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Exercise 4.1 Analyzing transactions. LO 4-1
Selected activity of the Ray Shipping Service follow.

TRANSACTIONS
Gave a cash refund of $750 to a customer because of a lost package. (The customer had previously paid in cash.)
Sent a check for $1,050 to the utility company to pay the monthly bill.
Provided services for $7,800 on credit.
Purchased new equipment for $4,600 and paid for it immediately by check.
Issued a check for $3,500 to pay a creditor on account.
Performed services for $15,250 in cash.
Collected $6,250 from credit customers.
The owner made an additional investment of $25,000 in cash.
Purchased supplies for $3,250 on credit.
Issued a check for $3,750 to pay the monthly rent.
 
Analyze the above transactions and record a journal entry for each transaction.  
 


   
Exercise 4.2 Recording transactions in the general journal. LO 4-1
Selected activity of Mason Consulting Services follow.
 

DATE			TRANSACTIONS
2019
Sept.		1	Zack Mason invested $59,000 in cash to start the firm.
		4	Purchased office equipment for $6,400 on credit from Den, Inc.; received Invoice 9823, payable in 30 days.
		16	Purchased an automobile that will be used to visit clients; issued Check 1001 for $14,400 in full payment.
		20	Purchased supplies for $510; paid immediately with Check 1002.
		23	Returned damaged supplies for a cash refund of $165.
		30	Issued Check 1003 for $4,100 to Den, Inc., as payment on account for Invoice 9823.
		30	Withdrew $2,900 in cash for personal expenses.
		30	Issued Check 1004 for $1,650 to pay the rent for September.
		30	Performed services for $2,700 in cash.
		30	Paid $430 for monthly telephone bill, Check 1005.

Prepare journal entries for the transactions incurred during September of 2019.
 


   
Exercise 4.3 Posting to the general ledger. LO 4-1, 4-3
Selected activity of Mason Consulting Services follow.
 

DATE			TRANSACTIONS
2019
Sept.		1	Zack Mason invested $41,000 in cash to start the firm.
		4	Purchased office equipment for $4,600 on credit from Den, Inc.; received Invoice 9823, payable in 30 days.
		16	Purchased an automobile that will be used to visit clients; issued Check 1001 for $12,600 in full payment.
		20	Purchased supplies for $330; paid immediately with Check 1002.
		23	Returned damaged supplies for a cash refund of $75.
		30	Issued Check 1003 for $2,750 to Den, Inc., as payment on account for Invoice 9823.
		30	Withdrew $1,100 in cash for personal expenses.
		30	Issued Check 1004 for $750 to pay the rent for September.
		30	Performed services for $3,200 in cash.
		30	Paid $340 for monthly telephone bill, Check 1005.

Post the above transactions into the appropriate Ledger accounts.
 


   
Exercise 4.4 Compound journal entries. LO 4-2
The following transactions took place at the Cook Employment Agency during November 2019.
 

DATE			TRANSACTIONS
Nov.	5		Performed services for Job Search, Inc., for $36,000; received $17,000 in cash and the client promised to pay the balance in 60 days.
	18		Purchased a graphing calculator for $405 and some supplies for $555 from Office Supply; issued Check 1008 for the total.
	23		Received Invoice 1602 for $1,900 from Automotive Technicians Repair for repairs to the firm’s automobile; issued Check 1009 for half the amount and arranged to pay the other half in 30 days.

 
Prepare journal entries for the above transactions.

 
Exercise 4.5 Recording a correcting entry. LO 4-4
On June 10, 2019, an employee of Williams Corporation mistakenly debited
Telephone Expense rather than Utilities Expense
when recording a bill of $975 for the May utility service.
The error was discovered on June 30. Prepare a general journal entry to correct the error.
 

   
Exercise 4.6 Recording a correcting entry. LO 4-4
On August 22, 2019, an employee of Bell Company mistakenly debited the Repair Expense account rather than the Truck Expense
account when recording a bill of $700 for repairs. The error was discovered on October 1.
Prepare a general journal entry to correct the error.
 
Problem 4.1A Recording transactions in the general journal. LO 4-1
The transactions that follow took place at the Desoto Recreation and Sports Arena during September 2019.
This firm has indoor courts where customers can play tennis for a fee. It also rents equipment and offers tennis lessons.
 

DATE		TRANSACTIONS
Sept.	1	Issued Check 1169 for $1,750 to pay the September rent.
	5	Performed services for $2,850 in cash.
	6	Performed services for $1,700 on credit.
	10	Paid $670 for monthly telephone bill; issued Check 1170.
	11	Paid for equipment repairs of $910 with Check 1171.
	12	Received $3,550 on account from credit clients.
	15	Issued Checks 1172–1177 for $4,550 for salaries.
	18	Issued Check 1178 for $2,350 to purchase supplies.
	19	Purchased new tennis rackets for $2,600 on credit from The Tennis Supply Shop; received Invoice 3108, payable in 30 days.
	20	Issued Check 1179 for $2,830 to purchase new nets. (Equip.)
	21	Received $1,020 on account from credit clients.
	21	Returned a damaged net and received a cash refund of $520.
	22	Performed services for $3,330 in cash.
	23	Performed services for $4,920 on credit.
	26	Issued Check 1180 for $530 to purchase supplies.
	28	Paid the monthly electric bill of $2,320 with Check 1181.
	30	Issued Checks 1182–1187 for $4,550 for salaries.
	30	Issued Check 1188 for $4,550 cash to Ellis Carter for personal expenses.

Required:
Record each of the above transactions in the general journal. 

Analyze:
If the company paid a bill for supplies on October 1, what check number would be included in the journal entry description?
 



 
Problem 4.2A Journalizing and posting transactions. LO 4-1, 4-2, 4-3
On October 1, 2019, Helen Kennedy opened an advertising agency.
  

DATE	TRANSACTIONS
Oct. 1	Helen Kennedy invested $56,000 cash in the business.
2	Paid October office rent of $2,800; issued Check 1001.
5	Purchased desks and other office furniture for $14,600 from Office Furniture Mart, Inc.; received Invoice 6704 payable in 60 days.
6	Issued Check 1002 for $3,000 to purchase art equipment.
7	Purchased supplies for $1,350; paid with Check 1003.
10	Issued Check 1004 for $560 for office cleaning service.
12	Performed services for $3,900 in cash and $1,700 on credit. (Use a compound entry.)
15	Returned damaged supplies for a cash refund of $360.
18	Purchased a computer for $2,800 from Office Furniture Mart, Inc., Invoice 7108; issued Check 1005 for a $1,650 down payment, with the balance payable in 30 days. (Use one compound entry.)
20	Issued Check 1006 for $7,300 to Office Furniture Mart, Inc., as payment on account for Invoice 6704.
26	Performed services for $4,200 on credit.
27	Paid $305 for monthly telephone bill; issued Check 1007.
30	Received $3,500 in cash from credit customers.
30	Mailed Check 1008 to pay the monthly utility bill of $380.
30	Issued Checks 1009–1011 for $7,800 for salaries.

 

Required:
Journalize the above transactions.
Post the above transactions to the ledger accounts.
 



 
 



 
Analyze:
What is the balance of account 202 in the general ledger?
 

   
Problem 4.3A Recording correcting entries. LO 4-4
The following journal entries were prepared by an employee of International Marketing Company
who does not have an adequate knowledge of accounting.
 

GENERAL JOURNAL					PAGE 3
Date		Description	Post. Ref.	Debit	Credit
2019
April	1	Accounts Payable		12,600
		Fees Income			12,600
		Performed services on credit
	2	Cash		520
		Telephone Expense			520
		Paid for March telephone service, Check 1917
	3	Office Equipment		7,360
		Office Supplies		820
		Cash			8,600
		Purchased file cabinet and office supplies, Check 1918

(Assume that Office Equipment and Office Supplies were recorded at the correct values.)

Required:
Examine the above journal entries carefully and prepare the correcting journal entries.


After the correct journal entries have been posted, what effect do the corrections have on the company’s reported assets?

 
Analyze:
 

Explanation
April 1: The debit should be to Accounts Receivable, not Accounts Payable.
April 2: The debit and credit amounts are reversed. Telephone Expense should be debited and Cash should be credited.
April 3: The two debit amounts and the credit amount in the entry are not equal because of a math error. The credit for Cash should be $8,180.

Analyze: After correcting the three entries, the assets are increased by $11,980 ($12,600 − $1,040 + $420).
   
Problem 4.4A Journalizing and posting transactions LO 4-1, 4-2, 4-3
Four transactions for Automotive Maintenance and Repair Shop that took place in November 2019 appear below.
 

DATE	TRANSACTION
Nov. 1	Ryan O’Malley invested $58,000 in cash plus tools with a fair market value of $2,300 to start the business.
2	Purchased equipment for $1,920 and supplies for $420 from Office Depot, Invoice 501; issued Check 100 for $570 as a down payment with the balance due in 30 days.
10	Performed services for Patricia Reed for $3,200, who paid $1,150 in cash with the balance due in 30 days.
20	Purchased machinery for $4,300 from Craft Machinery, Inc., Invoice 709; issued Check 101 for $1,650 in cash as a down payment with the balance due in 30 days.

Record the transactions in the general journal and post them to the appropriate ledger accounts.

Analyze:
What liabilities does the business owe as of November 30?
 

 



   
In the general ledger accounts, the balance sheet accounts appear first and are followed by the income statement accounts.
The order is:
 
Assets
Liabilities
Owner's Equity
Revenue
Expenses
   
The part of the journal entry to be recorded first is the:

a. Asset
b. Credit
c. Debit
d. Liability
c. Debit
   
A general journal is like a(n):

a. Address Book
b. Appointment calendar
c. Diary
d. To-Do List
   
Which of the reasons reflected below is the most accurate for including descriptions when making journal entries?

a. The audit trail will be more difficult to follow.
b. To eliminate the need for recording the transaction.
c. To substitute for recording the transaction.
d. The audit trail will be easier to follow.
   
Posting references are made in ledger accounts and in the journal to:

a. Indicate the entry has been posted
b. Ensure against posting the same information twice
c. Both indicate the entry has been posted and ensure against posting the same information twice are correct.
d. Neither indicate the entry has been posted nor ensure against posting the same information twice is correct.
   
Which of the following shows both debits and credits of an entire transaction?

a. An entry in the general journal
b. A posting to a general ledger account
   
The part of the journal entry to be recorded first is the:

a. Asset
b. Credit
c. Debit
d. Liability
   
What is entered in the Posting Reference column of the general ledger?

a. The ledger account number
b. The date of the transaction
c. The amount of the transaction
d. A description of the transaction
   
The journal entry to record the payment of a bill for advertising expense would include a:

a. Debit to Advertising Expense and a credit to Cash
b. Debit to Advertising Expense and a credit to Accounts Payable
c. Debit to Cash and a credit to Advertising Expense
d. Debit to Accounts Payable and a credit to Advertising expense
   
The general journal organizes accounting information in:

a. Account order
b. Alphabetical order
c. Date order
d. Chronological order
   
The general ledger organizes accounting information in:

a. Account order
b. Alphabetical order
c. Date order
D. Chronological order
   
The journal entry to record the receipt of cash from clients on account would include a:

a. Debit to Cash and a credit to Fees Income
b. Debit to Fees income and a credit to Cash
c. Debit to Cash and a credit to Accounts Receivable
d. Debit to Accounts Receivable and a credit to Cash
   
A firm recorded the receipt of cash on account from a creditor as a debit to Cash and a credit
to Accounts Payable. The error was discovered after the data was posted.
The correcting entry should contain:

a. A debit to Cash and a credit to Accounts Receivable
b. A debit to Accounts Payable and a credit to Cash
c. A debit to Accounts Receivable and a credit to Accounts Payable
d. A debit to Accounts Payable and a credit to Accounts Receivable
   
Which of the following statements regarding a compound entry is accurate?

a. A compound entry contains two or more accounts.
b. A compound entry must contain multiple debits and multiple credits
c. The total value of the debits within a compound entry must equal the total value of the credits.
d. A compound entry includes all credits on top, with all debits displayed on the lines below
   
Which of the following not included within a column of the balance ledger form?

a. Account number
b. Description
c. Posting reference
d. Date
   
Which of the following statements about a journal entry is inaccurate?

a. The description is listed on the final line.
b. The debited account(s) are indented.
c. The credited account(s) are listed after the debited account(s).
d. It is possible for all accounts in a journal entry to increase.
   
The journal entry to record the withdrawal of cash by Sue Snow, the owner, to pay a personal utility bill would include a:

a. Debit to Sue Snow, Capital and a credit to Cash
b. Debit to Utilities Expense and a credit to Cash
c. Debit to Sue Snow, Drawing and a credit to Cash
d. Debit to Sue Snow, Drawing and a credit to Utilities Expense
   
The journal entry to record a payment made in January for rent for the months of February and March would include a:

a. Debit to Sue Snow, Capital and a credit to Cash
b. Debit to Rent Expense and a credit to Cash
c. Debit to Prepaid rent and a credit to Cash
d. Debit to Sue Snow, Drawing and a credit to Rent Expense
   
The journal entry to record the payment of cash on account to a creditor should include a:

a. Debit to Cash and a credit to Accounts Payable
b. Debit to Cash and a credit to Accounts Receivable
c. Debit to Accounts Payable and a credit to Cash
d. Debit to Accounts Receivable and a credit to Cash.
   
A general journal is like a(n):

a. Address Book
b. Appointment Calendar
c. Diary
d. To-Do List
   
Which of the following is not made possible through the use of the audit trail?

a. Trace information
b. Analyze results
c. Locate errors
d. Prevent fraud
b. Analyze results
   
Checks and invoice numbers are included in the journal entry description to:

a. Validate the transaction
b. Provide an audit trail
c. Trace information through the accounting system
d. Both provide an audit trail and trace information through the accounting system are correct
   
The Posting Reference column of a journal is used to:

a. Record the page number of the ledger account
b. Record the date on which an amount is posted to the ledger account
c. Record the number of the ledger account to which the information is posted
d. Record the source document for the transaction
   
The process of transferring data from the journal to the ledger is known as:

a. Balancing
b. Journalizing
c. Ledgering
d. Posting
   
The journal is referred to as the:

a. Record of final entry
b. Record of original entry
c. Record of permanent entry
d. Record of temporary entry
   
In a compound journal entry:

a. If two accounts are debited, two accounts are credited.
b. If two accounts are debited at least one account must be credited.
c. Total debits must equal total credits.
d. Both if B & C
   
Checks and Invoice numbers are included in the journal entry description to:

a. Validate the transaction
b. Provide an Audit Trail
c. Trace information through an accounting system
d. Both b and c are correct
   
The journal is referred to as the:

a. Record of final entry
b. Record of original entry
c. Record of permanent entry
d. Record of temporary entry
   
In a compound journal entry:

a. If two accounts are debited, two accounts must be credited.
b. If two accounts are debited, at least one account must be credited.
c. Total debits must equal total credits
d. Both b and c are correct.
   
Which of the reasons reflected below is the most accurate for including descriptions when making journal entries?

a. The audit trail will be more difficult to follow
b. They eliminate the need for recording the transactions
c. They serve as a substitute for recording the transactions
d. The audit trail will be easier to follow.