Exam 2: Analyzing and Recording Transactions

Leonard Matson completed these transactions during December of the current year: Prepare general journal entries to record these transactions.

The balances for the accounts of Lance's Consulting Firm,Inc.for the year ended December 31 are shown below.Each account shown had a normal balance. Accounts payable \ 6,400 Wages expense \ 35,000 Accounts receivable 7,000 Rent expense 5,000 Cash 10,000 Retained earnings 68,700 Office supplies 1,000 Land 53,000 Building 99,000 Unearned revenue 7,000 Supplies expense 15,000 Dividends 20,000 Consulting revenue 150,000 Common stock 12,900 Calculate the debt ratio.

A ledger is:

Prepaid expenses are:

The credit purchase of a delivery truck for $4,700 was posted to Delivery Trucks as a $4,700 debit and to Accounts Payable as a $4,700 debit.What effect would this error have on the trial balance?

Which of the following statements is correct?

The debt ratio is used:

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

Items such as sales slips,invoices,checks,and purchase orders are source documents.

The first step in the analyzing and recording process is to analyze each transaction and event from source documents.

Another name for the balance sheet is the statement of financial position.

When a company provides services for which cash will not be received until some future date,the company should record unearned revenue for the amount charged to the customer.

A journal gives a complete record of each transaction in one place and shows the debits and credits for each transaction.

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

As prepaid expenses are used up,the costs of these assets become expenses.

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: Assets Liabilities Beginning of the year \ 114,000 \ 68,000 End of the year 135,000 73,000 If the owners made no investments and dividends of $5,000 were paid during the year,what was the amount of net income earned by Josephine's Bakery during the current year?

The following trial balance was prepared from the general ledger of Hal's Auto Repair. HAL'S AUTO REPAIR Trial Balance October 31 Account Debit Credit Cash \ 975 Accounts receivable 3,800 Supplies 500 Repair equipment 13,000 Office equipment 6,600 Accounts payable \ 4,510 Common stock 10,000 Retained earnings 13,000 Dividends 4,200 Repair fees earned 10,875 Supplies expense Totals \ 37.675 \ 38,385 Since the trial balance did not balance,you decided to examine the accounting records.You found that the following errors had been made: 1.A purchase of supplies on account for $245 was posted as a debit to Supplies and as a debit to Accounts Payable. 2.An investment of $500 cash by the owner was debited to Common Stock and credited to Cash. 3.In computing the balance of the Accounts Receivable account,a debit of $600 was omitted from the computation. 4.One debit of $300 to the Dividends account was posted as a credit. 5.Office equipment purchased for $800 was posted to the Repair Equipment account. 6.One entire entry was not posted to the general ledger.The transaction involved the receipt of $125 cash at the time repair services were performed. Prepare a corrected trial balance for the Hal's Auto Repair as of October 31.

Unearned revenues are classified as liabilities.

Describe source documents and their purpose.

Increases in liability accounts are recorded as debits.