Concept explainers
1.
Introduction:
To prepare: The general
1.
Explanation of Solution
September | Particular | PR | Dr. | Cr. |
a. | Cash | 101 | 60,000 | |
Office Equipment | 163 | 25,000 | ||
To capital | 301 | 85,000 | ||
(Owner’s investment) | ||||
b. | Land | 172 | 40000 | |
Building | 170 | 16000 | ||
Cash | 101 | 30000 | ||
Notes payable | 250 | 170000 | ||
(To record the purchase of land building with cash and notes payable) | ||||
c. | Office supplies | 108 | 2000 | |
To account payable | 201 | 2000 | ||
(Purchased office equipment and office supplies) | ||||
d. | Automobile | 164 | 16,500 | |
Capital | 301 | 16,500 | ||
(to record the owner’s investment | ||||
e. | Office equipment | 163 | 5600 | |
Account payable | 201 | 5600 | ||
(to record the purchased office equipment on credit) | ||||
f. | Salaries expense | 601 | 1800 | |
To cash | 101 | 1800 | ||
(to record the cash paid for salary) | ||||
G | Cash | 101 | 8000 | |
Fees earned | 402 | 8000 | ||
h. | Utilities expense | 602 | 635 | |
To Cash | 101 | 635 | ||
(Paid cash for utilities) | ||||
i. | Account payable | 201 | 2000 | |
Cash | 101 | 2000 | ||
(to record the cash paid that was due) | ||||
j. | Office equipment | 163 | 20300 | |
Cash | 101 | 20300 | ||
(to record the purchase of office equipment by paying cash) | ||||
K | Account receivable | 106 | 6250 | |
Fees earn | 406 | 6250 | ||
(to record the service provided on credit) | ||||
l. | Salaries expenses | 601 | 1800 | |
Cash | 101 | 1800 | ||
m. | Cash | 101 | 4000 | |
Account receivable | 106 | 4000 | ||
N | Withdrawals | 302 | 2800 | |
Cash | 101 | 2800 | ||
(being cash withdrawals ) | ||||
2.
Introduction: Cash Flow Analysis is a technique used by the company to know the overall worth of the company as well as its subsidiary or branches. Cash flow analysis helps in analyzing the company’s cash outflow and inflow through different activities like financing activities, investing activities, operating activities. This analysis shows how company generates money or revenue for its working.
To prepare: Ledger for the following transactions.
2.
Answer to Problem 7GLP
Balance of cash ledger is $12665, account receivable $2250, office supplies $2000, office equipment $50900, salary $3600
Explanation of Solution
Cash Account No.101 | ||||
Date | PR | Debit | Credit | Balance |
a. | G1 | 60000 | 60000 | |
b. | G1 | 30000 | 30000 | |
f. | G1 | 1800 | 28200 | |
g. | G1 | 8000 | 36200 | |
h. | G1 | 635 | 35565 | |
i. | G1 | 2000 | 33565 | |
j. | G1 | 2030 | 13265 | |
l. | G1 | 1800 | 11465 | |
m. | 4000 | 15465 | ||
n. | 2800 | 12665 |
Account receivable | Account no.106 | |||
Date | PR | Debit | Credit | Balance |
k. | G1 | 6250 | 6250 | |
M | G1 | 4000 | 2250 | |
Office supplies | Account no. 108 | |||
Date | PR | Debit | Credit | Balance |
c. | G1 | 2000 | 2000 |
Office equipment | Account no. 163 | |||
Date | PR | Debit | Credit | Balance |
a. | G1 | 25000 | 25000 | |
e. | G1 | 5600 | 30600 | |
j. | G1 | 20300 | 50900 |
Automobile | Account no. 164 | |||
Date | PR | Debit | Credit | Balance |
d. | G1 | 16500 | 16500 | |
Building | Account no. 170 | |||
Date | PR | Debit | Credit | Balance |
b. | G1 | 160,000 | 160,000 | |
Land | Account no. 172 | |||
Date | PR | Debit | Credit | Balance |
b. | G1 | 40000 | 40000 | |
Account payable | Account no. 201 | |||
Date | PR | Debit | Credit | Balance |
c. | G1 | 2000 | 2000 | |
e. | 5600 | 7600 | ||
I | 2000 | 5600 |
Note payable | Account no. 250 | |||
Date | PR | Debit | Credit | Balance |
b. | G1 | 170000 | 170000 |
Capital | Account no. 301 | |||
Date | PR | Debit | Credit | Balance |
a. | G1 | 85000 | 85000 | |
d. | G1 | 16500 | 101500 | |
G1 | ||||
Withdrawals | Account no. 302 | |||
Date | PR | Debit | Credit | Balance |
n. | G1 | 2800 | 2800 |
Fees earn | Account no. 402 | |||
Date | PR | Debit | Credit | Balance |
g. | G1 | 8000 | 8000 | |
k. | G1 | 6250 | 14250 |
Utilities Expense | Account no. 602 | |||
Date | PR | Debit | Credit | Balance |
h. | G1 | 635 | 635 |
Salaries | Account no. 601 | |||
Date | PR | Debit | Credit | Balance |
f. | G1 | 1800 | 1800 | |
l. | G1 | 1800 | 3600 |
3.
Introduction: Cash Flow Analysis is a technique used by the company to know the overall worth of the company as well as its subsidiary or branches. Cash flow analysis helps in analyzing the company’s cash outflow and inflow through different activities like financing activities, investing activities, operating activities. This analysis shows how the company generates money or revenue for its working.
To prepare: Trail balance.
3.
Answer to Problem 7GLP
Total of trail balance is $291,350
Explanation of Solution
Trail balance | ||
Particular | Dr. | Cr. |
Cash | 12665 | |
Account receivable | 2250 | |
Office supplies | 2000 | |
Land | 40,000 | |
Automobile | 16,500 | |
Office equipment | 50,900 | |
Account payable | 5600 | |
Note Payable | 170,000 | |
Capital | 101,500 | |
Withdrawals | 2800 | |
Fees earn | 14,250 | |
Utilities | 635 | |
Salaries expense | 3600 | |
Total | 291,350 | 291,350 |
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Chapter 2 Solutions
Loose Leaf for Financial Accounting: Information for Decisions
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