Exam 2: Analyzing Business Transactions

In the journal provided,prepare journal entries (in good form)for the following transactions.If no entry is required,write "no entry." Omit explanations. May 1 Investors opened a dry cleaning service, called Junction Cleaners, by depositing $\$ 100,000$ into a business bank account and receiving 50,000 shares of $\$ 2$ par value stock in exchange. 3 Paid two years' rent in advance, $\$ 11,200$ . 6 Purchased dry cleaning equipment for $\$ 36,000$ . Paid $\$ 14,000$ in cash, the remainder to be paid in two weeks. 10 Hired a worker, to be paid $\$ 550$ per week. 17 Paid the worker's weekly wage. 17 Recorded cash received for services rendered during the week, $\$ 5,000$ . 20 Paid for the remainder of the equipment purchased on May 6. 21 Received $\$ 240$ in advance of cleaning and boxing a wedding gown. 23 Performed $\$ 390$ of dry cleaning services for Tuxedos Unlimited. It will remit payment in three days. 24 Paid the weekly wages. 26 Received payment from Tuxedos Unlimited. 30 Received a telephone bill for $\$ 114$ , which will be paid in two weeks.

Which of the following statements is true about a journal entry?

The recognition issue deals with when a user of financial statements should use accounting information.

Which pair of accounts follows the rules of debit and credit in the opposite manner?

A contract is an example of a source document.

Which of the following gives the correct sequence of accounting procedures?

Given the following ledger account and postings,complete the Balance column.Assume no previous postings in the account.

Post the following transaction.

Use this journal entry to answer the following question. Nov. 16 Accaunts Payable 685 Cash 685 Recorded payment of a lability Explain how the above journal entry relates to the measurement issues of (a)recognition,(b)valuation,and (c)classification.

Which of the following accounts should be credited in a journal entry?

Accounts Payable has a normal credit balance.

Which of the following accounts is classified differently from the others listed?

What two purposes are served by using the Post.Ref.columns of a journal and ledger?

Which pair of accounts follows the rules of debit and credit in the same manner?

Which of the following errors will cause a trial balance to be out of balance?

The chart of accounts is the starting point for a

The account Dividends has a normal credit balance.

When the columns of the trial balance equal each other,it means that no errors have occurred in recording and posting the transactions.

Which of the following accounts has a normal credit balance?

The journal is a chronological record of all transactions.