ACC 200 SJC Transaction Analysis of the Blank Cells Multiple Choice Questions

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Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. A decrease in owner’s equity may result from a(n)
a. purchase of office supplies for cash.

b.	withdrawal of cash from the business by the owner.
c.	revenue that is derived from sales of goods or services.
d.	investment of cash in the business by the owner.

____ 2. A debit
a. is on the left side.

b.	decreases assets.
c.	increases liabilities.
d.	increases owner’s equity.

____ 3. A chart of accounts does NOT include
a. assets.

b.	liabilities.
c.	owner’s equity.
d.	names of customers.

____ 4. Purchase invoices received from suppliers provide information about
a. cash receipts.

b.	sales of goods.
c.	purchases of goods or services.
d.	cash payments.

____ 5. Copies of sales tickets or sales invoices issued to customers or clients provide information
about
a. sales of goods or services.

b.	purchases of goods or services.
c.	cash receipts.
d.	cash payments.

Problem
6. Show the effect of each transaction on the three basic accounting elements by indicating the
dollar amount of the increase or decrease under the proper element heading. Compute the resulting accounting
equation.
a. Owner invested $16,500 cash in the business.

b.	Paid premium for two-year insurance policy, $1,500.
c.	Purchased a van valued at $35,000 with $5,000 down payment; the balance to be paid over three years.
d.	Paid the rent for the month, $900.
e.	Purchased $470 of supplies for cash.
f.	Cash sales for the month, $8,750.
g.	Billed credit customers $14,200 for monthly services.
h.	Paid monthly utility bill, $210.
i.	Owner withdrew $2,200 for personal use.
j.	Received payments of $3,300 from credit customers.

ASSETS	=
Cash	+	Accounts Rec.	+	Supplies	+	Prepaid Ins.	+	Van	=	>
>
a.	____	____	____	____	____	>
b.	____	____	____	____	____	>
c.	____	____	____	____	____	>
d.	____	____	____	____	____	>
e.	____	____	____	____	____	>
f.	____	____	____	____	____	>
g.	____	____	____	____	____	>
h.	____	____	____	____	____	>
i.	____	____	____	____	____	>
j.	____	____	____	____	____	>
____	____	____	____	____	>

>
<

LIAB.	+	OWNER’S EQUITY
<	Notes Payable	+	Capital	–	Drawing	+	Revenues	–	Expenses
<
<	a.	____	____	____	____	____
<	b.	____	____	____	____	____
<	c.	____	____	____	____	____
<	d.	____	____	____	____	____
<	e.	____	____	____	____	____
<	f.	____	____	____	____	____
<	g.	____	____	____	____	____
<	h.	____	____	____	____	____
<	i.	____	____	____	____	____
<	j.	____	____	____	____	____
<	____	____	____	____	____

PROOF

Cash	____	Notes Payable	____
Accounts Receivable	____	Capital	____
Supplies	____	Drawing	____
Prepaid Insurance	____	Revenues	____
Van	____	Expenses	____
____	____

7. occurred:

Madame Shira began a fortune telling business on May 1. The following transactions

1. Owner Madame Shira invested $5,000 cash in the business.

2.	Purchased $2,000 of furniture with a down payment of $500; the rest by issuing an account payable to be paid in three monthly installments.
3.	Paid $700 rent.
4.	Purchased a crystal ball for $300.
5.	Paid $1,700 for a 12-month insurance policy.
6.	During the first month received $2,500 from cash customers.
7.	Sent billings of $2,000 for services rendered to credit customers.
8.	Paid assistant $1,500 wages for the month.
9.	Received $600 in payments from credit customers.
10.	Borrowed $3,200 by signing a note.
11.	Made a $500 payment on the furniture bill (from transaction 2).
12.	Owner withdrew $300 cash for personal use.
13.	Paid bills for advertising $60, utilities $39, and repairs $52.

Required:
1. Enter the above transactions in an accounting equation work sheet.
2. Prepare an income statement for Madame Shira for the month of May.
3. Prepare a statement of owner’s equity for the month of May.
8. From the following list of accounts, prepare an income statement, statement of owner’s
equity, and balance sheet for the year ended or at December 31, 20–, for J. Carr’s Delivery Service.
Cash

$11,450
Accounts Payable	4,450
Fees Earned	41,500
J. Carr, Capital January 1, 20–	14,500
J. Carr, Drawing	7,000
Office Supplies	250
Rent Expense	10,000
Accounts Receivable	7,000
Equipment	6,000
Wages Expense	14,000
Repairs Expense	250

Furniture 4,500

9.	Dr. Etana Jenson is a podiatrist. As of December 31, Jenson owned the following assets
related to the professional practice:
Cash	X-ray Equipment

$6,600 $9,000
Office Equipment 3,500 Laboratory Equipment 3,000
As of that date, Jenson owed business suppliers as follows:
Top Flight Office Equipment Co. $3,000
Dunhill Medical Supplies Company 1,000
Island Gas Company 2,200
Required:
a. Compute the amount of assets, liabilities, and owners’ equity as of December 31.

Assets	=	Liabilities	+	Owner’s Equity
_______________	_______________	_______________
b.	Assuming that during January there is an increase of $4,600 in Dr. Jenson’s business assets and an increase of $2,500 in the business liabilities, compute the resulting equation as of January 31.
_______________	_______________	_______________
c.	Assuming that during February there is a decrease of $1,500 in assets and a decrease of $1,200 in liabilities, compute the resulting accounting equation as of February 28.
_______________	_______________	________________

10. Record the following transactions in the T accounts below. Indicate next to each entry the
number for that transaction. After all transactions have been recorded, foot the accounts where necessary and
enter the balances in the proper places. Prepare a trial balance for Douglas Distinctive Services as of
December 31, 20–.
1. Mr. Douglas invested $25,000 cash in the business.

2.	Purchased equipment worth $7,000 with a $500 down payment. The remainder is due in 30 days.
3.	Paid $900 cash for a six-month insurance policy.
4.	Received $3,000 cash from customers for services rendered.
5.	Paid wages, $1,750.
6.	Received and paid advertising bill of $100.
7.	Performed services worth $2,500 for credit customers.
8.	Received $1,700 cash from customers previously billed on account.
9.	Mr. Douglas withdrew $5,300 cash for personal use.
10.	Paid utility bill, $205.

Cash
Accounts Receivable
Prepaid Insurance
Equipment
Accounts Payable
Douglas, Capital
Douglas, Drawing
Repair Fees
Wages Expense
Advertising Expense
Utilities Expense
11. Doug Allen has decided to go into the insect extermination business and to operate as Doug’s
Extermination Service. The following transactions were completed during the first month of operations, May,
20–.
1. Doug invested $35,000 cash in the business.

2.	Purchased extermination equipment for $17,000 in cash.
3.	Paid $700 rent for garage and office quarters.
4.	Purchased chemicals (expense) for $1,100 from Low Glow Chem Co. on account.
5.	Received $1,600 revenue for extermination service.
6.	Paid telephone bill, $120
7.	Paid assistant’s salary, $700.
8.	Earned $980 revenue for extermination service, on account.
9.	Paid electric bill, $230.
10.	Paid for truck repairs (expense), $145.
11.	Paid $600 to Low Glow Chem Co., on account.
12.	Paid $131 for gas and oil for truck (expense).

13. Received $1,400 revenue for extermination service.
14. Received $500 for services previously earned on account in transaction (8).
15. Paid assistant’s salary, $900.
Enter the transactions in the T accounts, then enter the total of each column. If an account has entries on both
sides, determine the balance and enter it on the side with the larger total.
Cash
Accounts Receivable
Extermination Equipment
Accounts Payable
D. Allen, Capital
Extermination Revenue
Rent Expense
Wages Expense
Truck Expense
Electricity Expense
Telephone Expense
Chemical Expense

12. after each entry.

Prepare general journal entries to record the following transactions. Omit the explanations

Mar. 1 J. Lynch invested in a neighborhood movie house. Land, $100,000; building,

$400,000; and equipment, $50,000; totaling $550,000.
2	Rental expense for the movies shown for the month, $6,000 on account.
5	Ticket sales for the month, $22,000 cash.
8	Wages paid for the month, $11,000.
12	Purchased a new popcorn machine, $3,300 on account.
17	Paid monthly fee to maintenance company, $2,700.
23	Rented the theater to an organization for a night. Billed them $2,300.
30	Paid $600 on the amount owed for the new popcorn machine.

13. Prepare general journal entries to record the following transactions. Omit explanations.
Jan. 3 Paid office rent, $1,600.

4	Bought a truck costing $50,000, making a down payment of $7,000.
6	Paid wages, $3,000.
7	Received $16,000 cash from customers for services performed.
10	Paid $4,100 owed on last month’s bills.
12	Billed credit customers, $5,300.
17	Received $1,800 from credit customers.
19	Taylor Gordon, the owner, withdrew $1,700.
23	Paid $700 on amount owed for truck.
29	Received bill for utilities expense, $255.

14. George Smyth opened a computer repair business on Apr. 1, 20–. During the first month of
operations, the firm had the following transactions. Record these transactions on page 1 of the general journal.
Omit explanations. Post appropriate transactions to the general ledger.
Apr. 1 George Smyth invested $30,000 cash in the business.

2	Paid rent for April, $2,100.
8	Bought equipment for $12,000 and issued a check for $3,000 as a down payment.
12	Performed services for $3,200 in cash, and $1,200 on credit.
19	Paid electric bill, $225.
25	Received $900 on account from credit customers.

JOURNAL Page 1

Date

Description

Post Ref.

Debit

Credit

GENERAL LEDGER

Account Cash	Account No. 101
Post	Balance
Date	Item	Ref.	Debit	Credit	Debit	Credit

Account Accounts Receivable Account No. 122

Post	Balance
Date	Item	Ref.	Debit	Credit	Debit	Credit

Account Equipment Account No. 181

Post	Balance
Date	Item	Ref.	Debit	Credit	Debit	Credit

Account Accounts Payable Account No. 202

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