1. The document provides a list of accounts and identification letters for Shannon Management Co., along with sample journal entries to record various business transactions.
2. Sample journal entries are provided to record transactions such as an owner's investment, payment of accounts payable, an owner's withdrawal, payment of salaries, purchase of equipment with part cash and part credit, completing work and receiving payment in both cash and credit, and receiving cash payment for future services.
3. The document also includes problems calculating net income based on beginning and ending asset and liability balances, with and without additional owner investments during the year, as well as sample T-account journal entries to record transactions for a new law firm.
1. The document provides a list of accounts and identification letters for Shannon Management Co., along with sample journal entries to record various business transactions.
2. Sample journal entries are provided to record transactions such as an owner's investment, payment of accounts payable, an owner's withdrawal, payment of salaries, purchase of equipment with part cash and part credit, completing work and receiving payment in both cash and credit, and receiving cash payment for future services.
3. The document also includes problems calculating net income based on beginning and ending asset and liability balances, with and without additional owner investments during the year, as well as sample T-account journal entries to record transactions for a new law firm.
1. The document provides a list of accounts and identification letters for Shannon Management Co., along with sample journal entries to record various business transactions.
2. Sample journal entries are provided to record transactions such as an owner's investment, payment of accounts payable, an owner's withdrawal, payment of salaries, purchase of equipment with part cash and part credit, completing work and receiving payment in both cash and credit, and receiving cash payment for future services.
3. The document also includes problems calculating net income based on beginning and ending asset and liability balances, with and without additional owner investments during the year, as well as sample T-account journal entries to record transactions for a new law firm.
1. The document provides a list of accounts and identification letters for Shannon Management Co., along with sample journal entries to record various business transactions.
2. Sample journal entries are provided to record transactions such as an owner's investment, payment of accounts payable, an owner's withdrawal, payment of salaries, purchase of equipment with part cash and part credit, completing work and receiving payment in both cash and credit, and receiving cash payment for future services.
3. The document also includes problems calculating net income based on beginning and ending asset and liability balances, with and without additional owner investments during the year, as well as sample T-account journal entries to record transactions for a new law firm.
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Chapter 2 exercises
1. The following is a list of accounts and identification letters A through J for Shannon Management Co.:
Use the form below to identify the type of account and its normal balance. The first item is filled in as an example.
2. a. Owner invested $30,000 cash into the company.
a. Company A paid $2,500 cash to satisfy a previously recorded account payable.
b. Mr A, one owner of the company withdrew $ 100 to pay to company X for his personal use.
c. Company A paid $5,400 cash in salaries to office personnel.
d. Company A purchased a van that cost $35,000, paid $15000 in cash and the balance will be paid later. e. Completed work for a client on credit, $500. f. Completed work for a client and received $800 cash. g. Received $500 cash for the work described in (e). h. Received $1,000 from a client for accounting services to be performed next month.
Prepare journal entries to record the above transactions.
Date Description Account name Dr Cr a1 Investment by owner Cash 30000 Contributed capital 30000 a2 pay for account payable Account payable 2500 Cash 2500 b withdrawal by owner Withdrawal 100 Cash 100 c pay salary Expense 5400 Cash 5400 d purchase equipment Equipment 35000 Cash 15000 Account payable 20000 e complete work on credit Account receivable 500 Revenue 500 f complete work for cash Cash 800 Revenue 800 g customer paid for account receivable Cash 500 Account receivable 500 h received cash for future service Cash 1000 Unearned revenue 1000
4. Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:
a. If Josephine made no investments in the business and withdrew no assets during the year, what was the amount of net income earned by Josephine's Bakery?
b. If Josephine invested an additional $12,000 in the business during the year, but withdrew no assets during the year, what was the amount of net income earned by Josephine's Bakery?
5. Maria Sanchez began business as Sanchez Law Firm on November 1. Record the following November transactions by making entries directly to the T-accounts provided.
a) Sanchez invested $15,000 cash and a law library valued at $6,000.
b) Purchased $7,500 of office equipment from Johnson Bros. on credit. c) Completed legal work for a client and received $1,500 cash in full payment. d) Paid Johnson Bros. $3,500 cash in partial settlement of the amount owed. e) Completed $4,000 of legal work for a client on credit. f) Sanchez withdrew $2,000 cash for personal use. g) Received $2,500 cash as partial payment for the legal work completed for the client in (e). h) Paid $2,500 cash for the legal secretary's salary. 1.
2.
a)
DR Accounts payable 2500
CR Cash 2500
b) DR Withdrawals 100
CR Cash 100
c)
Cash Office salaries expense
5,400 5,400
d) DR Tangible fixed asset – van 35,000
CR Accounts payable 35,000
Accounts payable Tangible assets – van
35,000 35,000 e) DR Inventories 5000
CR Cash 5000
Cash Inventories
5000 5000
3. Prepare journal entries to record the above transactions. Explanations are not necessary.
Ending owner's equity = $135,000 - $73,000 = $62,000 Increase in owner's equity = $62,000 - $46,000 = $16,000 Since there were no investments or withdrawals during the year, the net income is $16,000.
