SOLUTIONS TO BRIEF EXERCISES

BRIEF EXERCISE 2-1

1.
2.
3.
4.
5.
6.

Accounts Payable
Advertising Expense
Service Revenue
Accounts Receivable
Owners Capital
Owners Drawings

(a)
Debit
Effect
Decrease
Increase
Decrease
Increase
Decrease
Increase

(b)
Credit
Effect
Increase
Decrease
Increase
Decrease
Increase
Decrease

(c)
Normal
Balance
Credit
Debit
Credit
Debit
Credit
Debit

BRIEF EXERCISE 2-2

June 1
2
3
12

Account Debited
Cash
Equipment
Rent Expense
Accounts Receivable

Account Credited
Owners Capital
Accounts Payable
Cash
Service Revenue

BRIEF EXERCISE 2-3

June 1
2
3
12

Cash......................................................................
Owners Capital ............................................

5,000

Equipment ............................................................
Accounts Payable ........................................

2,100

Rent Expense .......................................................

Cash ..............................................................

800

Accounts Receivable...........................................
Service Revenue ..........................................

300

5,000
2,100
800
300

BRIEF EXERCISE 2-4

The basic steps in the recording process are:
1.

Analyze each transaction. In this step, business documents are

examined to determine the effects of the transaction on the
accounts.

2.

Enter each transaction in a journal. This step is called

journalizing and it results in making a chronological record of
the transactions.

3.

Transfer journal information to ledger accounts. This step is

called posting. Posting makes it possible to accumulate the
effects of journalized transactions on individual accounts.

BRIEF EXERCISE 2-5

(a)
Aug.

Effect on Accounting Equation

(b)

Debit-Credit Analysis

The asset Cash is increased; the

owners equity account
Owners Capital is increased.

Debits increase assets:

debit Cash $8,000.
Credits increase owners equity:
credit Owners Capital $8,000.

The asset Prepaid Insurance is

increased; the asset Cash is
decreased.

Debits increase assets:

debit Prepaid Insurance $1,800.
Credits decrease assets:
credit Cash $1,800.

16

The asset Cash is increased; the

revenue Service Revenue is
increased.

Debits increase assets:

debit Cash $3,400.
Credits increase revenues:
credit Service Revenue $3,400.

27

The expense Salaries and Wages

Expense is increased; the asset
Cash is decreased.

Debits increase expenses:

debit Salaries and Wages Expense
$1,000.
Credits decrease assets:
credit Cash $1,000.

BRIEF EXERCISE 2-6

Aug. 1
4
16
27

Cash ......................................................................
Owners Capital ............................................

8,000

Prepaid Insurance ................................................

Cash...............................................................

1,800

Cash ......................................................................
Service Revenue ...........................................

3,400

Salaries and Wages Expense ..............................

Cash...............................................................

1,000

8,000
1,800
3,400
1,000

BRIEF EXERCISE 2-7

Cash
5/12
2,400
5/15
3,000
Ending Bal. 5,400

5/5

Accounts Receivable
4,100 5/12

Service Revenue
5/5
4,100
5/15
3,000
Ending Bal. 7,100

2,400

Ending Bal. 1,700

BRIEF EXERCISE 2-8

Cash
Date
May 12
15

Explanation

Ref.
J1
J1

Debit
2,400
3,000

Credit

Balance
2,400
5,400

BRIEF EXERCISE 2-8 (Continued)

Accounts Receivable
Date
Explanation
May 5
12

Ref.
J1
J1

Debit
4,100

Service Revenue
Date
Explanation
May 5
15

Ref.
J1
J1

Debit

Credit
2,400

Balance
4,100
1,700

Credit
4,100
3,000

Balance
4,100
7,100

BRIEF EXERCISE 2-9

DEROCHE COMPANY
Trial Balance
June 30, 2014
Debit
Credit
Cash ............................................................................
Accounts Receivable .................................................
Equipment ..................................................................
Accounts Payable ......................................................
Owners Capital..........................................................
Owners Drawings .....................................................
Service Revenue ........................................................
Salaries and Wages Expense....................................
Rent Expense .............................................................

$ 5,800
3,000
17,000
$ 9,000
15,000
1,200
10,000
6,000
1,000
$34,000

$34,000

BRIEF EXERCISE 2-10

HUEWITT COMPANY
Trial Balance
December 31, 2014
Debit
Credit
Cash ............................................................................
Prepaid Insurance ......................................................
Accounts Payable ......................................................
Unearned Service Revenue .......................................
Owners Capital..........................................................
Owners Drawings .....................................................
Service Revenue ........................................................
Salaries and Wages Expense....................................
Rent Expense .............................................................

$10,800
3,500
$ 3,000
2,200
9,000
4,500
25,600
18,600
2,400
$39,800

$39,800