accounts payable (A/P)
Date Account/Explanation PR Debit Credit Accounts payable (A/P) 2 4 Joel Co. performed $160 services for Client Co. on account invoice #123 80 160 Accounts receivable (A/R) Service revenue
May 1 X X Dividends 40 Accounts receivable (A/R) 3 5 Joel Co. received invoice # 8329 for $ 60 from PG&E for this month's utilities 30 60 Utilities expense Accounts payable (A/P)
X X Cash 40 Accounts receivable (A/R) 4 6 Joel Co. issued check #359 to Luf Co. to purchase $400 of equipment 200 400 Equipment Cash
X Cash 5 7 Joel Co. paid $80 (ck# 365) to Allstate for 6 months insurance 40 80 Prepaid insurance Cash
Cash 6 8 Joel Co. received $180 for services performed for Customer Co. 90 180 Cash Service revenue
Joel Co. received $140 from Buyer Co. for services it will perform next month Common stock 7 1 Joel Co. paid $40 to its shareholders 20 40 Dividends Cash
Common stock 8 2 Joel Co. received $140 from Buyer Co. for services it will perform next month 70 140 Cash Unearned revenue
General Journal Dividends
Date Account/Explanation PR Debit Credit Dividends 0
May 2 X X Cash 140 Equipment 0
X X Unearned revenue 140 Equipment 0
X Insurance expense
Insurance expense
Joel Co. bought $20 of office supplies on account from Office Depot invoice# 3135 Office supplies
Office supplies
General Journal Prepaid insurance
Date Account/Explanation PR Debit Credit Prepaid insurance
May 3 X X Office supplies 20 Prepaid rent
X X Accounts payable (A/P) 20 Prepaid rent
X Rent expense
Rent expense
Joel Co. performed $160 services for Client Co. on account invoice #123 Repair expense
Repair expense
General Journal Service revenue
Date Account/Explanation PR Debit Credit Service revenue
May 4 X X Accounts receivable (A/R) 160 Unearned revenue
X X Service revenue 160 Unearned revenue
X Utilities expense
Utilities expense
Joel Co. received invoice # 8329 for $ 60 from PG&E for this month's utilities
General Journal
Date Account/Explanation PR Debit Credit
May 5 X X Utilities expense 60
X X Accounts payable (A/P) 60
X
Joel Co. issued check #359 to Luf Co. to purchase $400 of equipment
General Journal
Date Account/Explanation PR Debit Credit
May 6 X X Equipment 400
X X Cash 400
X
Joel Co. paid $80 (ck# 365) to Allstate for 6 months insurance
General Journal
Date Account/Explanation PR Debit Credit
May 7 X X Prepaid insurance 80
X X Cash 80
X
Joel Co. received $180 for services performed for Customer Co.
General Journal
Date Account/Explanation PR Debit Credit
May 8 X X Cash 180
X X Service revenue 180
X

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0 0 35 possible
Exercise 5 Prepare financial statements for Consulting Corp. given the following account balances. 0 factor 2 factor
List expenses in alphabetical order and assets in order of liquidity. nominal adjusted Sign
A/P 20 40
A/P 40 Legal Expense 20 47 possible A/R 30 60
A/R 60 Loan Payable 240 Building 200 400
Building 400 Prepaid Insurance 50 Cash 15 30
Cash 30 Rent Expense 40 Common Stock 65 130
Common Stock 130 Retained Earnings 1/1/0X 100 Consulting Revenue 120 240
Consulting Revenue 240 Unearned Revenue 60 Dividends 30 60
Dividends 60 Wage Expense 20 Equipment 80 160
Equipment 160 Wages Payable 60 Insurance Expense 15 30
Insurance Expense 30 Legal Expense 10 20
Loan Payable 120 240
Consulting Corp. Net Income 65 130
Income Statement Prepaid Insurance 25 50
Year Ending 200X Rent Expense 20 40
Retained Earnings 1/1/0X 50 100
Revenue Hide-Vlookup Retained Earnings 12/31/0X - 0
X X -1 Unearned Revenue 30 60
Expenses Wage Expense 10 20
X X -1 Wages Payable 30 60
X X -1
X X -1 A/P
X X -1 A/R
Total Expenses X -4 Building
X X -1 Cash Revenue
Common Stock Consulting Revenue 120.00 240.00
Consulting Corp. Consulting Revenue Expenses
Retained Earnings Statement Dividends Insurance Expense 15.00 30.00
Year Ending 200X Equipment Legal Expense 10.00 20.00
Insurance Expense Rent Expense 20.00 40.00
X X -1 Legal Expense Wage Expense 10.00 20.00
+ X X -1 Loan Payable Total Expenses 55.00 110.00
- X X -1 Net Income Net Income 65.00 130.00
= X X -3 Prepaid Insurance
Rent Expense
Consulting Corp. Retained Earnings 1/1/0X Retained Earnings 1/1/0X 50.00 100.00
Balance Sheet Retained Earnings 12/31/0X Net Income 65.00 130.00
12/31/0X Unearned Revenue Dividends (30) (60)
Wage Expense Retained Earnings 12/31/0X 85 170
Assets Wages Payable
X X -1 Assets
X X -1 Cash 15.00 30.00
X X -1 A/R 30.00 60.00
X X -1 Prepaid Insurance 25.00 50.00
X X -1 Equipment 80.00 160.00
Total Assets X -5 Building 200.00 400.00
Total Assets 350.00 700.00
Liabilities
X X -1 Liabilities
X X -1 A/P 20.00 40.00
X X -1 Wages Payable 30.00 60.00
X X -1 Unearned Revenue 30.00 60.00
Total Liabilities X -4 Loan Payable 120.00 240.00
Total Liabilities 200.00 400.00
Shareholder's Equity Equity
X X -1 Common Stock 65.00 130.00
X X -3 Retained Earnings 12/31/0X 85.00 170.00
Total Shareholder's Equity X -4 Total Equity 150.00 300.00
Total Liabilities & Equity X -8 Total Liabilities & Equity 350.00 700.00

6

Exercise 6 Record the appropriate journal entry for each transaction. 0 36 possible
Factor 4
Ran Nominal Adjusted Dr. Cr. Feedback
General Journal Accounts payable (A/P) 1 5 (Paid 3 months rent in advance of $120 to L Co.) 30 120 Prepaid rent Cash
Date Account/Explanation PR Debit Credit Accounts payable (A/P) 2 6 (Performed services for D Co. and received payment of $200) 50 200 Cash Service revenue
Jan 1 X X Accounts receivable (A/R) 160 Accounts receivable (A/R) 3 7 (Purchased $160 machinery on account from Y Co.) 40 160 Machinery Accounts payable (A/P)
X X Service revenue 160 Accounts receivable (A/R) 4 8 (Issued checks to shareholders totaling $100) 25 100 Dividends Cash
(Performed $160 of services on account for P Co.) Advertising expense 5 9 (Paid $140 on account (amount owed suppliers)) 35 140 Accounts payable (A/P) Cash
Advertising expense 6 1 (Performed $160 of services on account for P Co.) 40 160 Accounts receivable (A/R) Service revenue
Jan 2 X X Telephone expense 40 Cash 7 2 (Received a $40 invoice from AT&T for this month's phone service) 10 40 Telephone expense Accounts payable (A/P)
X X Accounts payable (A/P) 40 Cash 8 3 (Received $240 payment from E Co. (for work done last month)) 60 240 Cash Accounts receivable (A/R)
(Received a $40 invoice from AT&T for this month's phone service) Common stock 9 4 (Issued a $80 check to Paper Co. for ads run this month) 20 80 Advertising expense Cash
Common stock
Jan 3 X X Cash 240 Dividends
X X Accounts receivable (A/R) 240 Dividends
(Received $240 payment from E Co. (for work done last month)) Machinery
Machinery
Jan 4 X X Advertising expense 80 Prepaid rent
X X Cash 80 Prepaid rent
(Issued a $80 check to Paper Co. for ads run this month) Rent expense
Rent expense
Jan 5 X X Prepaid rent 120 Repair expense
X X Cash 120 Repair expense
(Paid 3 months rent in advance of $120 to L Co.) Service revenue
Service revenue
Jan 6 X X Cash 200 Supplies
X X Service revenue 200 Supplies expense
(Performed services for D Co. and received payment of $200) Telephone expense
Telephone expense
Jan 7 X X Machinery 160 Unearned revenue
X X Accounts payable (A/P) 160 Unearned revenue
(Purchased $160 machinery on account from Y Co.)
Jan 8 X X Dividends 100
X X Cash 100
(Issued checks to shareholders totaling $100)
Jan 9 X X Accounts payable (A/P) 140
X X Cash 140
(Paid $140 on account (amount owed suppliers))

7

Exercise 7 Given the following information calculate each company's debt ratio and return on assets (ROA). 0 18 possible Factor 4
Larry Co. Curly Co. Mo Co. Larry Co. Curly Co. Mo Co. Larry Co. Curly Co. Mo Co.
Revenues 120 200 80 Revenues 30 50 20 120 200 80
Expenses 80 180 40 Expenses 20 45 10 80 180 40
NI 10 5 10 40 20 40
Total Assets 800 720 480 Total Assets 200 180 120 800 720 480
Total Liabilities 400 612 96 Total Liabilities 100 153 24 400 612 96
Average Assets 1,000 800 400 Average Assets 250 200 100 1000 800 400
Debt Ratio X X X Debt Ratio 50.0% 85.0% 20.0% 50.00% 85% 20%
Return on Assets X X X Return on Assets 4.0% 2.5% 10.0% 4.00% 2.5% 10.0%
Which company is most highly leveraged (relies most on creditor financing)?
X Larry Co.
Curly Co.
Which company relies most heavily on equity financing? Mo Co.
X
Which company most effectively utilizes its assets?
X

8

Exercise 8 Record the appropriate journal entry for each transaction. 0 44 possible
Factor 4
Ran Nominal Adjusted Dr. Cr. Feedback
General Journal Accounts payable (A/P) 1 1 (Stu Pidman invested $4000 to start Delivery Corp. (DC) ) 1,000 4,000 Cash Common stock
Date Account/Explanation PR Debit Credit Accounts payable (A/P) 2 2 (DC purchased a used van for $3600 by issuing check #101) 900 3,600 Van (delivery equipment) Cash
Aug 1 X X Cash 4000 Accounts receivable (A/R) 3 3 (DC purchased $400 supplies on account from Supply Co.) 100 400 Supplies Accounts payable (A/P)
X X Common stock 4000 Accounts receivable (A/R) 4 4 (DC delivered goods to Shady Co. and received $20000) 5,000 20,000 Cash Delivery Revenue
(Stu Pidman invested $4000 to start Delivery Corp. (DC) ) Cash 5 5 (DC paid $40 to buy gasoline for the van.) 10 40 Fuel (gas) expense Cash
Cash 6 6 (DC delivered goods to Legit Co. and billed them $1200) 300 1,200 Accounts receivable (A/R) Delivery Revenue
Aug 2 X X Van (delivery equipment) 3600 Common stock 7 7 (DC received a $2000 invoice from Mafia Co. for monthly 'security') 500 2,000 Security expense Accounts payable (A/P)
X X Cash 3600 Common stock 8 8 (DC made a delivery to Scary Co. and received $24000) 6,000 24,000 Cash Delivery Revenue
(DC purchased a used van for $3600 by issuing check #101) Delivery revenue 9 9 (DC paid $400 on account - for suppies purchased 8/3) 100 400 Accounts payable (A/P) Cash
Delivery Revenue 10 10 (DC received $1200 from Legit Co. on account - from 8/6) 300 1,200 Cash Accounts receivable (A/R)
Aug 3 X X Supplies 400 Fuel (gas) expense 11 11 (DC received a $1600 invoice from Law Co. for legal advice) 400 1,600 Legal expense Accounts payable (A/P)
X X Accounts payable (A/P) 400 Fuel (gas) expense
(DC purchased $400 supplies on account from Supply Co.) Legal expense
Legal expense
Aug 4 X X Cash 20000 Security expense
X X Delivery Revenue 20000 Security expense
(DC delivered goods to Shady Co. and received $20000) Supplies
Supplies expense
Aug 5 X X Fuel (gas) expense 40 Telephone expense
X X Cash 40 Telephone expense
(DC paid $40 to buy gasoline for the van.) Unearned revenue
Unearned revenue
Aug 6 X X Accounts receivable (A/R) 1200 Van (delivery equipment)
X X Delivery Revenue 1200 Van (delivery equipment)
(DC delivered goods to Legit Co. and billed them $1200)
Aug 7 X X Security expense 2000
X X Accounts payable (A/P) 2000
(DC received a $2000 invoice from Mafia Co. for monthly 'security')
Aug 8 X X Cash 24000
X X Delivery Revenue 24000
(DC made a delivery to Scary Co. and received $24000)
Aug 9 X X Accounts payable (A/P) 400
X X Cash 400
(DC paid $400 on account - for suppies purchased 8/3)
Aug 10 X X Cash 1200
X X Accounts receivable (A/R) 1200
(DC received $1200 from Legit Co. on account - from 8/6)
Aug 11 X X Legal expense 1600
X X Accounts payable (A/P) 1600
(DC received a $1600 invoice from Law Co. for legal advice)

9

0 0 35 possible
Exercise 9 Prepare financial statements for Yo Corp. given the following account balances. 0 factor 4 factor
List expenses in alphabetical order and assets in order of liquidity. nominal adjusted Sign
33 possible A/P 5 20
A/P 20 Rent Expense 16 47 possible A/R 10 40
A/R 40 Retained Earnings 1/1/0X 40 Advertising Expense 2 8
Advertising Expense 8 Service Revenue 200 Cash 13 52
Cash 52 Supplies 20 Common Stock 3 12
Common Stock 12 Supplies Expense 12 Dividends 1 4
Dividends 4 Unearned Revenue 32 Machine 40 160
Machine 160 Wage Expense 48 Net Income 29.00 116
Note Payable 60 Wages Payable 4 Note Payable 15 60
Prepaid Rent 8 Prepaid Rent 2 8
Rent Expense 4 16
Yo Corp. Retained Earnings 1/1/0X 10 40
Income Statement Retained Earnings 12/31/0X - 0
Year Ending 200X Service Revenue 50 200
Supplies 5 20
Revenue Hide-Vlookup Supplies Expense 3 12
X X -1 Unearned Revenue 8 32
Expenses Wage Expense 12 48
X X -1 Wages Payable 1 4
X X -1
X X -1 A/P
X X -1 A/R
Total Expenses X -4 Advertising Expense
X X -1 Cash Revenue
Common Stock Service Revenue 50.00 200.00
Yo Corp. Dividends Expenses - 0
Retained Earnings Statement Machine Advertising Expense 2.00 8.00
Year Ending 200X Net Income Rent Expense 4.00 16.00
Note Payable Supplies Expense 3.00 12.00
X X -1 Prepaid Rent Wage Expense 12.00 48.00
+ X X -1 Rent Expense Total Expenses 21.00 84.00
- X X -1 Retained Earnings 1/1/0X Net Income 29.00 116.00
= X X -3 Retained Earnings 12/31/0X - 0
Service Revenue - 0
Yo Corp. Supplies Retained Earnings 1/1/0X 10.00 40.00
Balance Sheet Supplies Expense Net Income 29.00 116.00
12/31/0X Unearned Revenue Dividends (1) (4.00)
Wage Expense Retained Earnings 12/31/0X 38 152.00
Assets Wages Payable - 0
X X -1 Assets - 0
X X -1 Cash 13.00 52.00
X X -1 A/R 10.00 40.00
X X -1 Machine 40.00 160.00
X X -1 Prepaid Rent 2.00 8.00
Total Assets X -5 Supplies 5.00 20.00
Total Assets 70.00 280.00
Liabilities - 0
X X -1 Liabilities - 0
X X -1 A/P 5.00 20.00
X X -1 Wages Payable 1.00 4.00
X X -1 Unearned Revenue 8.00 32.00
Total Liabilities X -4 Note Payable 15.00 60.00
Total Liabilities 29.00 116.00
Shareholder's Equity Equity - 0
X X -1 Common Stock 3.00 12.00
X X -3 Retained Earnings 12/31/0X 38.00 152.00
Total Shareholder's Equity X -4 Total Equity 41.00 164.00
Total Liabilities & Equity X -8 Total Liabilities & Equity 70.00 280.00