Accounting Analysis of Transactions

ANALYSIS OF TRANSACTIONS

1. On January 2nd NetSolutions purchased $750.00 in office supplies.

(a) Journalize this transaction as if NetSolutions paid cash.
(b) (1) Journalize this transaction as if NetSolutions placed it on account.

(b) (2) On January 15th NetSolutions pays the amount due. Journalize this event.
2. On November 15th NetSolutions provides $2,250.00 in services to clients.

(a) Journalize this event as if the clients had paid cash at the time the services were rendered.
(b)(1) Journalize this event as if the clients had placed this on account.
(b)(2) Assume that the clients paid $1,700.00 of the amount on account on November 30th.
Journalize this transaction.
3. On November 12th NetSolutions provides $1,900.00 in services to clients. At the time of service,
the clients paid $500.00 in cash and put the balance on account.
(a) Journalize this event.
(b) On November 29th NetSolutions clients paid an additional $800.00 on their accounts due.
Journalize this event.
(c) Calculate the amount on accounts receivable on November 30th.
4. Journalize the following selected transactions for August 2008 in a two-column journal. Journal
entry explanations may be omitted.
Aug 1 Received cash from the investment made by the owner, $15,000.
2 Received cash for providing accounting services, $8,000.
3 Billed customers on account for providing services, $4,000.
4 Paid advertising expense, $400.
5 Received cash from customers on account, $3,500.
6 Owner withdraws, $1,000
7 Received telephone bill, $100
8 Paid telephone bill, $100.
Date Description Post Ref Debit Credit
5. Analyze the following transactions as to their effect on the accounting equation.
(a) The company paid $225 to a vendor for supplies purchased previously on account.
(b) The company performed $1,050 of services and billed the customer.
(c) The company received a utility bill for $195 and will pay it next month.
(d) The owner of the company withdrew $50 of supplies for personal use.
(e) The company paid $305 in salaries to its employees.
(f) The company collected $725 of cash from its customers on account.
Some of the possible effects of a transaction on the accounting equation are listed below:
(1) Asset, dr.; Asset, cr.

(2) Asset, dr.; Owner's Equity, cr.
(3) Asset, dr.; Liability, cr.
(4) Asset, dr.; Revenue, cr.
(5) Liability, dr.; Assets, cr.
(6) Drawing, dr.; Asset, cr.
(7) Expense, dr.; Assets, cr.
(8) Expense, dr.; Liability, cr.
Put the appropriate letter next to each transaction.
6. Set up T accounts for Cash; Accounts Receivable; Supplies; Accounts Payable; Brenda Wells,
Capital; Brenda Wells, Drawing; Professional Fees; and Operating Expenses.
(a) In the T accounts, record the following transactions of Wells Consultant Services for
May, 2007, identifying each entry by number:
(1) Wells invested $12,000 cash in the business.
(2) Purchased supplies on account, $5,750.
(3) Paid operating expenses, $5,000.
(4) Billed clients for fees, $6,940.
(5) Received cash from cash clients, $4,200.
(6) Paid creditors on account, $1,000.
(7) Received $2,600 from clients on account.
(8) Withdrew $1,000 cash for personal use.
(b) Prepare a trial balance as of May 31, 2007 for Wells Consultant Services.
(c) Assuming that supplies expense (which has not been recorded) amounts to $1,000 for
May, determine the following:
(1) Net income for the month.
(2) Owner's equity as of May 31.
7. Prepare a trial balance, listing the following accounts in proper sequence. The accounts (all
normal balances) were taken from the ledger of Jilson Consultants on June 30, 2008.
Accounts Payable $ 2,100 Rent Expense $10,500

Accounts Receivable 1,450 Salary Expense 13,000
Cash 5,375 Fees Earned 46,600
Judy Jilson, Capital 15,800 Supplies 1,125
Judy Jilson, Drawing 13,500 Supplies Expense 1,400
Equipment 13,500 Utilities Expense 4,400
Miscellaneous Expense 250
Exhibit 2-1
All nine transactions for Bowan Realty for June, the first month of operations, are recorded in the
following T accounts:
Cash Meg Bowan, Capital

(1) 20,000 (3) 7,500 (1) 20,000
(7) 6,900 (5) 2,600
(9) 4,700 (6) 5,500
(8) 2,000
Accounts Receivable Meg Bowan, Drawing
(4) 4,900 (9) 4,700 (8) 2,000
Supplies Fees Earned
(3) 7,500 (4) 4,900
(7) 6,900
Equipment Operating Expense
(2) 4,500 (6) 5,500
Accounts Payable
(5) 2,600 (2) 4,500
8. Refer to Exhibit 2-1. Prepare a trial balance, listing the accounts in their proper order.
9.
(a) List the errors in the following trial balance. All accounts have normal balances.
(b) What would be the new balance of the trial balance after errors are corrected? What
would be the balance of Accounts Receivable?
Herb's Auto Service
Trial Balance
For Month Ending September 30, 2007
Cash 19,475
Accounts Receivable ?
Supplies 1,000
Equipment 15,000
Prepaid Insurance 500
Accounts Payable 2,500
Herb Cole, Capital 17,000
Herb Cole, Drawing 1,000
Fees Earned 49,600
Salary Expense 14,500
Rent Expense 9,000
Utilities Expense 1,400
Supplies Expense 3,900
Miscellaneous Expense 250
55,000 81,575
10. Answer the following questions for each of the errors listed below, considered individually:
(a) Did the error cause the trial balance totals to be unequal?
(b) What is the amount of the difference between the trial balance totals (where
applicable)?
(c) Which of the trial balance totals, debit or credit, is the larger (where applicable)?
Present your answers in columnar form, using the following headings:
Error Totals Difference in Totals Larger of Totals

(identifying number) (equal or unequal) (amount) (debit or credit)
Errors:
(1) A withdrawal of $1,000 cash by the owner was recorded by a debit of $1,000 to
Salary Expense and a credit of $1,000 to Cash.
(2) A $950 purchase of supplies on account was recorded as a debit of $1,950 to
Equipment and a credit of $1,950 to Accounts Payable.
(3) A purchase of equipment for $4,500 on account was not recorded.
(4) A $630 receipt on account was recorded as a $630 debit to Cash and a $360 credit
to Accounts Receivable.
(5) A payment of $1,030 cash on account was recorded only as a credit to Cash.
(6) Cash sales of $9,500 were recorded as a credit of $9,500 to Cash and a credit of
$9,500 to Fees Earned.
(7) The debit to record a $5,000 cash receipt on account was posted twice; the credit
was posted once.
(8) The credit to record an $800 cash payment on account was posted twice; the debit
was posted once.
(9) The debit balance of $9,400 in Accounts Receivable was recorded in the trial
balance as a debit of $9,300.

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ANALYSIS OF TRANSACTIONS

1. On January 2nd NetSolutions purchased $750.00 in office supplies.

(b) (1) Journalize this transaction as if NetSolutions placed it on account.

2. On November 15th NetSolutions provides $2,250.00 in services to clients.

(c) Calculate the amount on accounts receivable on November 30th.

(1) Asset, dr.; Asset, cr.

Accounts Payable $ 2,100 Rent Expense $10,500

Cash Meg Bowan, Capital

Present your answers in columnar form, using the following headings:

Error Totals Difference in Totals Larger of Totals

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