WRD Ab.az.Ch02 SV Analyzing Transaction
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Transcript of WRD Ab.az.Ch02 SV Analyzing Transaction
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8/14/2019 WRD Ab.az.Ch02 SV Analyzing Transaction
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Analyzing Transactions
Student Version
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Describe the
characteristics of anaccount and a chart of
accounts.
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The T Account
Title
The left side of
the account is
called the debit
side.
Debit
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The right side of
the account is
called the credit
side.
Credit
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Cash(a) 25,000 (b) 20,000
(d) 7,500 (e) 3,650
(f) 950(h) 2,000
Balance 5,900Balance of the account
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Assetsare resources owned by the
business entity.
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Liabilitiesare debts owed tooutsiders (creditors).
Owners equityis the owners right
to the assets of the business.
(cont inued)
Chart of Accounts
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Revenuesare increases in owners
equity as a result of selling services
or products to customers.
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Chart of Accounts
Expensesare the results of using up
of assets or consuming services in the
process of generating revenues.
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Describe and illustrate
journalizing transactionsusing the double-entry
accounting system.
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On November 1, Chris Clark opens anew business and deposits $25,000 in a
bank account in the name of
NetSolutions.
Transaction A
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Date Description Debit CreditNov. 1
2009Cash 25,000
Chris Clark, Capital 25,000
Invested cash in NetSolutions.
P.R.
JOURNAL Page 1
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The effect of this entry is shown in the
accounts of NetSolutions as follows:Cash
Nov. 1 25,000 Nov. 1 25,000
Chris Clark, Capital
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On November 5, NetSolutions bought
land for $20,000, paying cash.
Transaction B
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On November 10, NetSolutions bought
supplies on account for $1,350.
Transaction C
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On November 18, NetSolutions received
fees of $7,500 from customers for services
rendered.
Transaction D
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Throughout the month, NetSolutions
incurred the following expenses: wages,
$2,125; rent, $800; utilities, $450; and
miscellaneous, $275.
Transaction E
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On November 30, NetSolutions paidcreditors on account, $950.
Transaction F
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Chris Clark determined that the costof supplies on hand on November 30
was $550.
Transaction G
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On November 30, Chris Clark
withdrew $2,000 from NetSolutions
for personal use.
Transaction H
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Describe and illustrate
the journalizing andposting of transactions
to accounts.
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Dec. 1 NetSolutions paid a premium of
$2,400 for an insurance policy
for liability, theft and fire. Thepolicy covers a one-year period.
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to Cash
Step 1
ep 3
Step 1
Step 2
Step 2
ep 3
(cont inued)
Exhibit 4 Diagram of the Recording and
Posting of a Debit and a Credit
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Step 1
ep 3
Step 2
Step 1
ep 4
Step 3
Step 3
Exhibit 4 Diagram of the Recording and Posting
of a Debit and a Credit(cont inu ed)
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Dec. 1 NetSolutions paid rent for December,
$800. The company from which
NetSolutions is renting its store space
now requires the payment of rent on the
first of each month, rather than at the end
of the month.
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Dec. 1 NetSolutions received an offer from a
local retailer to rent the land purchased
on November 5. The retailer plans touse the land as a parking lot for its
employees and customers.
NetSolutions agreed to rent the land to
the retailer for three months, with therent payable in advance.
(cont inued)
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Dec. 1 NetSolutions receives $360 for three
months rent for use of its land
beginning December 1.
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Dec. 4 NetSolutions purchased office
equipment on account from Executive
Supply Co. for $1,800.
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1-262-2626
Dec. 6 NetSolutions paid $180 for a newspaper
advertisement.
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Dec. 11 NetSolutions paid creditors $400.
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Dec. 13 NetSolutions paid a receptionist and
part-time assistant $950 for two weeks
wages.
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Dec. 16 NetSolutions received $3,100 from
fees earned for the first half of
December.
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Dec. 20 NetSolutions paid $900 to Executive
Supply Co. on the $1,800 debt owed
from the December 4 transaction.
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1-312-3131
Dec. 21 NetSolutions received $650 from
customers in payment of their accounts.
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1-322-3232
Dec. 23 NetSolutions paid $1,450 for supplies.
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Dec. 27 NetSolutions paid the receptionist and
part-time assistant $1,200 for two weeks
wages.
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Dec. 31 NetSolutions paid its $310 telephone bill
for the month.
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1-352-3535
Dec. 31 NetSolutions paid $225 for electric usage
for the month.
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1-362-3636
Dec. 31 NetSolutions received $2,870 from fees
earned for the second half of December.
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Dec. 31 NetSolutions earned $1,120 on account
for the second half of December.
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Dec. 31 Chris Clark withdrew $2,000 for
personal use.
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Prepare an unadjusted
trial balance and explainhow it can be used to
discover errors.
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Exhibit 6 Trial Balance
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1-412-4141