Solution Manual for College Accounting: A Practical Approach, 14th Edition

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College AccountingFourteenth EditionJeffrey SlaterMike DeschampsInstructor's Resource ManualforCollegeAccounting:ApracticalApproachBy Carolyn Strauch

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1-11Accounting Conceptsand ProceduresANSWERS TO DISCUSSION QUESTIONS ANDCRITICAL THINKING/ETHICAL CASE1.The functions of accounting are to analyze, record, classify, summarize, report,interpret, and communicatefinancial information.2.Sole proprietorship—1 owner; unlimited liability; easy to form; limited lifePartnership—2 or more owners; unlimited liability; easy to form; limited lifeCorporation—Stockholders; limited liability; difficult to form;unlimited life3.Businesses are classified as service, merchandise, or manufacturing.4.Computer technology has greatly reduced the time required for performing thebookkeeping function.5.The three elements of the basic accounting equation are assets, liabilities,andowner's equity.6.Capital is the owner's current investment or equity in the assets of a business. It isone subdivision of owner's equity.7.True. The sum of the left side of the equation (assets) must equal the sum of theright side of the equation (liabilities and owner's equity).8.False. That is the income statement.9.False. Revenue is a subdivision of owner's equity.10.Owner's equity is subdivided into Capital, Withdrawals, Revenue, and Expenses.11.False. It is a subdivision of owner's equityandrecords payments oftheowner’spersonal(non-business) expenses or distributions direct to the owner.It is not abusiness expense.12.Reject. As expenses increase, owner's equity decreases.13.Revenue less Expenses; anincome statement shows performanceover time.14.False. It calculates ending capital.15.The question in this case is whether Paul should be allowed to "pad" his expenseaccount with an additional $100 of expenses.This would be unethical.Paul shouldonly expense those items that are business related. Paul's argument that he isentitled to an additional $100 is not a valid assumption. However, he should bereimbursedfor any business expenses during the weekend.

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1-2SOLUTIONS TOCONCEPT CHECKS1.a. Ab. Ac. Ld. Ae. OEf. A2.a.Liabilitiesb.Total Assetsc.Accounts Payable3.a.Ib.S4.Total assets = Cash $26,000 + Computer equipment $20,000 = $46,0005.b.J. Penny, Capitald.J. Penny, Withdrawalsf.AdvertisingExpenseg.Taxi Fees Earned6.c.Accounts Payabled.Grooming Fees Earned7.a, b, d8.a.ISb.BSc.BSd.BSe.ISf.ISg.OEh.BS9.a.OEb.BSc.BSd.IS

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1-3SOLUTIONS TOSET AEXERCISES1A-1.a.$17,500= $6,000 + $11,500b.$65,000= $5,000 +$60,000c.$15,000= $12,000 + $3,0001A-2.Assets=Liabilities+ Owner’s EquityCash+Equipment=Accounts+PayableMorgan, Capitala.+124,000+124,000b.(1,300)+1,300c.+900+9001A-3.RABBIT COMPANYCLEANERSBALANCE SHEETSEPTEMBER30, 201XAssetsLiabilitiesand Owner’s EquityCash$67000LiabilitiesEquipment7000Accounts Payable$1300013000Total LiabilitiesOwner's EquityB.Rabbit, Capital61000Total Liabilities andTotal Assets$74000Owner's Equity$74000

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1-4EXERCISES(CONTINUED)1A-4.ASSETS=LIABILITIES+OWNER'S EQUITYB.B.AccountsComputerAccountsBaker,Baker,Cash+Rec.+Equip.=Payable+Capital–Withd.+Revenues–Expensesa.+80,000+80,000b.+4,000+4,000c.(125)+125d.+13,600+13,600e.+30,000+30,000f.(4,100)+4,100g.(1,490)+1,490Remember, as withdrawals or expensesincrease, the end result is to reduce owner's equity.1A-5.(a)FREEMANREALTYINCOME STATEMENTMONTH ENDEDJUNE30, 201XRevenue:Professional Fees$3100Operating Expenses:Salaries Expense$450Utilities Expense150Rent Expense450Total Operating Expenses11050Net Income$2050(b)FREEMANREALTYSTATEMENT OF OWNER’S EQUITYMONTH ENDEDJUNE30, 201XS.Freeman, Capital,June1, 201X$10245Net Income forJune$2050Less: Withdrawals forJune(225)Increase in Capital1825S.Freeman, Capital,June30, 201X$12070

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1-5EXERCISES (CONTINUED)(c)FREEMANREALTYBALANCE SHEETJUNE30, 201XAssetsLiabilitiesand Owner’s EquityCash$5200LiabilitiesAccountsReceivable1370Accounts Payable$6000OfficeEquipment11500Owner's EquityS.Freeman, Capital12070Total Liabilities andTotalAssets$18070Owner'sEquity$18070SOLUTIONS TO SET B EXERCISES1B-1.a.$19,000= $6,000 + $13,000b.$100,000= $4,000 + $96,000c.$45,000= $10,000 + $35,0001B-2.Assets=Liabilities+ Owner’s EquityCash+Equipment=Accounts+PayableMelody, Capitala.+128,000+128,000b.(1,650)+1,650c.+1,200+1,2001B-3.RAUSCHERCOMPANYCLEANERSBALANCE SHEETNOVEMBER30,201XASSETSLIABILITIES AND OWNER’S EQUITYCash$65000LiabilitiesEquipment10000Accounts Payable$29000Total Liabilities$29000Owner's EquityB.Rauscher, Capital$46000TotalLiabilities andTotal Assets$75000Owner's Equity$75000

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1-6EXERCISES(CONTINUED)1B-4.ASSETS=LIABILITIES+OWNER'S EQUITYB.B.AccountsComputerAccountsBeadell,Beadell,Cash+Rec.+Equip.=Payable+Capital–Withdr.+Revenues–Expensesa.+65,000+65,000b.+7,500+7,500c.(225)+225d.+13,500+13,500e.+29,600+29,600f.(3,800)+3,800g.(1,530)+1,530Remember, as withdrawals or expensesincrease, the end result is to reduce owner's equity.1B-5.(a)FAIRMONTREALTYINCOME STATEMENTMONTH ENDEDNOVEMBER30,201XRevenue:Professional Fees$4000Operating Expenses:Salaries Expense$300Utilities Expense250Rent Expense300Total Operating Expenses850Net Income$3150(b)FAIRMONTREALTYSTATEMENT OF OWNER'S EQUITYMONTH ENDEDNOVEMBER30,201XS.Fairmont, Capital,November 1,201X$10015Net Income forNovember$3150Less: Withdrawals forNovember(175)Increase in Capital2975S.Fairmont, Capital,November 30, 201X$12990

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1-7(c)FAIRMONTREALTYBALANCE SHEETNOVEMBER30,201XASSETSLIABILITIES AND OWNER'S EQUITYCash$4500LiabilitiesAccountsReceivable1490AccountsPayable$6000OfficeEquipment13000Owner's EquityS.Fairmont, Capital12990Total Liabilities andTotalAssets$18990Owner'sEquity$18990

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1-8SOLUTIONS TOSETA PROBLEMSPROBLEM1A-1MELODY'SNAIL SPATransactionAssets=Liabilities +Owner’s EquityCashStoreEquipmentAccountsPayableM. Abington,Capitala.+19,000+19,000b.(3,400)+3,400c.+6,100+6,100d.(1,200)(1,200)Total14,4009,5004,90019,000PROBLEM 1A-2SIMON’SINTERNET SERVICEBALANCE SHEETNOVEMBER30,201XASSETSLIABILITIES AND OWNER'S EQUITYCash$45000LiabilitiesEquipment24000Accounts Payable$16500Building30000Owner'sEquityB. Simon, Capital82500TotalLiabilities andTotalAssets$99000Owner's Equity$99000

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1-9PROBLEM 1A-3Expenses0000+325325+220545+8001,3451,345–---------–-–-–-–OWNER'SEQUITYComputerServiceRevenue00+1,3001,300+2,2003,5003,5003,5003,5003,500+++++++++++++++++FALCOCOMPUTER SERVICER.Falco,Withd.0000000+300300–---------------–R. Falco,Capital+40,00040,00040,00040,00040,00040,00040,00040,00040,000++++++++++++++++++LIABILITIESAccountsPayable0+6,5006,5006,5006,5006,5006,500+8007,3007,30049,155==================ComputerEquipment0+6,5006,5006,5006,5006,5006,5006,5006,50049,155+++++++++++++++++ASSETSAccountsReceivable000+2,2002,2002,2002,2002,2002,200+++++++++++++++++Cash+40,00040,00040,000+1,30041,30041,300(325)40,975(220)40,75540,755(300)40,455a.BALANCEb.BALANCEc.BALANCEd.BALANCEe.BALANCEf.BALANCEg.BALANCEh.ENDINGBALANCE

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1-10PROBLEM 1A-4(a)WENGLERHOME DECORATINGSERVICEINCOME STATEMENTMONTH ENDEDJUNE30,201XRevenue:Home DecoratingFees$2400Operating Expenses:Advertising Expense$145Repair Expense55Travel Expense250Supplies Expense55Rent Expense375Total Operating Expenses880Net Income$1520(b)WENGLERHOME DECORATINGSERVICESTATEMENT OF OWNER'S EQUITYMONTH ENDEDJUNE30,201XJ.WenglerCapital,June1,201X$3885Net Income forJune$1520Less: Withdrawals forJune(1000)Increase in Capital520J.Wengler, Capital,June30,201X$4405(c)WENGLERHOME DECORATINGSERVICEBALANCE SHEETJUNE30,201XASSETSLIABILITIES AND OWNER'S EQUITYCash$2300LiabilitiesAccounts Receivable1200Accounts Payable$250DecoratingEquipment1155Owner's EquityJ.Wengler, Capital4405Total Liabilities andTotal Assets$4655Owner's Equity$4655

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1-11PROBLEM 1A-5OWNER’S EQUITYExpenses00000+690690690690+60750750750750+5001,250+5501,800–-----------–-–-–-–-–-–-–-–-–CateringRevenue0000+2,4002,4002,400+1752,5752,5752,5752,575+1,9004,4754,4754,4754,475+++++++++++++++TRUMAN’S CATERING SERVICEJ.Truman,Withd000000000+909090909090–-------------------–---–-–-–J.Truman,Capital+33,00033,00033,00033,00033,00033,00033,00033,00033,00033,00033,00033,00033,00033,00033,000++++++++++++++++++++++++++++++LIABILITIESAccountsPayable00+2,1002,100(200)1,9001,9001,9001,9001,9001,9001,9001,900+8002,700+5003,2003,200$38,785=================Equipment+1,6001,600+2,1003,7003,7003,7003,7003,7003,7003,7003,7003,700+8004,5004,5004,500$38,785+++++++++++++++++++++++++++++ASSETSAccountsReceivable000000+175175(120)55555555555555+++++++++++++++++++++++++++++Cash+33,00033,000(1,600)31,40031,400(200)31,200+2,40033,600(690)32,91032,910+12033,030(60)32,970(90)32,880+1,90034,78034,78034,780(550)34,2305/25BALANCE5/27BALANCE5/28BALANCE5/29BALANCE6/1BALANCE6/5BALANCE6/8BALANCE6/10BALANCE6/15BALANCE6/17BALANCE6/20BALANCE6/25BALANCE6/28BALANCE6/30END.BAL.

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1-12PROBLEM 1A-5 (CONTINUED)(b)TRUMAN'SCATERING SERVICEBALANCE SHEETMAY31,201XASSETSLIABILITIES AND OWNER'S EQUITYCash$31200LiabilitiesEquipment3700AccountsPayable$1900Owner'sEquityJ.Truman, Capital33000TotalLiabilities andTotal Assets$34900Owner's Equity$34900(c)TRUMAN'SCATERING SERVICEINCOME STATEMENTMONTH ENDEDJUNE30,201XRevenue:CateringRevenue$4475Operating Expenses:Salaries Expense$690Telephone Expense60Rent Expense500Supplies Expense550Total Operating Expenses1800Net Income$2675

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1-13PROBLEM 1-5A(CONCLUDED)(d)TRUMAN'SCATERING SERVICESTATEMENT OF OWNER'S EQUITYMONTH ENDEDJUNE30,201XJ.Truman, CapitalJune1,201X$33000Net Income forJune$2675Less: Withdrawals forJune(90)Increase in Capital2585J.Truman, Capital,June30,201X$35585(e)TRUMAN'SCATERING SERVICEBALANCE SHEETJUNE30,201XASSETSLIABILITIES AND OWNER'S EQUITYCash$34230LiabilitiesAccounts Receivable55Accounts Payable$3200Equipment4500Owner's EquityJ.Truman,Capital35585TotalLiabilities andTotal Assets$38785Owner's Equity$38785

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1-14SOLUTIONS TOSETB PROBLEMSPROBLEM 1B-1MADELINE’SNAIL SPATransactionAssets=Liabilities+ Owner’s EquityCashStoreEquipmentAccountsPayableM. Abdul, Capitala.+17,000+17,000b.(3,900)+3,900c.+6,200+6,200d.(800)(800)Total12,30010,1005,40017,000PROBLEM 1B-2SAM'SINTERNET SERVICEBALANCE SHEETSEPTEMBER30,201XASSETSLIABILITIES AND OWNER'S EQUITYCash$5000LiabilitiesEquipment34000Accounts Payable$15500Building45000Owner's EquityB. Sam, Capital68500Total Liabilities andTotal Assets$84000Owner's Equity$84000

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1-15PROBLEM 1B-3FANNIER COMPUTER SERVICEREDFUMAN COMPUTERSERVICEExpenses0000+300300+180480+1,0001,4801,480–-------–-–-–-–-–OWNER'SEQUITYComputerServiceRevenue00+700700+1,2001,9001,9001,9001,9001,900+++++++++++++++++R.FannierWithd.0000000+800800–-------------–-–R.Fannier,Capital+17,00017,00017,00017,00017,00017,00017,00017,00017,000++++++++++++++++++LIABILITIESAccountsPayable0+5,0005,0005,0005,0005,0005,000+1,0006,0006,000$22,620===================ComputerEquipment0+5,0005,0005,0005,0005,0005,0005,0005,000$22,620+++++++++++++++++ASSETSAccountsReceivable000+1,2001,2001,2001,2001,2001,200+++++++++++++++++Cash+17,00017,00017,000+70017,70017,700(300)17,400(180)17,22017,220(800)16,420a.BALANCEb.BALANCEc.BALANCEd.BALANCEe.BALANCEf.BALANCEg.BALANCEh.ENDINGBALANCE

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1-16PROBLEM 1B-4(a)WADDENHOME DECORATINGSERVICEINCOME STATEMENTMONTH ENDEDSEPTEMBER30,201XRevenue:Home DecoratingFees$2400Operating Expenses:Advertising Expense$250Repair Expense40Travel Expense750Supplies Expense95Rent Expense300Total Operating Expenses1435Net Income$965(b)WADDEN HOME DECORATINGSERVICESTATEMENT OF OWNER'S EQUITYMONTH ENDEDSEPTEMBER30,201XJ.Wadden, Capital,September1,201X$2675Net income forSeptember$965Less: Withdrawals forSeptember(800)Increase in Capital165J.Wadden, Capital,September30,201X$2840(c)WADDENHOME DECORATINGSERVICEBALANCE SHEETSEPTEMBER30,201XASSETSLIABILITIES AND OWNER'S EQUITYCash$2500LiabilitiesAccounts Receivable550Accounts Payable$935DecoratingEquipment725Owner's EquityJ.Wadden, Capital2840Total Liabilities andTotal Assets$3775Owner's Equity$3775

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1-17PROBLEM1B-5OWNER’S EQUITYExpenses00000+1,5001,5001,5001,500+501,5501,5501,5501,550+5502,100+2502,350–-----------–-–-–---–---–-–-–CateringRevenue0000+2,0002,0002,000+1502,1502,1502,1502,150+1,0003,1503,1503,1503,150+++++++++++++++++++++++++++++TRICKETT’S CATERING SERVICEJ.Trickett,Withd000000000+400400400400400400–-------------------–---–-–-–J.Trickett,Capital+22,00022,00022,00022,00022,00022,00022,00022,00022,00022,00022,00022,00022,00022,00022,000++++++++++++++++++++++++++++++LIABILITIESAccountsPayable00+2,1002,100(800)1,3001,3001,3001,3001,3001,3001,3001,300+4001,700+5502,2502,250$24,650===============================Equipment0+700700+2,1002,8002,8002,8002,8002,8002,8002,8002,8002,800+4003,2003,2003,200$24,650+++++++++++++++++++++++++++++ASSETSAccountsReceivable000000+150150(100)50505050505050+++++++++++++++++++++++++++++Cash+22,00022,000(700)21,30021,300(800)20,500+2,00022,500(1,500)21,00021,000+10021,100(50)21,050(400)20,650+1,00021,65021,65021,650(250)21,40010/25BALANCE10/27BALANCE10/28BALANCE10/29BALANCE11/1BALANCE11/5BALANCE11/8BALANCE11/10BALANCE11/15BALANCE11/17BALANCE11/20BALANCE11/25BALANCE11/28BALANCE11/30ENDBAL.

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1-18PROBLEM 1B-5(CONTINUED)(b)TRICKETT'SCATERING SERVICEBALANCE SHEETOCTOBER31,201XASSETSLIABILITIES AND OWNER'S EQUITYCash$20500LiabilitiesEquipment2800Accounts Payable$1300Owner'sEquityJ.Trickett, Capital22000TotalLiabilities andTotalAssets$23300Owner's Equity$23300(c)TRICKETT'SCATERING SERVICEINCOME STATEMENTMONTH ENDEDNOVEMBER30,201XRevenue:CateringRevenue$3150Operating Expenses:Salaries Expense$1500Telephone Expense50Rent Expense550Supplies Expense250Total Operating Expenses2350Net Income$800

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1-19PROBLEM 1B-5(CONCLUDED)(d)TRICKETT'SCATERING SERVICESTATEMENT OF OWNER'S EQUITYMONTH ENDEDNOVEMBER30,201XJ.Trickett,Capital,November1, 201X$22000Net Income forNovember$800Less: Withdrawals forNovember(400)Increase in Capital400J.Trickett,Capital,November30, 201X$22400(e)TRICKETT'SCATERING SERVICEBALANCE SHEETNOVEMBER30,201XASSETSLIABILITIES AND OWNER'S EQUITYCash$21400LiabilitiesAccountsReceivable50Accounts Payable$2250Equipment3200Owner's EquityJ.Trickett, Capital22400Total Liabilities andTotalAssets$24650Owner's Equity$24650FINANCIAL REPORT PROBLEM SOLUTION—2016Amazon’s Annual ReportYEARCash and Cash Equivalents2016$19,334million2015$15,890millionIncrease$3,444millionCashand cash equivalentsincreased $3.4billionfrom 2015to 2016.

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1-20KEEPING IT REAL--SuarezComputer Center SolutionExpenses+$800(Rent)800800800+100(Util.)900900$900OWNER'S EQUITY–––––––ServiceRevenue+$1,0001,000+7001,7001,700+1,4003,100$3,100++++++Falco,Withdrawals+1,500$1,500––=LIABILITIES+Falco,+Capital+$12,50012,50012,50012,50012,50012,50012,50012,50012,50012,500$12,500$13,800SUAREZCOMPUTER CENTERAccountsPayable++++++++++$500500500500500+100600600$600============OfficeEquipment+$1,5001,5001,5001,5001,5001,5001,5001,500$1,500$13,800+++++++++ComputerShop Equipment+$1,2601,2601,2601,2601,2601,2601,2601,2601,260$1,260++++++++++ASSETSSupplies+$500500500500500500500$500++++++++Cash+$12,50012,500–1,26011,240–1,5009,7409,740–8008,940+1,0009,940+70010,64010,640+1,40012,040–1,500$10,540a.BALANCEb.BALANCEc.BALANCEd.BALANCEe.BALANCEf.BALANCEg.BALANCEh.BALANCEi.BALANCEj.ENDINGBALANCE

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1-21SUAREZCOMPUTER CENTERINCOME STATEMENTFORTHE MONTH ENDED JULY 31, 201XRevenue:Service Revenue$310000Operating Expenses:Rent Expense$80000UtilitiesExpense10000Total Operating Expenses90000Net Income$220000SUAREZCOMPUTER CENTERSTATEMENT OF OWNER'S EQUITYFOR MONTH ENDED JULY 31, 201XT.Falco, Capital, July 1, 201X$000Investment for July1250000Total investment for July1250000Net Income for July$220000Less: Withdrawals for July(150000)Increase in Capital70000T.Falco, Capital, July 31, 201X$1320000SUAREZCOMPUTER CENTERBALANCE SHEETJULY 31, 201XASSETSLIABILITIES AND OWNER'S EQUITYCash$1054000Liabilities:Supplies50000Accounts Payable$60000Computer Shop Equipment126000Office Equipment150000Owner’s EquityT.Falco, Capital1320000Total Liabilities andTotal Assets$1380000Owner's Equity$1380000

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2-12Debits and Credits:Analyzing and RecordingBusiness TransactionsANSWERS TO DISCUSSION QUESTIONS ANDCRITICAL THINKING/ETHICAL CASE1.A ledger is a group of accounts that records in monetary valuethedata frombusiness transactions.2.The left-hand sideis always the debit side. It is an arbitrary rule.3.False. Accounts with one entry will not need footings.4.Thefinancial statements are theend productsof the accounting process.5.The transaction analysis chart is a teaching device that is not used in the regularaccounting process.6.Which accounts are affected?In whichcategoriesdothe accounts belong?Aretheaccounts increasing ordecreasing?What do the rulesof debit and creditsay?Whatdoes the T-account look like?7.Disagree.Computers will record debits and credits based on the account type.8.False.The trial balance is aninformal reportthatdoes not have the same status asfinancial statements.Thetrial balance is used toverify the equality of total debitsand credits andprepare the financial statements.9.The financial statements are prepared from the ending balances of the accounts(debit or credit) in the ledger. The columns on financial statements areused forlisting amounts andfor subtotaling.10.It is easier to prepare the reports from the trial balancerather than the expandedaccounting equationbecausethe trial balancelistsall accounts and their balances.The columns for revenue, expenses, etc.,in the expanded accounting equation donot list specific titles and their balances.11.The question in this case is whetherJoshuashould be allowed to put fictitiousfigures into the trial balance. I would not support this type of behavior. Hisbehavioris extremely unprofessionaland goes against professional ethicalstandards.Instead of putting in fictitious figures,Joshuashould stay late and correct the trialbalance.He could also ask for help.

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2-2SOLUTIONS TO CONCEPT CHECKS1.The ending balance in Cash is $19,500(debit balance). The ending balance inC.Rice, Capital is $18,000(credit balance).Cash 1106/248,0006/28 12,000500 6/2620,000500Bal. 19,500C. Rice, Capital 31111,000 6/16,000 6/81,000 6/2218,000 Bal.2.CategoryIncr.Decr.Normal Bal.A.LiabilityCr.Dr.Cr.B.RevenueCr.Dr.Cr.C.AssetDr.Cr.Dr.D.CapitalCr.Dr.Cr.E.WithdrawalDr.Cr.Dr.F.AssetDr.Cr.Dr.G.ExpenseDr.Cr.Dr.3.AccountCategoryIncrease/DecreaseDr. or Cr.T AccountsCashAsset↑Dr.Cash600AccountsReceivableAsset↑Dr.Acc. Rec.2,900DesignFees EarnedRevenue↑Cr.DesignFeesEarned3,500

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2-34.CashAccounts ReceivableOffice EquipmentAccounts PayableB. O’Mally, CapitalB. O’Mally,WithdrawalsHair Salon Fees EarnedSelling ExpenseSalary ExpenseAdvertising Expense5.A.BSB.BSC.BSD.BSE.OEF.OEG.ISH.ISI.ISJ.ISK.IS

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2-4SOLUTIONS TOSET AEXERCISES2A-1.Balance Sheet AccountsAssets111Cash112Accounts Receivable121Office Equipment (Microsoft Surface Tablet)Liabilities211Accounts PayableOwner's Equity311L. Janas, Capital312L. Janas, WithdrawalsIncome Statement AccountsRevenue411Legal FeesExpenses511SalaryExpense512RepairExpense513Advertising Expense2A-2.1.Accounts Affected2.Category3.↑↓4.Rules5.T-Account UpdateComputer EquipmentAsset↑Dr.Computer Equipment26,000CashAsset↓Cr.Cash9,000Accounts PayableLiability↑Cr.Accounts Payable17,000

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2-5EXERCISES(CONTINUED)2A-3.ACCOUNTCATEGORY↑↓FINANCIAL STATEMENTComputer SuppliesAssetDr.Cr.Balance SheetLegal Fees EarnedRevenueCr.Dr.Income StatementP.Roy, WithdrawalsWithdrawalDr.Cr.Statement of Owner's EquityAccountsPayableLiabilityCr.Dr.Balance SheetSalaries ExpenseExpenseDr.Cr.Income StatementAutoAssetDr.Cr.Balance Sheet2A-4.Dr.Cr.A.81B.61C.94D.17E.101F.35G.27H.12I.34

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2-6EXERCISES(CONTINUED)2A-5.(1)HELM'SCLEANERSINCOME STATEMENTFOR MONTH ENDEDMARCH31,201XRevenue:Cleaning Fees$466Operating Expenses:Salaries Expense$125Utilities Expense162Total Operating Expenses287Net Income$179(2)HELM'SCLEANERSSTATEMENT OF OWNER'S EQUITYFOR MONTH ENDEDMARCH31,201XJ.Helm, Capital,March1,201X$726Net Income forMarch$179Less: Withdrawals forMarch(55)Increasein Capital124J.Helm, Capital,March31,201X$850(3)HELM'SCLEANERSBALANCE SHEETMARCH31,201XASSETSLIABILITIES AND OWNER'S EQUITYCash$750LiabilitiesEquipment500Accounts Payable$400Owner's EquityJ.Helm, Capital850Total Liabilities andTotal Assets$1250Owner's Equity$1250

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2-7SOLUTIONS TOSET BEXERCISES2B-1.Balance Sheet AccountsAssets111Cash112Accounts Receivable121Office Equipment (Apple iPad)Liabilities211Accounts PayableOwner's Equity311L. Jones, Capital312L. Jones, WithdrawalsIncome Statement AccountsRevenue411Legal FeesEarnedExpenses511SalaryExpense512RentExpense513Advertising Expense2B-2.1.Accounts Affected2.Category3.↑↓4.Rules5.T-Account UpdateComputer EquipmentAsset↑Dr.Computer Equipment28,000CashAsset↓Cr.Cash8,000Accounts PayableLiability↑Cr.Accounts Payable20,000

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2-8EXERCISES(CONTINUED)2B-3.ACCOUNTCATEGORY↑↓FINANCIAL STATEMENTOfficeSuppliesAssetDr.Cr.Balance SheetRentalFees EarnedRevenueCr.Dr.Income StatementA. Troy, WithdrawalsWithdrawalDr.Cr.Statement of Owner's EquityAccounts PayableLiabilityCr.Dr.Balance SheetWageExpenseExpenseDr.Cr.Income StatementComputerAssetDr.Cr.Balance Sheet2B-4.Dr.Cr.A.81B.61C.94D.17E.101F.35G.27H.12I.34

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