Nobles Horngrenacct11 Ch02 Working Paper

HORNGREN'S ACCOUNTING - Eleventh Edition
1.
Identify the three categories of the accounting equation and list at least four
accounts associated with each category.
2.
What is the purpose of the chart of accounts? Explain the numbering typically
associated with the accounts.
3.
What does a ledger show? Whats the difference between a ledger and the chart
of accounts?
4.
Accounting uses a double-entry system. Explain what this sentence means.
Chapter 2: Recording Business Transactions
Page 1 of 118

5.
What is a T-account? On which side is the debit? On which side is the credit?
Where does the account name go on a T-account?
6.
When are debits increases? When are debits decreases?
7.
When are credits increases? When are credits decreases?
8.
Identify which types of accounts have a normal debit balance and which types
of accounts have a normal credit balance.
9.
What are source documents? Provide examples of source documents that a

business might use.
Page 2 of 118

10. Where are transactions initially recorded?
11. Explain the five steps in journalizing and posting transactions.
12. What are the four parts of a journal entry?
13. What is involved in the posting process?
Page 3 of 118
Page 4 of 118
14. What is the purpose of the trial balance?
15. What is the difference between the trial balance and the balance sheet?
16. If total debits equal total credits on the trial balance, is the trial balance error-free?
Explain your answer.
17. What is the calculation for the debt ratio? Explain what the debt ratio evaluates.
Page 5 of 118

S2-1
Identify each account as an asset (A), liability (L), or equity (E).
Solution:
a.
b.
c.
d.
e.
f.
g.
h.
i
j.
Page 6 of 118

S2-2
For each account, identify whether the changes would be recorded as a debit
(DR) or credit (CR).
Solution:
a.
b.
c.
d.
e.
f.
g.
h.
i
j.
Page 7 of 118

S2-3
For each account, identify whether the normal balance is a debit (DR) or credit (CR).
Solution:
a.
b.
c.
d.
e.
f.
g.
h.
i
j.
Page 8 of 118

S2-4
Journalize the transactions of Jack Davis, M.D. Include an explanation with each
entry.
Solution:
Date
Accounts and Explanation
Debit
Credit
Page 9 of 118

S2-5
Journalize the transactions of Arkansas Sales Consultants. Include an explanation
with each journal entry.
Solution:
Date
Debit
Credit
Page 10 of 118

S2-6
Calculate the Accounts Payable balance.
Solution:
Accounts Payable
Page 11 of 118

S2-7
Requirements
1. Journalize the transactions of Kenneth Watson Optical Dispensary. Include
an explanation with each journal entry.
2. Open the following accounts (use T-account format): Cash (Beginning
Balance of $23,000), Office Supplies, and Accounts Payable. Post the
journal entries from Requirement 1 to the accounts and compute the
balance in each account.
Solution:
Requirement 1
Date
Debit
Credit
Requirement 2
Cash
Accounts Payable
Office Supllies
Page 12 of 118
Page 13 of 118

S2-8
Prepare the trial balance of Henderson Floor Coverings at December 31, 2016.
Solution:
HENDERSON FLOOR COVERINGS
Trial Balance
December 31, 2016
Account Title
Balance
Debit
Credit
Page 14 of 118

S2-9
What is Magic Carpet Cares debt ratio as of October 31?
Solution:
Page 15 of 118

E2-10
Match the accounting terms with the corresponding definitions.
Solution:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Page 16 of 118

E2-11
Create a chart of accounts for Raymond Autobody Shop using the standard system.
Solution:
Assets
Equity
Liabilities
Revenues
Expenses
Page 17 of 118

E2-12
Requirements
1. Identify each account as asset (A), liability (L), or equity (E).
2. Identify whether the account is increased with a debit (DR) or credit (CR).
3. Identify whether the normal balance is a debit (DR) or credit (CR).
Solution:
Requirement 1
Account Name
Type of Account
Requirement 2
Increase with
Debit/Credit
Requirement 3
Normal Balance
with Debit/Credit
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
Page 18 of 118

E2-13
Insert the missing information into the accounting equation. Signify increases
as Incr. and decreases as Decr.
Solution:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
r.
Page 19 of 118

E2-14
For each transaction, identify a possible source document.
Solution:
a.
b.
c.
Page 20 of 118

E2-15
As the manager of Margarita Mexican Restaurant, you must deal with a variety of
business transactions. Provide an explanation for the following transactions:
Solution:
a.
b.
c.
d.
e.
f.
g.
Page 21 of 118

E2-16
Journalize the transactions of London Engineering. Include an explanation with each
journal entry.
Solution:
Date
Debit
Credit
Page 22 of 118
Page 23 of 118

E2-17
Requirements
1. Open the following T-accounts for London Engineering: Cash; Accounts
Receivable; Office Supplies; Equipment; Accounts Payable; Notes Payable;
London, Capital; London, Withdrawals; Service Revenue; Utilities Expense.
2. Post the journal entries to the T-accounts. Also transfer the dates to the T-accounts.
3. Compute the July 31 balance for each account.
Solution:
Requirements 1, 2, and 3
Cash
Accounts Payable
Accounts Receivable
Notes Payable
Office Supplies
London, Capital
Page 24 of 118
Equipment
London, Withdrawals
Service Revenue
Utilities Expense
Page 25 of 118

E2-18
Journalize the transactions of Wilson Technology Solutions. Include an explanation
with each journal entry.
Solution:
Date
Debit
Credit
Page 26 of 118
Date
Debit
Credit
Page 27 of 118

E2-19
Requirements
1.Open four-column accounts using the following account numbers: Cash, 110;
Accounts Receivable, 120; Office Supplies, 130; Prepaid Advertising, 140; Building,
150; Land, 160; Accounts Payable, 210; Unearned Revenue, 220; Wilson, Capital,
310; Service Revenue, 410; Rent Expense, 510; Salaries Expense, 520.
2.Post the journal entries to the four-column accounts and determine the balance in the
account after each transaction. Assume that the journal entries were recorded on page 10 of
the journal. Make sure to complete the Post. Ref. columns in the journal and ledger.
Solution:
Requirement 2
Date
Post Ref.
Debit
Credit
Page 28 of 118

Date
Post Ref.
Debit
Credit
Requirements 1 and 2
CASH
Date
Item
Post.
Ref.
Debit
Credit
Account No. 110

Balance
Debit
Credit
Page 29 of 118

ACCOUNTS RECEIVABLE
Date
Item
Post.
Ref.
Debit
Credit
Account No. 120

Balance
Debit
Credit
Credit
Account No. 130

Balance
Debit
Credit
Credit
Account No. 140

Balance
Debit
Credit
Credit
Account No. 150

Balance
Debit
Credit
Credit
Account No. 160

Balance
Debit
Credit
Credit
Account No. 210

Balance
Debit
Credit
OFFICE SUPPLIES
Date
Item
Post.
Ref.
Debit
PREPAID ADVERTISING
Date
Item
Post.
Ref.
Debit
BUILDING
Date
Item
Post.
Ref.
Debit
LAND
Date
Item
Post.
Ref.
Debit
ACCOUNTS PAYABLE
Date
Item
Post.
Ref.
Debit
Page 30 of 118

UNEARNED REVENUE
Date
Item
Post.
Ref.
Debit
Credit
Account No. 220

Balance
Debit
Credit
Credit
Account No. 310

Balance
Debit
Credit
Credit
Account No. 410

Balance
Debit
Credit
Credit
Account No. 510

Balance
Debit
Credit
Credit
Account No. 520

Balance
Debit
Credit
WILSON, CAPITAL
Date
Item
Post.
Ref.
Debit
SERVICE REVENUE
Date
Item
Post.
Ref.
Debit
RENT EXPENSE
Date
Item
Post.
Ref.
Debit
SALARIES EXPENSE
Date
Item
Post.
Ref.
Debit
Page 31 of 118

E2-20
The first nine transactions of North-West Airplane Repair have been posted to
the T-accounts. Provide an explanation for each of the nine transactions.
Solution:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Page 32 of 118

E2-21
Prepare the journal entries that served as the sources for the five transactions. Include
an explanation for each entry.
Solution:
Date
Posting
Ref.
Debit
Credit
Page 33 of 118

E2-22
Prepare Aker's trial balance as of August 31, 2016.
Solution:
AKER MOVING COMPANY
Trial Balance
August 31, 2016
Account Title
Balance
Debit
Credit
Page 34 of 118

E2-23
Prepare Morris Farm Equipment Repairs trial balance as of May 31, 2016.
Solution:
MORRIS FARM EQUIPMENT REPAIR
Trial Balance
May 31, 2016
Account Title
Balance
Debit
Credit
Page 35 of 118

E2-24
Requirements
1.
Open the following four-column accounts of Tori Peel, CPA: Cash, 110;
Accounts Receivable, 120; Office Supplies, 130; Office Furniture, 140; Accounts
Payable, 210; Utilities Payable, 220; Peel, Capital, 310; Peel, Withdrawals, 320;
Service Revenue, 410; Salaries Expense, 510; Rent Expense, 520; Utilities
Expense, 530.
2.
Journalize the transactions and then post the journal entries to the fourcolumn accounts. Keep a running balance in each account. Assume the
journal entries are recorded on page 10 of the journal.
3.
Prepare the trial balance as of June 30, 2016.
Solution:
Requirement 2
Date
Posting
Ref.
Debit
Page 36 of 118
Date
Posting
Ref.
Debit
Requirements 1 & 2
CASH
Date
Item
Post.
Ref.
Debit
Credit
Account No. 110

Balance
Debit
Credit
Account No. 120

Balance
Debit
Credit
Account No. 130

Balance
Debit
Credit
Account No. 140

Balance
Debit
ACCOUNTS RECEIVABLE
Date
Item
Post.
Ref.
Debit
OFFICE SUPPLIES
Date
Item
Post.
Ref.
Debit
OFFICE FURNITURE
Date
Item
Post.
Ref.
Debit
Page 37 of 118
ACCOUNTS PAYABLE
Date
Item
Post.
Ref.
Debit
Credit
Account No. 210

Balance
Debit
Credit
Account No. 220

Balance
Debit
Credit
Account No. 310

Balance
Debit
Credit
Account No. 320

Balance
Debit
Credit
Account No. 410

Balance
Debit
Credit
Account No. 510

Balance
Debit
UTILITIES PAYABLE
Date
Item
Post.
Ref.
Debit
PEEL, CAPITAL
Date
Item
Post.
Ref.
Debit
PEEL, WITHDRAWALS
Date
Item
Post.
Ref.
Debit
SERVICE REVENUE
Date
Item
Post.
Ref.
Debit
SALARIES EXPENSE
Date
Item
Post.
Ref.
Debit
Page 38 of 118

RENT EXPENSE
Date
Item
Post.
Ref.
Debit
Credit
Account No. 520

Balance
Debit
Credit
Account No. 530

Balance
Debit
UTILITIES EXPENSE
Date
Item
Post.
Ref.
Debit
Requirement 3
Acct. No.
TORI PEEL, CPA

Trial Balance
June 30, 2016
Account Name
Debit
Page 39 of 118
ure, 140; Accounts

Withdrawals, 320;
, 520; Utilities
Credit
Page 40 of 118
Credit
Account No. 110

Balance
Credit
Account No. 120

Balance
Credit
Account No. 130

Balance
Credit
Account No. 140

Balance
Credit
Page 41 of 118
Account No. 210

Balance
Credit
Account No. 220

Balance
Credit
Account No. 310

Balance
Credit
Account No. 320

Balance
Credit
Account No. 410

Balance
Credit
Account No. 510

Balance
Credit
Page 42 of 118

Account No. 520
Balance
Credit
Account No. 530

Balance
Credit
Credit
Page 43 of 118

E2-25
Requirements
1. For each of these errors, state whether total debits equal total credits on the
trial balance.
2. Identify each account that has an incorrect balance, and the amount and
direction of the error (such as Accounts Receivable $500 too high).
Solution:
Debits equal Credits,
Yes or No
Accounts
Amount
High or Low
a.
b.
c.
d.
e.
Page 44 of 118

E2-26
Prepare the corrected trial balance as of November 30, 2016. Assume all amounts
are correct and all accounts have normal balances.
Solution:
Account Title
TOWN AND COUNTRY PAINTING SPECIALISTS

Trial Balance
November 30, 2016
Balance
Debit
Credit
Page 45 of 118

E2-27
Prepare the corrected trial balance as of May 31, 2016, complete with a heading;
journal entries are not required.
Solution:
CARLA MADOCK TUTORING SERVICE
Trial Balance
May 31, 2016
Account Title
Balance
Debit
Credit
Explanation:
a.
b.
c.
d.
Page 46 of 118

E2-28
Calculate the debt ratio for Jason Hilton, M.D.
Solution:
Liabilities:
Assets:
Page 47 of 118
Page 48 of 118

P2-29A
Requirements
1. Journalize each transaction. Explanations are not required.
2. Post the journal entries to the T-accounts, using transaction dates as posting
references in the ledger accounts. Label the balance of each account Bal.
3. Prepare the trial balance of Vincent Yarwood, M.D. as of July 31, 2017.
Solution:
Requirement 1
Date
Posting
Ref.
Debit
Credit
Page 49 of 118
Date
Posting
Ref.
Debit
Credit
Requirement 2
Cash
Accounts Payable
Accounts Receivable
Advertising Payable
Office Supplies
Unearned Revenue
Page 50 of 118
Yarwood, Capital
Notes Payable
Land
Yarwood, Withdrawals
Service Revenue
Utilities Expense
Salaries Expense
Rent Expense
Advertising Expense
Page 51 of 118
Requirement 3
VINCENT YARWOOD, MD
Trial Balance
July 31, 2017
Account Title
Balance
Debit
Credit
Page 52 of 118

P2-30A
Requirements
1. Record each transaction in the journal using the following account titles: Cash;
Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Land;
Accounts Payable; Utilities Payable; Unearned Revenue; Stann, Capital;
Stann, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense.
Explanations are not required.
2. Open a T-account for each of the accounts.
4. Prepare the trial balance of Doris Stann, Designer, as of September 30, 2017.
Solution:
Requirement 1
Date
Posting
Ref.
Debit
Credit
Page 53 of 118
Date
Posting
Ref.
Debit Credit
Page 54 of 118

Cash
Accounts Payable
Utilities Payable
Accounts Receivable
Unearned Revenue
Office Supplies
Stann, Capital
Prepaid Insurance
Stann, Withdrawals
Land
Service Revenue
Page 55 of 118
Furniture
Utilities Expense
Salaries Expense
Rent Expense
Requirement 4
DORIS STANN, DESIGNER
Trial Balance
September 30, 2017.
Account Title
Balance
Debit
Credit
Page 56 of 118

P2-31A
Requirements
1. Record each transaction in the journal, using the following account titles: Cash;
Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Building;
Land; Accounts Payable; Utilities Payable; Notes Payable; Monroe, Capital;
Monroe, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; and Utilities
Expense. Explanations are not required.
2. Open the following four-column accounts including account numbers:
Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid
Insurance, 131; Furniture, 141; Building, 151; Land, 161; Accounts
Payable, 201; Utilities Payable, 211; Notes Payable, 221; Monroe, Capital, 301;
Monroe, Withdrawals, 311; Service Revenue, 411; Salaries Expense, 511;
Rent Expense, 521; and Utilities Expense, 531.
3. Post the journal entries to four-column accounts in the ledger, using dates,
account numbers, journal references, and posting references. Assume the journal
entries were recorded on page 1 of the journal.
4. Prepare the trial balance of Timothy Monroe, Attorney, at January 31, 2017.
Solution:
Requirement 1 and 3
Date
Posting
Ref.
Debit
Credit
Page 57 of 118
Date
Posting
Ref.
Debit
Credit
Page 58 of 118

CASH
Date
Item
Post.
Ref.
Debit
Account No. 101

Balance
Credit
Debit
Credit
ACCOUNTS RECEIVABLE
Date
Item
Post.
Ref.
Debit
Credit
Account No. 111

Balance
Debit
Credit
Credit
Account No. 121

Balance
Debit
Credit
Credit
Account No. 131

Balance
Debit
Credit
Credit
Account No. 141

Balance
Debit
Credit
Credit
Account No. 151

Balance
Debit
Credit
OFFICE SUPPLIES
Date
Item
Post.
Ref.
Debit
PREPAID INSURANCE
Date
Item
Post.
Ref.
Item
Post.
Ref.
Debit
FURNITURE
Date
Debit
BUILDING
Date
Item
Post.
Ref.
Debit
Page 59 of 118

LAND
Date
Item
Post.
Ref.
Debit
Credit
Account No. 161

Balance
Debit
Credit
Credit
Account No. 201

Balance
Debit
Credit
Credit
Account No. 211

Balance
Debit
Credit
Credit
Account No. 221

Balance
Debit
Credit
Credit
Account No. 301

Balance
Debit
Credit
Credit
Account No. 311

Balance
Debit
Credit
Credit
Account No. 411

Balance
Debit
Credit
Credit
Account No. 511

Balance
Debit
Credit
ACCOUNTS PAYABLE
Date
Item
Post.
Ref.
Debit
UTILITIES PAYABLE
Date
Item
Post.
Ref.
Debit
NOTES PAYABLE
Date
Item
Post.
Ref.
Debit
MONROE, CAPITAL
Date
Item
Post.
Ref.
MONROE, WITHDRAWALS
Post.
Date
Item
Ref.
Debit
Debit
SERVICE REVENUE
Date
Item
Post.
Ref.
Debit
SALARIES EXPENSE
Date
Item
Post.
Ref.
Debit
Page 60 of 118
RENT EXPENSE
Date
Item
Post.
Ref.
Debit
Credit
Account No. 521

Balance
Debit
Credit
Credit
Account No. 531

Balance
Debit
Credit
UTILITIES EXPENSE
Date
Item
Post.
Ref.
Debit
Requirement 4
TIMOTHY MONROE, ATTORNEY
Trial Balance
January 31, 2017
Account Title
Balance
Debit
Credit
Page 61 of 118

P2-32A
Requirements
1. Record the April transactions in the journal.
2. Open the four-column ledger accounts listed in the trial balance, together with
their balances as of March 31.
3. Post the journal entries to four-column accounts in the ledger, using dates, account
numbers, journal references, and posting references. Assume the journal
4. Prepare the trial balance of Steve Mentz, CPA, at April 30, 2017.
Solution:
Requirement 1
Date
Posting
Ref.
Debit
Credit
Page 62 of 118
Date
Posting
Ref.
Debit
Credit
Page 63 of 118
CASH
Date
Item
Post.
Ref.
Debit
Credit
ACCOUNTS RECEIVABLE
Date
Item
Post.
Ref.
Debit
Credit
Account No. 12
Balance
Debit
Credit
Credit
Account No. 13
Balance
Debit
Credit
Credit
Account No. 14
Balance
Debit
Credit
OFFICE SUPPLIES
Date
Item
Post.
Ref.
Debit
FURNITURE
Date
Item
Post.
Ref.
Debit
Account No. 11
Balance
Debit
Credit
Page 64 of 118
AUTOMOBILE
Date
Item
Post.
Ref.
Debit
Credit
Account No. 15
Balance
Debit
Credit
Credit
Account No. 16
Balance
Debit
Credit
Credit
Account No. 21
Balance
Debit
Credit
Credit
Account No. 22
Balance
Debit
Credit
Credit
Account No. 31
Balance
Debit
Credit
Credit
Account No. 33
Balance
Debit
Credit
Credit
Account No. 41
Balance
Debit
Credit
LAND
Date
Item
Post.
Ref.
Debit
ACCOUNTS PAYABLE
Date
Item
Post.
Ref.
Debit
UNEARNED REVENUE
Date
Item
Post.
Ref.
Debit
MENTZ, CAPITAL
Date
Item
Post.
Ref.
Debit
MENTZ, WITHDRAWALS
Date
Item
Post.
Ref.
Debit
SERVICE REVENUE
Date
Item
Post.
Ref.
Debit
Page 65 of 118
SALARIES EXPENSE
Date
Item
Post.
Ref.
Debit
Credit
Account No. 51
Balance
Debit
Credit
Credit
Account No. 52
Balance
Debit
Credit
RENT EXPENSE
Date
Item
Post.
Ref.
Debit
Requirement 4
Acct. No.
STEVE MENTZ, CPA

Trial Balance
April 30, 2017
Account Title
Balance
Debit
Credit
Page 66 of 118
Page 67 of 118

P2-33A
Prepare the corrected trial balance as of August 31, 2017. Journal entries are not
required.
Solution:
CREATIVE CHILD CARE
Trial Balance
August 31, 2017
Account Title
Balance
Debit
Credit
Explanations:
Page 68 of 118

P2-34A
Requirements
1. Prepare the income statement for the month ended July 31, 2017.
2. Prepare the statement of owner's equity for the month ended July 31, 2017.
The beginning balance of capital was $0 and the owner contributed $24,000.
3. Prepare the balance sheet as of July 31, 2017.
4. Calculate the debt ratio as of July 31, 2017.
Solution:
Requirement 1
SANDRA SOUSA, REGISTERED DIETICIAN
Income Statement
Month Ended July 31, 2017
Page 69 of 118
Requirement 2
Statement of Owners Equity
Requirements 3
Balance Sheet
July 31, 2017
Assets
Liabilities
Owner's Equity
Requirements 4
Page 70 of 118
Page 71 of 118
ly 31, 2017.
ted $24,000.
Page 72 of 118
ties
Equity
Page 73 of 118
Page 74 of 118

P2-35B
Requirements
1. Journalize each transaction. Explanations are not required.
3. Prepare the trial balance of Vito York, M.D. as of March 31, 2017.
Solution:
Requirement 1
Date
Posting
Ref.
Debit
Credit
Page 75 of 118
Date
Posting
Ref.
Debit
Credit
Requirement 2
Cash
Accounts Payable
Accounts Receivable
Advertising Payable
Office Supplies
Unearned Revenue
Page 76 of 118
York, Capital
Notes Payable
Land
York, Withdrawals
Service Revenue
Utilities Expense
Salaries Expense
Rent Expense
Advertising Expense
Page 77 of 118
Requirement 3
VITO YORK, MD
Trial Balance
March 31, 2017
Account Title
Balance
Debit
Credit
Page 78 of 118

P2-36B
Requirements
1. Record each transaction in the journal using the following account titles: Cash;
Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Land;
Accounts Payable; Utilities Payable; Unearned Revenue; Sikes, Capital;
Sikes, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense.
Explanations are not required.
2. Open a T-account for each of the accounts.
4. Prepare the trial balance of Deb Sikes, Designer, as of November 30, 2017.
Solution:
Requirement 1
Date
Posting
Ref.
Debit
Credit
Page 79 of 118
Date
Posting
Ref.
Debit
Credit
Page 80 of 118

Cash
Accounts Payable
Utilities Payable
Accounts Receivable
Unearned Revenue
Office Supplies
Sikes, Capital
Prepaid Insurance
Sikes, Withdrawals
Page 81 of 118
Land
Service Revenue
Furniture
Utilities Expense
Salaries Expense
Rent Expense
Page 82 of 118

Requirement 4
DEB SIKES,DESIGNER
Trial Balance
November 30, 2017
Account Title
Balance
Debit
Credit
Page 83 of 118

P2-37B
Requirements
1. Record each transaction in the journal, using the following account titles: Cash;
Accounts Receivable; Office Supplies; Prepaid Insurance; Furniture; Building;
Land; Accounts Payable; Utilities Payable; Notes Payable; Moore, Capital;
Moore, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; and Utilities
Expense. Explanations are not required.
2. Open the following four-column accounts including account numbers:
Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid
Insurance, 131; Furniture, 141; Building, 151; Land, 161; Accounts
Payable, 201; Utilities Payable, 211; Notes Payable, 221; Moore, Capital, 301;
Moore, Withdrawals, 311; Service Revenue, 411; Salaries Expense, 511;
Rent Expense, 521; and Utilities Expense, 531.
3. Post the journal entries to four-column accounts in the ledger, using dates,
account numbers, journal references, and posting references. Assume the journal
4. Prepare the trial balance of Trevor Moore, Attorney, at April 30, 2017.
Solution:
Requirement 1 and 3
Date
Posting
Ref.
Debit
Credit
Page 84 of 118
Date
Posting
Ref.
Debit
Credit
Page 85 of 118

CASH
Date
Item
Post.
Ref.
ACCOUNTS RECEIVABLE
Post.
Date
Item
Ref.
Debit
Debit
Credit
Credit
Account No. 111

Balance
Debit
Credit
Credit
Account No. 121

Balance
Debit
Credit
Credit
Account No. 131

Balance
Debit
Credit
Credit
Account No. 141

Balance
Debit
Credit
Credit
Account No. 151

Balance
Debit
Credit
OFFICE SUPPLIES
Date
Item
Post.
Ref.
Debit
PREPAID INSURANCE
Date
Item
Post.
Ref.
Debit
FURNITURE
Date
Item
Post.
Ref.
Debit
BUILDING
Date
Item
Post.
Ref.
Debit
Account No. 101

Balance
Debit
Credit
Page 86 of 118
LAND
Date
Item
Post.
Ref.
Debit
Credit
Account No. 161

Balance
Debit
Credit
Credit
Account No. 201

Balance
Debit
Credit
Credit
Account No. 211

Balance
Debit
Credit
Credit
Account No. 221

Balance
Debit
Credit
Credit
Account No. 301

Balance
Debit
Credit
Credit
Account No. 311

Balance
Debit
Credit
Credit
Account No. 411

Balance
Debit
Credit
ACCOUNTS PAYABLE
Date
Item
Post.
Ref.
Debit
UTILITIES PAYABLE
Date
Item
Post.
Ref.
Debit
NOTES PAYABLE
Date
Item
Post.
Ref.
Debit
MOORE, CAPITAL
Date
Item
Post.
Ref.
MOORE, WITHDRAWALS
Post.
Date
Item
Ref.
Debit
Debit
SERVICE REVENUE
Date
Item
Post.
Ref.
Debit
Page 87 of 118
Page 88 of 118

SALARIES EXPENSE
Date
Item
Post.
Ref.
Debit
Credit
Account No. 511

Balance
Debit
Credit
Credit
Account No. 521

Balance
Debit
Credit
Credit
Account No. 531

Balance
Debit
Credit
RENT EXPENSE
Date
Item
Post.
Ref.
Debit
UTILITIES EXPENSE
Date
Item
Post.
Ref.
Debit
Page 89 of 118
Requirement 4
TREVOR MOORE, ATTORNEY
Trial Balance
April 30, 2017
Account Title
Balance
Debit
Credit
Page 90 of 118

P2-38B
Requirements
1. Record the April transactions in the journal using the following accounts: Cash;
Accounts Receivable; Office Supplies; Furniture; Automobile; Land; Accounts
Payable; Unearned Revenue; Howe, Capital; Howe, Withdrawals; Service Revenue;
Salaries Expense; and Rent Expense. Include an explanation for each entry.
2.
Open the four-column ledger accounts listed in the trial balance, together
with their balances as of March 31. Use the following account numbers: Cash,
11; Accounts Receivable, 12; Office Supplies, 13; Furniture, 14; Automobile,
15; Land, 16; Accounts Payable, 21; Unearned Revenue, 22; Howe, Capital, 31;
Howe, Withdrawals; 33; Service Revenue, 41; Salaries Expense, 51; and Rent
Expense, 52.
3. Post the journal entries to four-column accounts in the ledger, using dates, account
numbers, journal references, and posting references. Assume the journal
4. Prepare the trial balance of James Howe, CPA, at April 30, 2017.
Solution:
Requirement 1
Date
Posting
Ref.
Debit
Credit
Page 91 of 118
Date
Posting
Ref.
Debit
Credit
Page 92 of 118
CASH
Date
Item
Post.
Ref.
Debit
Account No. 11
Balance
Credit
Debit
Credit
Debit
Account No. 12
Balance
Credit
Debit
Credit
Debit
Account No. 13
Balance
Credit
Debit
Credit
ACCOUNTS RECEIVABLE
Date
Item
Post.
Ref.
OFFICE SUPPLIES
Date
Item
Post.
Ref.
Page 93 of 118

FURNITURE
Date
Item
Post.
Ref.
Debit
Account No. 14
Balance
Credit
Debit
Credit
Debit
Account No. 15
Balance
Credit
Debit
Credit
Debit
Account No. 16
Balance
Credit
Debit
Credit
Debit
Account No. 21
Balance
Credit
Debit
Credit
Debit
Account No. 22
Balance
Credit
Debit
Credit
Debit
Account No. 31
Balance
Credit
Debit
Credit
AUTOMOBILE
Date
Item
Post.
Ref.
LAND
Date
Item
Post.
Ref.
ACCOUNTS PAYABLE
Date
Item
Post.
Ref.
UNEARNED REVENUE
Date
Item
Post.
Ref.
HOWE, CAPITAL
Date
Item
Post.
Ref.
Page 94 of 118

HOWE, WITHDRAWALS
Date
Item
Post.
Ref.
Debit
Account No. 33
Balance
Credit
Debit
Credit
Debit
Account No. 41
Balance
Credit
Debit
Credit
Debit
Account No. 51
Balance
Credit
Debit
Credit
Debit
Account No. 52
Balance
Credit
Debit
Credit
SERVICE REVENUE
Date
Item
Post.
Ref.
SALARIES EXPENSE
Date
Item
Post.
Ref.
RENT EXPENSE
Date
Item
Post.
Ref.
Page 95 of 118
Requirement 4
JAMES HOWE, CPA
Trial Balance
April 30, 2017
Acct. No. Account Title
Balance
Debit
Credit
Page 96 of 118

P2-39B
Prepare the corrected trial balance as of May 31, 2015. Journal entries
are not required.
Solution:
LEARN FOR LIFE CHILD CARE
Trial Balance
May 31, 2017
Account Title
Balance
Debit
Credit
Explanations:
Page 97 of 118
Page 98 of 118

P2-40B
Requirements
1. Prepare the income statement for the month ended July 31, 2017.
2. Prepare the statement of owner's equity for the month ended July 31, 2017. The
beginning balance of capital was $0 and the owner contributed $26,000.
3. Prepare the balance sheet as of July 31, 2017.
4. Calculate the debt ratio as of July 31, 2017.
Solution:
Requirement 1
SARAH SILK, REGISTERED DIETICIAN
Income Statement
Page 99 of 118

Requirement 2
Requirements 3
Balance Sheet
July 31, 2017
Assets
Liabilities
Owner's Equity
Requirements 4
Page 100 of 118

P2-41
Requirements
1.
Journalize the transactions, using the following accounts: Cash; Accounts

Receivable; Office Supplies; Equipment; Furniture; Accounts Payable;
Unearned Revenue; Daniels, Capital; Daniels, Withdrawals; Service Revenue; Rent
Expense; and Utilities Expense. Explanations are not required.
2.
Open a T-account for each of the accounts.
3.
Post the journal entries to the T-accounts and calculate account balances.
Formal posting references are not required.
4.
Prepare a trial balance as of December 31, 2016.
5.
Prepare the income statement of Davis Consulting for the month ended
December 31, 2016.
6.
Prepare the statement of owner's equity for the month ended December 31,
2016.
7.
Prepare the balance sheet as of December 31, 2016.
8.
Calculate the debt ratio for Daniels Consulting.
Page 101 of 118

Solution:
Requirement 1
Date
Posting
Ref.
Debit
Credit
Page 102 of 118
Date
Posting
Ref.
Debit
Credit
Cash
Accounts Payable
Accounts Receivable
Unearned Revenue
Office Supplies
Daniels, Capital
Equipment
Daniels, Withdrawals
Page 103 of 118

Furniture
Service Revenue
Rent Expense
Utilities Expense
Requirement 4
DANIELS CONSULTING
Trial Balance
December 31, 2016
Account Title
Balance
Debit
Credit
Page 104 of 118

Requirement 5
DANIELS CONSULTING
Income Statement
Month Ended December 31, 2016
Requirement 6
DANIELS CONSULTING
Month Ended December 31, 2016
Page 105 of 118

Requirement 7
DANIELS CONSULTING
Balance Sheet
December 31, 2016
Assets
Liabilities
Requirement 8
Page 106 of 118

P2-42
Requirements
1. Journalize the transactions, using the following accounts: Cash; Accounts
Receivable; Cleaning Supplies; Prepaid Rent; Prepaid Insurance; Equipment;
Truck; Accounts Payable; Unearned Revenue; Notes Payable; Habib, Capital;
Habib, Withdrawals; Service Revenue; Salaries Expense; Advertising Expense; and
Utilities Expense. Explanations are not required.
2. Open a T-account for each account.
3. Post the journal entries to the T-accounts and calculate account balances.
Formal posting references are not required.
4. Prepare a trial balance as of November 30, 2017.
Solution:
Requirement 1
Date
Posting
Ref.
Debit
Credit
Page 107 of 118
Date
Posting
Ref.
Debit
Credit
Page 108 of 118

Cash
Accounts Payable
Accounts Receivable
Unearned Revenue
Cleaning Supplies
Notes Payable
Prepaid Rent
Habib, Capital
Prepaid Insurance
Habib, Withdrawals
Page 109 of 118

Equipment
Service Revenue
Truck
Salaries Expense
Utilities Expense
Advertising Expense
Page 110 of 118

Requirement 4
CRYSTAL CLEAR CLEANING
Trial Balance
November 30, 2017
Account Title
Balance
Debit
Credit
Page 111 of 118

Decision Case 2-1
Requirements
1. Open the following T-accounts: Cash; Accounts Receivable; Office Supplies;
Accounts Payable; McChesney, Capital; Service Revenue; Salaries Expense; Rent
Expense; and Advertising Expense.
2. Post the transactions directly to the accounts without using a journal. Record
each transaction by letter. Calculate account balances.
3. Prepare a trial balance at June 30, 2016.
4. Compute the amount of net income or net loss for this first month of operations.
Would you recommend that McChesney continue in business?
Solution:
Cash
Accounts Payable
Accounts Receivable
McChesney, Capital
Office Supplies
Service Revenue
Page 112 of 118
Rent Expense
Salaries Expense
Advertising Expense
Requirement 3
A-PLUS TRAVEL PLANNERS
Trial Balance
June 30, 2016
Account Title
Balance
Debit
Credit
Page 113 of 118
Requirement 4
Page 114 of 118

Ethical Issue 2-1
What is the ethical issue in this situation, if any? State why you approve or
disapprove of Hensons management of Better Days Aheads funds.
Solution:
Page 115 of 118

Fraud Case 2-1
Requirements
1.
How did the change in the journal entries affect the net income of the
company at year-end?
2.
Who gained and who lost as a result of these actions?
Solution:
Requirement 1
Requirement 2
Page 116 of 118

Financial Statement Case 2-1
Requirement
1. Calculate the debt ratio for Starbucks Corporation as of September 29, 2013.
2. How did the debt ratio for Starbucks Corporation compare to the debt ratio for Green
Mountain Coffee Roasters, Inc.? Discuss.
Solution:
Requirement 1
Requirement 2
Page 117 of 118

Communication Activity 2-1
In 35 words or fewer, explain the difference between a debit and a credit, and explain
what the normal balance of the six account types is.
Solution:
Page 118 of 118

Nobles Horngrenacct11 Ch02 Working Paper

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HORNGREN'S ACCOUNTING - Eleventh Edition

Accounting uses a double-entry system. Explain what this sentence means.

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

When are debits increases? When are debits decreases?

When are credits increases? When are credits decreases?

What are source documents? Provide examples of source documents that a

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

11. Explain the five steps in journalizing and posting transactions.

12. What are the four parts of a journal entry?

13. What is involved in the posting process?

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

14. What is the purpose of the trial balance?

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Accounts and Explanation

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Accounts and Explanation

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Accounts and Explanation

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Accounts and Explanation

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Chapter 2: Recording Business Transactions

HORNGREN'S ACCOUNTING - Eleventh Edition

Accounts and Explanation