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    Chapter 2 Exercises

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    Đào Thị Minh Thu
    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

    Uploaded by

    Đào Thị Minh Thu
    20 views5 pages
    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

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    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.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    20 views5 pages

    Chapter 2 Exercises

    Uploaded by

    Đào Thị Minh Thu
    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.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    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. 

       

    4. Beginning owner's equity = $114,000 - $68,000 = $46,000


    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.

    5.

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