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2. Record each transaction in the journal, using the account titles given. Key each
transaction by date. Explanations are not required.
3. Post the transactions to T-accounts, using transaction dates as posting references
in the ledger. Label the balance of each account Bal, as shown in the chapter.
4. Prepare the trial balance of Vince Smith, Attorney, at March 31, 2010.

P2-31A (L. OBJ. 2, 3, 4, 5) Journalizing transactions, posting to accounts in four-column

format, and preparing a trial balance [45–60 min]
The trial balance of Seth Knoll, CPA, is dated November 30, 2011:

SETH KNOLL, CPA

Trial Balance
November 30, 2011
Account No. Account Debit Credit
11 Cash $ 3,000
12 Accounts receivable 8,700
13 Supplies 700
14 Land 16,000
21 Accounts payable $ 4,200
31 Seth Knoll, Capital 24,200
32 Seth Knoll, Withdrawals
41 Service revenue
51 Salary expense
52 Rent expense
Total $ 28,400 $ 28,400

During December, Knoll or his business completed the following transactions:

Dec 4 Collected $5,000 cash from a client on

account.
8 Performed tax services for a client on account,
$4,500.
13 Paid business debt on account, $2,300.
18 Purchased office supplies on account, $800.
20 Knoll withdrew $1,900.
21 Knoll paid for a deck for his private residence,
using personal funds, $9,000.
22 Received $2,200 cash for consulting work just
completed.
28 Paid office rent, $400.
28 Paid employee salary, $1,200.

Requirements
1. Record the December transactions in the journal. Include an explanation for
each entry.
2. Post the transactions to four-column accounts in the ledger, using dates,
account numbers, journal references, and posting references. Open the ledger
accounts listed in the trial balance, together with their balances at
November 30.
3. Prepare the trial balance Seth Knoll, CPA, at December 31, 2011.

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P2-32A (L. OBJ. 2, 3, 4, 5) Journalizing transactions, posting to T-accounts, and

preparing a trial balance [45–60 min]
The trial balance of Shelley Summers, Registered Dietician, at December 31, 2010,
follows.

SHELLEY SUMMERS, REGISTERED DIETICIAN

Trial Balance
December 31, 2010
Account No. Account Debit Credit
11 Cash $ 4,000
12 Accounts receivable 8,300
13 Supplies 800
14 Equipment 16,000
21 Accounts payable $ 5,500
31 Shelley Summers, Capital 23,600
32 Shelley Summers, Withdrawals
41 Service revenue
51 Salary expense
52 Rent expense
Total $ 29,100 $ 29,100

During January, Summers or her business completed the following transactions:

Jan 4 Collected $5,000 cash from a client on account.

7 Performed a nutritional analysis for a hospital on
account, $6,400.
12 Summers used personal funds to pay for the
renovation of her private residence, $53,000.
16 Purchased supplies on account, $600.
19 Summers withdrew $2,200.
20 Paid business debt on account, $2,600.
24 Received $2,400 cash for consulting with Pelican
Foods.
31 Paid rent, $700.
31 Paid employee salary, $1,500.

Requirements
1. Record the January transactions in the business’s journal. Include an explanation
for each entry.
2. Post the transactions to four-column accounts in the ledger, using dates, account
numbers, journal references, and posting references.
3. Prepare the trial balance of Shelley Summers, Registered Dietician, at
January 31, 2011.

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P2-33A (L. OBJ. 2, 3, 4, 5) Recording transactions, using four-column accounts,

posting, and preparing a trial balance [45–60 min]
Mike Smith started an environmental consulting company and during the first month
of operations (December 2012) the business completed the following transactions:

a. Smith began the business with an investment of $49,000 cash

and a building at $22,000. The business issued $71,000 of
capital to Smith.
b. Purchased office supplies on account, $2,300.
c. Paid $16,000 for office furniture.
d. Paid employee’s salary, $1,900.
e. Performed consulting services on account, $3,300.
f. Paid $500 of the account payable created in transaction (b).
g. Received a $500 bill for advertising expense that will be paid in
the near future.
h. Performed consulting service for cash, $900.
i. Received cash on account, $1,600.
j. Paid the following cash expenses:
(1) Rent on equipment, $1,000.
(2) Utilities, $800.
k. Smith withdrew $3,000.

Requirements
1. Open the following four-column accounts: Cash; Accounts receivable; Office
supplies; Office furniture; Building; Accounts payable; Mike Smith, Capital;
Mike Smith, Withdrawals; Service revenue; Salary expense; Rent expense;
Advertising expense; Utilities expense.
2. Record each transaction in the journal. Use the letters to identify the transactions.
3. Post to the accounts and keep a running balance for each account.
4. Prepare the trial balance of Smith Environmental Consulting Company at
December 31, 2012.

P2-34A (L. OBJ. 2, 3, 4, 5) Recording transactions, using four-column accounts,

posting, and preparing a trial balance [45–60 min]
Val Vaughn started Vaughn Carpet Installers, and during the first month of operations
(December 2011) the business completed the following selected transactions:

a. Vaughn began the business with an investment of $43,000 cash

and an automobile worth $26,000. The business issued $69,000
of capital to Vaughn.
b. Paid $36,000 for equipment.
c. Purchased supplies on account, $400.
d. Paid employee’s salary, $1,600.
e. Received $1,100 for a carpet installation job.
f. Received a $500 bill for advertising expense that will be paid in
the near future.
g. Paid the account payable created in transaction (c).
h. Installed carpet for a hotel on account, $1,700.
i. Received cash on account, $1,700.
j. Paid the following cash expenses:
(1) Rent, $1,100.
(2) Insurance, $900.
k. Vaughn withdrew $2,000.

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Requirements
1. Open the following four-column accounts: Cash; Accounts receivable; Supplies;
Equipment; Automobile; Accounts payable; Val Vaughn, Capital; Val Vaughn,
Withdrawals; Service revenue; Salary expense; Rent expense; Advertising
expense; and Insurance expense.
2. Record the transactions in the journal. Use the letters to identify the transactions.
3. Post to the accounts and keep a running balance for each account.
4. Prepare the trial balance of Vaughn Carpet Installers at December 31, 2011.

P2-35A (L. OBJ. 2, 5) Correcting errors in a trial balance [15–25 min]

The trial balance of Kind Care Child Care does not balance.

KIND CARE CHILD CARE

Trial Balance
April 30, 2012
Account Debit Credit
Cash $ 6,600
Accounts receivable 8,000
Supplies 600
Equipment 89,000
Accounts payable $ 55,000
Ron Lazer, Capital 50,700
Ron Lazer, Withdrawals 2,300
Service revenue 4,500
Salary expense 4,100
Rent expense 800
Total $ 111,400 $ 110,200

The following errors are detected:

a. Cash is understated by $2,000.

b. A $1,000 debit to Accounts receivable was posted as a credit.
c. A $1,400 purchase of supplies on account was neither
journalized nor posted.
d. Equipment’s cost is $84,300 not $89,000
e. Salary expense is overstated by $500.

Requirement
1. Prepare the corrected trial balance at April 30, 2012. Journal entries are not
required.

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P2-36A (L. OBJ. 2, 5) Correcting errors in a trial balance [15–25 min]

The trial balance for Gold Rush Exploration Company does not balance.

GOLD RUSH EXPLORATION COMPANY

Trial Balance
October 31, 2012
Account Debit Credit
Cash $ 6,200
Accounts receivable 1,000
Supplies 700
Exploration equipment 22,400
Computers 46,000
Accounts payable $ 2,500
Note payable 18,400
Ozzy Faulk, Capital 50,800
Ozzy Faulk, Withdrawals 8,000
Service revenue 4,200
Salary expense 1,200
Rent expense 500
Advertising expense 700
Utilities expense 100
Total $ 86,800 $ 75,900

The following errors were detected:

a. The cash balance is overstated by $2,000.

b. Rent expense of $390 was erroneously posted as a credit rather than a debit.
c. A $6,600 credit to Service revenue was not posted.
d. A $200 debit to Accounts receivable was posted as $20.
e. The balance of Utilities expense is understated by $10.
f. A $200 purchase of supplies on account was neither journalized nor posted.
g. Exploration equipment should be $19,130.

Requirement
1. Prepare the corrected trial balance at October 31, 2012. Journal entries are not
required.

P2-37A (L. OBJ. 5) Preparing financial statements from the trial balance [20–30 min]
Link Back to Chapter 1 (Income Statement, Statement of Owner’s Equity, Balance
Sheet). Refer to Problem 2-27A. After completing the ledger in Problem 2-27A, pre-
pare the following financial statements for Party Time Amusements Company:

Requirement
1. Income statement for the month ended November 30, 2012.
2. Statement of Owner’s Equity for the month ended November 30, 2012. The
beginning balance of Capital was $0.
3. Balance sheet at November 30, 2012.

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P2-38A (L. OBJ. 5) Preparing financial statements from the trial balance [20–30 min]
Link Back to Chapter 1 (Income Statement, Statement of Owner’s Equity, Balance
Sheet). Refer to Problem 2-28A. After completing the trial balance in Problem 2-28A,
prepare the following financial statements for William White. M.D.:

Requirement
1. Income statement for the month ended January 31, 2010.
2. Statement of Owner’s Equity for the month ended January 31, 2010. The begin-
ning balance of Capital was $0.
3. Balance sheet at January 31, 2010.

P2-39A (L. OBJ. 5) Preparing financial statements from the trial balance [20–30 min]
Link Back to Chapter 1 (Income Statement, Statement of Owner’s Equity, Balance
Sheet). Refer to Problem 2-29A. After completing the trial balance in Problem 2-29A,
prepare the following financial statements for Donna White, Designer:

Requirement
1. Income statement for the month ended January 31, 2010.
2. Statement of Owner’s Equity for the month ended January 31, 2010. The begin-
ning balance of Capital was $0.
3. Balance sheet at January 31, 2010.

P2-40A (L. OBJ. 5) Preparing financial statements from the trial balance [20–30 min]
Link Back to Chapter 1 (Income Statement, Statement of Owner’s Equity, Balance
Sheet). Refer to Problem 2-30A. After completing the trial balance in Problem 2-30A,
prepare the following financial statements for Vince Smith, Attorney:

Requirement
1. Income statement for the month ended March 31, 2010.
2. Statement of Owner’s Equity for the month ended March 31, 2010. The begin-
ning balance of Capital was $0.
3. Balance sheet at March 31, 2010.

P2-41A (L. OBJ. 5) Preparing financial statements from the trial balance [20–30 min]
Link Back to Chapter 1 (Income Statement, Statement of Owner’s Equity,
Balance Sheet). Refer to Problem 2-31A. After completing the trial balance in
Problem 2-31A, prepare the following financial statements for Seth Knoll, CPA, at
December 31, 2011:

Requirement
1. Income statement for the month ended December 31, 2011.
2. Statement of Owner’s Equity for the month ended December 31, 2011.
3. Balance sheet at December 31, 2011.

P2-42A (L. OBJ. 5) Preparing financial statements from the trial balance [20–30 min]
Link Back to Chapter 1 (Income Statement, Statement of Owner’s Equity,
Balance Sheet). Refer to Problem 2-32A. After completing the trial balance in
Problem 2-32A, prepare the following financial statements for Shelley Summers,
Registered Dietician:

Requirement
1. Income statement for the month ended January 31, 2011.
2. Statement of Owner’s Equity for the month ended January 31, 2011.
3. Balance sheet at January 31, 2011.
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P2-43A (L. OBJ. 5) Preparing financial statements from the trial balance [20–30 min]
Link Back to Chapter 1 (Income Statement, Statement of Owner’s Equity, Balance
Sheet). Refer to Problem 2-33A. After completing the trial balance in Problem 2-33A,
prepare the following financial statements for Smith Environmental Consulting
Company:

Requirement
1. Income statement for the month ended December 31, 2012.
2. Statement of Owner’s Equity for the month ended December 31, 2012. The
beginning balance of Capital was $0.
3. Balance sheet at December 31, 2012.

P2-44A (L. OBJ. 5) Preparing financial statements from the trial balance [20–30 min]
Link Back to Chapter 1 (Income Statement, Statement of Owner’s Equity, Balance
Sheet). Refer to Problem 2-34A. After completing the trial balance in Problem 2-34A,
prepare the following financial statements for Vaughn Carpet Installers:

Requirement
1. Income statement for the month ended December 31, 2011.
2. Statement of Owner’s Equity for the month ended December 31, 2011.
3. Balance sheet at December 31, 2011.

䊏 Problems (Group B)
P2-45B (L. OBJ. 2, 3, 4, 5) Analyzing and journalizing transactions, posting, and
preparing a trial balance [40–50 min]
Big Screen Amusements Company owns movie theaters. Big Screen engaged in the
following business transactions in 2012:

Aug 1 Don Cougliato invested $390,000 personal cash in the business by

depositing that amount in a bank account titled Big Screen
Amusements. The business gave capital to Cougliato.
2 Paid $300,000 cash to purchase a theater building.
5 Borrowed $210,000 from the bank. Cougliato signed a note
payable to the bank in the name of Big Screen.
10 Purchased theater supplies on account, $1,100.
15 Paid $800 on account.
15 Paid property tax expense on theater building, $1,400.
16 Paid employees’ salaries $2,300, and rent on equipment $1,700.
Make a single compound entry.
28 Owner withdrew $10,000.
31 Received $22,000 cash from service revenue and deposited that
amount in the bank.

Big Screen Amusements uses the following accounts: Cash; Supplies; Building; Accounts
payable; Notes payable; Don Cougliato, Capital; Don Cougliato, Withdrawals; Service
revenue; Salary expense; Rent expense; Property tax expense.

Requirements
1. Journalize each transaction of Big Screen as shown for August 1. Explanations
are not required.

Aug 1 Cash 390,000

Don Cougliato, Capital 390,000

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2. Post the transactions to the T-accounts, using transaction dates as posting refer-
ences in the ledger accounts. Label the balance of each account Bal, as shown in
the chapter.

P2-46B (L. OBJ. 2, 3, 4, 5) Analyzing and journalizing transactions, posting, and

preparing a trial balance [45–60 min]
Warren Smith practices medicine under the business title Warren Smith, M.D.
During April, the medical practice completed the following transactions:

Apr 1 Smith deposited $78,000 cash in the business bank account.

The business gave capital to Smith.
5 Paid monthly rent on medical equipment, $780.
9 Paid $18,000 cash to purchase land for an office site.
10 Purchased supplies on account, $1,200.
19 Borrowed $20,000 from the bank for business use. Smith signed
a note payable to the bank in the name of the business.
22 Paid $800 on account.
30 Revenues earned during the month included $5,900 cash and
$4,900 on account.
30 Paid employees’ salaries $2,000, office rent $1,800, and
utilities $420. Make a single compound entry.
30 Owner withdrew $9,000.

The business uses the following accounts: Cash; Accounts receivable; Supplies; Land;
Accounts payable; Notes payable; Warren Smith, Capital; Warren Smith, Withdrawals;
Service revenue; Salary expense; Rent expense; Utilities expense.

Requirements
1. Journalize each transaction, as shown for April 1. Explanations are not required.

Apr 1 Cash 78,000

Warren Smith, Capital 78,000

2. Post the transactions to the T-accounts, using transaction dates as posting refer-
ences in the ledger accounts. Label the balance of each account Bal, as shown in
the chapter.
3. Prepare the trial balance of Warren Smith, M.D., at April 30, 2010.

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