Exam 2: Analyzing for Business Transactions

Jerry's Butcher Shop, Inc. had the following assets and liabilities at the beginning and end of the current year: Assets Liabilities Beginning of the year ............ \1 14,000 \6 8,000 End of the year ...................... 135,000 73,000 If Jerry made no investments in the business but withdrew $5,000 during the year, what was the amount of net income earned by Jerry's Butcher Shop, Inc.?

If cash was incorrectly debited for $100 instead of correctly crediting it for $100, the cash account's balance will be overstated (too high).

Golddigger Services, Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $60,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a:

Explain how accounts are used in recording information about a business's transactions.

Debits increase asset and expense accounts.

Geraldine Parker, the owner of Gi Gi's Dance Studio, Inc., started the business by investing $10,000 cash and donating a building worth $20,000. Identify the general journal entry below that Gi Gi's will make to record the transaction.

Identify the statement that is incorrect.

At a given point in time, a business's trial balance is a list of all of its general ledger accounts and their balances

Using the following list of accounts and identification letters A through J for Homer's Management Co., Inc., enter the type of account and its normal balance into the table below. The first item is filled in as an example:

Items such as sales tickets, bank statements, checks, and purchase orders are examples of a business's source documents.

A debit entry is always an increase in the account.

During the month of March, Harley's Computer Services made purchases on account totaling $43,500. Also during the month of March, Harley was paid $8,000 by a customer for services to be provided in the future and paid $36,900 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $77,300, what is the balance in accounts payable at the end of March?

_____________ and ______________ are the starting points for the analyzing and recording process.

The business paid $100 cash dividend to Charles Nice (the sole stockholder of the corporation). Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Identify the account below that impacts the Equity of a business:

A debit is used to record which of the following:

The balances for the accounts of Milo's Management Co., Inc. for the year ended December 31 are shown below. Each account shown had a normal balance. Accounts payable..... \ 6,500 Accounts receivable... 7,000 Cash ............... ? Office supplies. 1,200 Building ........... 125,000 Supplies expense..... 21,500 Common stock ........ 118,700 Management revenue. 175,000 Wages expense 36,000 Rent expense 6,000 Land 50,000 Unearned management fees 4,000 Dividends 48,000 Calculate the correct balance for Cash and prepare a trial balance.

Explain the recording and posting processes.

At the end of its first month of operations, Michael's Consulting Services, Inc. reported net income of $25,000. They also had account balances of: Cash, $18,000; Office Supplies, $2,000 and Accounts Receivable $10,000. The stockholders' total investment for this first month was $5,000. Calculate the ending balance in Stockholders' Equity to be reported on the Balance Sheet.