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Chapter 2 Exercises

The document contains examples of journal entries for various business transactions for Shannon Management Co. and Josephine's Bakery. For Shannon, transactions include owner investment, payment of accounts payable, owner withdrawal, payment of salaries, purchase of a van, and work completed and billed. For Josephine's Bakery, the problem provides beginning and ending asset and liability amounts and calculates net income based on those amounts and any owner investments or withdrawals. Finally, transactions are recorded through T-accounts for Sanchez Law Firm, including initial investment, purchase of equipment on credit, work billed and collected, payment to creditor, work completed on credit, owner withdrawal, and payment of salaries.

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114 views4 pages

Chapter 2 Exercises

The document contains examples of journal entries for various business transactions for Shannon Management Co. and Josephine's Bakery. For Shannon, transactions include owner investment, payment of accounts payable, owner withdrawal, payment of salaries, purchase of a van, and work completed and billed. For Josephine's Bakery, the problem provides beginning and ending asset and liability amounts and calculates net income based on those amounts and any owner investments or withdrawals. Finally, transactions are recorded through T-accounts for Sanchez Law Firm, including initial investment, purchase of equipment on credit, work billed and collected, payment to creditor, work completed on credit, owner withdrawal, and payment of salaries.

Uploaded by

Chu Thị Thủy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

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.


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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