Exam 2: The Recording Process

For each item below, indicate whether a debit or credit applies: -Increase in Dividends paid

Thomas Carlisle Jr. was appointed the manager of Westbrook Properties, a recently formed company that manages residential rental properties. Maria Fremont is the accountant. She prepared a chart of accounts based on an analysis of the expenditures of the company. One of the largest expense categories is Travel and entertainment. Mr Carlisle believes that it is important to maintain a presence in the social life of the city. In this, he sharply differs from his father, Thomas Carlisle Sr. The elder Mr Carlisle has set up Westbrook Properties in order to test his son's management skills before allowing him to manage a more lucrative commercial property business. Mr Carlisle Sr. provided the capital for Westbrook and maintains close contact with the company. He allowed his son, however, to hire his own employees. Mr Carlisle Jr. has asked Ms Fremont to name the Travel and entertainment account Property development. He hopes to deflect his father's attention away from the amount he has spent on travel and entertainment until he has proven that his methods work. When Ms Fremont resisted, he reminded her that he, not his father, hired her. He also reminded her that she had been enthusiastic about his business plans when she was hired. Required: 1. Who are the stakeholders in this situation? 2. Should Ms Fremont agree to the change in the Travel and entertainment account to Property development? Explain.

Match the items by choosing the appropriate code letter : -The entire group of accounts maintained by a business.

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have: -Service revenue

For each item , indicate whether a debit or credit applies: -Increase in Supplies

For each item below, indicate whether a debit or credit applies: -Decrease in Wages expense

For each of the following accounts indicate: (a) the type of account (asset, liability, equity, revenue, expense) (b) the debit and credit effects (c) the normal account balance. -Share capital

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have: -Accounts payable

Some of the following errors would cause the debit and credit columns of the trial balance to have unequal totals. For each of the four cases, state whether the error would cause unequal totals in the trial balance. If the error causes unequal totals, indicate the amount of difference between the columns and state whether the debit or credit is larger. Each case is to be considered independently of the others.

Journalise the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transactions. 1. Received $35,000 from shareholders. 2. Purchased equipment for $45,000, paying $15,000 in cash and the remainder is due in 30 days. 3. Paid $3,000 rent for the month. 4. Recorded $12,500 of services provided on account. 5. Paid wages of $7,500. 6. Received $7,000 in cash for services provided. 7. Collected $2,000 from customers on account.

Match the items by choosing the appropriate code letter : -The side which increases an asset account.

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account. -An increase in Dividends paid

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have: -Advertising expense

For each item , indicate whether a debit or credit applies: -Decrease in Interest receivable

For each of the following accounts indicate: (a) the type of account (asset, liability, equity, revenue, expense) (b) the debit and credit effects (c) the normal account balance. -Service revenue

Journalise the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transactions. 1. Shareholders invest $35,000 in cash in starting a real estate office operating as a company. 2. Purchased $400 of office supplies on credit. 3. Purchased office equipment for $6,000, paying $2,500 in cash and the remainder on credit. $3,500, loan 4. Real estate commissions invoiced to clients amount to $4,000. 5. Paid $700 in cash for the current month's rent. 6. Paid $200 cash on account for office supplies purchased in transaction 2. 7. Received an account for $500 for advertising for the current month. 8. Paid $2,200 cash for office salaries. 9. Paid $1,200 cash dividends to shareholders. 10. Received a cheque for $3,000 from a client in payment on account for commissions invoiced in transaction 4.

The accounts in the trial balance of Koala Ltd are shown below. Select whether the account balance is normally a debit (Dr) or a credit (Cr). -Retained earnings

The accounting equation can be used to analyse transactions for:

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account. -A decrease in Store equipment.

Selected transactions for Kookaburra Ltd are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities and equity. Sample: Made initial cash investment in the business. The answer would be - Increase in assets and increase in Equity. -Incurred advertising expenses on account.