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Exercise 3-3

During 2017, its first year of operations as a delivery service, Flounder Corp. entered into the following transactions.

1.		Issued shares of common stock to investors in exchange for $137,000 in cash.
2.		Borrowed $55,000 by issuing bonds.
3.		Purchased delivery trucks for $63,000 cash.
4.		Received $18,000 from customers for services performed.
5.		Purchased supplies for $6,600 on account.
6.		Paid rent of $5,900.
7.		Performed services on account for $10,700.
8.		Paid salaries of $26,700.
9.		Paid a dividend of $11,500 to shareholders.

Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders’ Equity in the far right column. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced, see Illustration 3-3 for example.)

	Assets	=	Liabilities	+	Stockholders’ Equity
	Cash	+	Accounts Receivable	+	Supplies	+	Equipment	=	Accounts Payable	+	Bonds Payable	+	Common Stock	+	Retained Earnings
															Revenues	–	Expenses	–	Dividends
(1)	$		$		$		$		$		$		$		$		$		$
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
	$		$		$		$	=	$		$		$		$		$		$

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Exercise 3-7

Selected transactions for Front Room, an interior decorator corporation, in its first month of business, are as follows.

1.		Issued stock to investors for $16,300 in cash.
2.		Purchased used car for $10,400 cash for use in business.
3.		Purchased supplies on account for $310.
4.		Billed customers $5,620 for services performed.
5.		Paid $300 cash for advertising start of the business.
6.		Received $1,460 cash from customers billed in transaction (4).
7.		Paid creditor $330 cash on account.
8.		Paid dividends of $320 cash to stockholders.

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For each transaction indicate the basic type of account debited and credited (asset, liability, stockholders’ equity); the specific account debited and credited (Cash, Rent Expense, Service Revenue, etc.); whether the specific account is increased or decreased; and the normal balance of the specific account.

Account Debited

Account Credited

No.

Basic Type

Specific Account

Effect

Normal Balance

Basic Type

Specific Account

Effect

Normal Balance

Asset

Cash

Increase

Debit

Stockholders’ Equity

Common Stock

Increase

Credit

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Journalize the transactions. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
1.

2.

3.

4.

5.

6.

7.

8.

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Exercise 3-12

On April 1, Skysong, Inc. began operations. The following transactions were completed during the month.

1.		Issued common stock for $26,400 cash.
2.		Obtained a bank loan for $7,700 by issuing a note payable.
3.		Paid $12,100 cash to buy equipment.
4.		Paid $1,300 cash for April office rent.
5.		Paid $1,600 for supplies.
6.		Purchased $660 of advertising in the Daily Herald, on account.
7.		Performed services for $19,800: cash of $2,200 was received from customers, and the balance of $17,600 was billed to customers on account.
8.		Paid $440 dividend to stockholders.
9.		Paid the utility bill for the month, $2,200.
10.		Paid Daily Herald the amount due in transaction (6).
11.		Paid $40 of interest on the bank loan obtained in transaction (2).
12.		Paid employees’ salaries, $7,040.
13.		Received $13,200 cash from customers billed in transaction (7).
14.		Paid income tax, $1,650.

No.	Account Titles and Explanation	Debit	Credit
1.

2.

3.

4.

5.

6.

7.


8.

9.

10.

11.

12.

13.

14.

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Exercise 3-18

Whispering Winds Corp. provides security services. Selected transactions for Whispering Winds Corp. are presented below.

Oct. 1		Issued common stock in exchange for $71,300 cash from investors.
2		Hired part-time security consultant. Salary will be $2,200 per month. First day of work will be October 15.
4		Paid 1 month of rent for building for $2,200.
7		Purchased equipment for $19,400, paying $4,300 cash and the balance on account.
8		Paid $500 for advertising.
10		Received bill for equipment repair cost of $420.
12		Provided security services for event for $3,500 on account.
16		Purchased supplies for $440 on account.
21		Paid balance due from October 7 purchase of equipment.
24		Received and paid utility bill for $160.
27		Received payment from customer for October 12 services performed.
31		Paid employee salaries and wages of $5,500.

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Journalize the transactions. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit

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Post the transactions to T-accounts. (Post entries in the order of journal entries presented in the previous part. For accounts with zero balance select "Balance" from the list and enter "0" or leave it blank.)

Cash

Accounts Receivable

Supplies

Equipment

Accounts Payable

Common Stock

Service Revenue

Advertising Expense

Salaries and Wages Expense

Maintenance & Repairs Expense

Rent Expense

Utilities Expense

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Prepare a trial balance at October 31, 2017.

WHISPERING WINDS CORP. Trial Balance
	Debit	Credit
	$	$










	$	$

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Exercise 4-10

Pharoah Company, opened an incorporated dental practice on January 1, 2017. During the first month of operations, the following transactions occurred.

1.		Performed services for patients who had dental plan insurance. At January 31, $930 of such services was completed but not yet billed to the insurance companies.
2.		Utility expenses incurred but not paid prior to January 31 totaled $500.
3.		Purchased dental equipment on January 1 for $86,650, paying $28,200 in cash and signing a $58,450, 3-year note payable (interest is paid each December 31). The equipment depreciates $500 per month. Interest is $610 per month.
4.		Purchased a 1-year malpractice insurance policy on January 1 for $24,000.
5.		Purchased $2,440 of dental supplies (recorded as increase to Supplies). On January 31, determined that $690 of supplies were on hand.

Prepare the adjusting entries on January 31. Account titles are Accumulated Depreciation—Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expense, and Accounts Payable. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.	Date	Account Titles and Explanation	Debit	Credit
1.	Jan. 31

2.	Jan. 31

3.	Jan. 31

		(To record depreciation expense)


		(To record interest expense)
4.	Jan. 31

5.	Jan. 31