Exam 2: Analyzing and Recording Transactions

After preparing an (unadjusted)trial balance at year-end,G.Chu of Chu Design Company discovered the following errors: 1.Cash payment of the $225 telephone bill for December was recorded twice. 2.Cash payment of a note payable was recorded as a debit to Cash and a debit to Notes Payable for $1,000. 3.A $900 cash withdrawal by the owner was recorded to the correct accounts as $90. 4.An additional investment of $5,000 cash by the owner was recorded as a debit to G.Chu,Capital and a credit to Cash. 5.A credit purchase of office equipment for $1,800 was recorded as a debit to the Office Equipment account with no offsetting credit entry. Using the form below,indicate whether the error would cause the trial balance to be out of balance by placing an X in either the yes or no column.Would the error cause the trial balance to be out of balance? Would the error cause the trial balance to be out of balance?

A business paid $100 cash to Karen Smith (the owner of the business)for her personal use.Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Stride Along had total liabilities of $130 million and total assets of $375 million.Its debt ratio was _______________.

Hal Smith opened Smith's Repairs on March 1 of the current year.During March,the following transactions occurred and were recorded in the company's books: 1)Smith invested $25,000 cash in the business. 2)Smith contributed $100,000 of equipment to the business. 3)The company paid $2,000 cash to rent office space for the month. 4)The company received $16,000 cash for repair services provided during March. 5)The company paid $6,200 for salaries for the month. 6)The company provided $3,000 of services to customers on account. 7)The company paid cash of $500 for monthly utilities. 8)The company received $3,100 cash in advance of providing repair services to a customer. 9)Smith withdrew $5,000 for his personal use from the company. Based on this information,the balance in Hal Smith,Capital reported on the Statement of Owner's Equity at the end of March would be:

The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors.

An account balance is the difference between the debits and credits for an account including any beginning balance.

Tom Pines decided to open a bed and breakfast in his hometown.Prepare journal entries to record the following transactions.

Accounts are normally decreased by debits.

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

In which of the following situations would the trial balance not balance?

The three general categories of accounts in a general ledger are ____________,_________,and _____________.

Vicki Lake is a computer consultant.Shown below are (a)several accounts in her ledger with each account preceded by an identification number,and (b)several transactions completed by Lake.Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.

Of the following errors,which one by itself will cause the trial balance to be out of balance?

A transaction that decreases an asset account and increases a liability account must also affect one or more other accounts.

The four categories of equity accounts are ________________,__________________,______________________,and ______________________.

A $130 credit to Office Equipment was credited to Fees Earned by mistake.By what amounts are the accounts under- or overstated as a result of this error?

_________________ identify and describe transactions and events and provide objective evidence and amounts for recording.

Indicate the financial statement on which each of the following items appears.Use I for income statement,E for statement of owner's equity,and B for balance sheet.

Posting is the transfer of journal entry information to the ledger.