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BE2 – 1
For each of the following accounts indicate the effects of (a) a debit and (b) a credit on the accounts and
(c) the normal balance of the account.
1. Accounts Payable.
2. Advertising Expense.
3. Service Revenue.
4. Accounts Receivable.
5. B.C. King, Capital.
6. B.C. King, Drawing.
Solution:-
Effect of the accounts
BE2-2
Transactions for the Kaustav Sen Company for the month of June are presented below. Identify the
accounts to be debited and credited for each transaction.
June 1 Kaustav Sen invests Tk 4,000 cash in a small welding business of which he is the sole
proprietor.
2 Purchases equipment on account for Tk900
3 Tk800 cash is paid to landlord for June rent.
12 Bills J .Kronsnoble Tk300 for welding work done on account
Solution:-
BE2-4
Tem Weber, a fellow student, is unclear about the basic steps in the recording process. Identify and briefly
explain the steps in the order in which they occur.
Solution:-
The basic steps in the recording process are:-
Step 1:- To analyze each transaction. N this step, business documents are examined to determine the
effects of the transaction on the accounts.
Step 2:- To enter each transaction in a journal .this step is called journalizing and its results in making
a chronological record of the transactions.
Step 3:- To transfer journal information to ledger accounts. This step is called posting. Posting makes it
possible to accumulate the effect of journalized transactions on individual accounts.
BE2-5
J. A. Motzek has the following transactions during August of the current year. Indicate (a) the effect on the
accounting equation and (b) the debit-credit analysis illustrated on pages 58–62 of the text.
Aug. 1 Opens an office as a financial advisor, investing Tk5,000 in cash.
4 Pays insurance in advance for 6 months,Tk1,800 cash.
16 Receives Tk800 from clients for services provided.
27 Pays secretary Tk1,000 salary.
Solution:-
BE2-6
Using the data in BE2-5, Journalize the transactions.(You may omit explanations.)
Solution:-
Journal
Selected transactions for the Finney Company are presented in journal form below. Post the transactions
to T accounts. Make one T account for each item and determine each account’s ending balance.
Solution:-
Gilles Company
T- Accounts
Dr. Service revenue Cr.
May 5, 6000
May 15, 3000
Balance = 9000
Dr .Cash Cr.
May 5, 2400
May 15, 3000
Balance = 5400
BE2-8
Selected journal entries for the Gilles Company are presented in BE2-7. Post the transactions using the
standard form of account.
Solution:-
Gilles Company
Standard Form of Account
General Ledger
Debit Account Receivable Account
Credit
Date Particulars Ref. Tk Date Particulars Ref. Tk
May 5 Account 6000
Receivable May12 2400
Account Tk 3600
Receivable
Balance
Service Tk 9000
Revenue
Balance
Tk 5400
Cash Balance
BE2-9
From the ledger balances given below, prepare a trial balance for the P.J. Farve Company at June
30,2005. List the accounts in the order shown on page 57 of the text. All account balances are normal.
Accounts Payable Tk9,000,Cash Tk6,800, P.J. Farve, Capital Tk20,000; P.J. Farve,DrawingTk1,200;
Equipment Tk17, 000, Service Revenue Tk6, 000, Accounts Receivable Tk3, 000, Salaries Expense
Tk6, 000, and Rent Expense Tk1, 000.
Solution:-
P.J. Company
Trial Balance June 30, 2005
CHENG COMPANY
Trial Balance
June 30, 2005
Debit Credit
Cash Tk16,800
Prepaid Insurance Tk3,500
Accounts Payable 3,000
Unearned Revenue 4,200
P.Cheng,Capital 13,000
P.Cheng,Drawing 4,500
Service Revenue 25,600
Salaries Expense 18,600
Rent Expense 2,400
Balance Tk39,600 Tk52,000
Solution:-
P.J. Company
Trial Balance June 30, 2005