P 2-57A

1.

a. This transaction does not qualify for recognition because issuing a new price list does not affect
the basic accounting equation. Boatsman must enter into a sales contract with one of its
customers and there must be performance under the contract (e.g., merchandise is delivered or a
service is performed by Boatsman or the customer makes a cash payment) before the transaction
is recorded.

b. This transaction does not qualify for recognition because the offer does not affect the basic
accounting equation. When there is performance under the contract (property or money is
exchanged), the transaction will be recorded.

c. This transaction does qualify for recognition because the receipt of cash by Boatsman and the
delivery of the deed constitute performance. Assets (cash and land) have been affected by this
transaction.

d. This transaction does not qualify for recognition because the total of the common share account
of Boatsman has not changed as a result of this transaction. This transaction does not involve
Boatsman but two other entities—two shareholders.

e. This transaction does qualify for recognition, because Boatsman has incurred an expense
(maintenance) that will lower shareholders’ equity. The actual performance of the service by the
dealer leads to recognition by Boatsman, regardless of whether Boatsman has paid the dealer for
the maintenance.

2. Item d illustrates the separate entity assumption—the transactions of a company are accounted for
separately from its owners, managers, and employees.
P 2-58A

1.

Assets = Liabilities + Shareholders’ Equity

Cash + Accounts +Supplies= Accounts + Notes + Common Retained

Receivable Payable Payable Shares Earnings

8,000 15,900 4,100 2,500 4,000 12,000 9,500

a. 15,000 15,000

b. (850) (850)**

c. 2,250 2,250

d. 8,000 8,000

e. (1,080) (1,080)

f. (2,150) (2,150)**

g. 4,700 4,700*

h. (3,180) (3,180)**

i. 1,920 1,920*

j. (500) 500

k. 1,290 (1,290)

i. (1,000) (1,000)

31,410 + 16,530 + 3,670 = 3,670 + 12,000 + 27,000 8,940

 Madero Accounting Inc.

Trial Balance

August 31, 2022

Account Debit Credit

Cash……………………………………………………………………………… $31,410

Accounts 16,530
Receivable………………………………………………………………

Supplies………………………………………………………………………… 3,670

Accounts Payable………………………………………………………………… $3,670

Notes Payable…………………………………………………………………… 12,000

Common Shares………………………………………………………………… 27,000

Retained Earnings…………………………………………………………… 9,500

Dividends Declared……………………………………………………………… 1,000

Revenue *………………………………………………………………………… 6,620

Expenses ** 6,180 _____

$58,790 $58,790

P 2-61A

Journal

Date Account and Explanation Debit Credit

Sept. 5 Trucks 34,900

Cash 34,900

(Record purchase of truck)

8 Inventory 3,400

Accounts Payable 3,400

 (Record purchase of inventory on account)

10 Supplies 1,450

Accounts Payable 1,450

(Record purchase of supplies on account)

11 Cash 12,800

Service Revenue 12,800

(Record performance of services)

12 Accounts Receivable 3,600

Service Revenue 3,600

(Record performance of services on account)

18 Wages Expense 4,170

Cash 4,170

(Record payment of wages)

22 Cash 3,600

Accounts Receivable 3,600

(Record collection of cash on account)

23 Cash 14,100

Notes Payable 14,100

(Record borrowing of cash)

28 Cash 40,000

Common Shares 40,000

(Record issuance of common shares)

30 Dividends Declared 4,350

Cash 4,350

(Declared and paid cash dividend)

 P 2-63A

1.

Asset = Liabilities + Shareholders' Equity

a. 22,000 22,000

b. (13,500) (13,500)

c. (5,320) (5,320)

d. (58,800) (58,800)

e. 128,200 146,850

18,650

f. (59,110) (59,110)

g. (3,500) (3,500)

h. 109,400

(109,400)

2.

Date Account and Explanation Debit Credit

a. Cash 22,000

Common Shares 22,000

(Issued common shares)

b. Rent Expense 13,500

Cash 13,500

(Record payment of rent)

c. Utilities Expense 5,320

Cash 5,320

(Record payment of utilties)

d. Wages Expense 58,800

 Cash 58,800

(Record payment of wages)

e. Cash 18,650

Accounts Receivable 128,200

Service Revenue 146,850

(Record performance of services)

f.* Supplies Expense 59,110

Cash 59,110

(Record payment for supplies)

g. Dividends Declared 3,500

Cash 3,500

(Declared and paid cash dividends)

h. Cash 109,400

Accounts Receivable 109,400

(Record receipt of cash on account)

* An alternative answer would involve making the following 2 entries:

Supplies…........................................................................................59,110

Cash……………………………………… 59,110

Supplies Expense…..........................................................................59,110

Supplies………………………………… 59,110

Cash

(a) 22,000 (b) 13,500

(e) 18,650 (c) 5,320

(h) 109,400 (d) 58,800
(f) 59,110

(g) 3,500

9,820
 Accounts Receivable

(e) 128,200 (h) 109,400

18,800

Common Shares

(a) 22,000

22,000

Dividends Declared

(g) 3,500

3,500

Service Revenue

(e) 146,850

146,850

Rent Expense

(b) 13,500

13,500

Utilities Expense

(c) 5,320

5,320

Wages Expense

(d) 58,800

58,800

Supplies Expense
 (f) 59,110

59,110

3.

Karleen’s Catering Service

Trial Balance

December 31, 2022

Account Debit Credit

Cash…………………………………………………………………………………… $9,820

Accounts Receivable……………………………………………………………… 18,800

Common Shares…………………………………………………………………… $22,000

Dividends Declared………………………………………………………………… 3,500

Service Revenue…………………………………………………………………… 146,850

Rent Expense……………………………………………………………………….. 13,500

Utilities Expense………………………………………………………………… 5,320

Wages Expense………………………………………………………………… 58,800

Supplies Expense……………………………………………………………… 59,110

$168,850 $168,850

P 2-72B

1. and 3.

Cash

6,000 (c) 8,000

(b) 699,000 (d) 379,000

(e) 9,000

(f) 28,000

(g) 13,000

(h) 26,000
 (i) 10,300

(j) 5,000

226,700

Accounts Receivable

130,000 (b) 699,000

(a) 690,000

121,000

Prepaid Rent

96,000 (f) 96,000

Supplies

(g) 13,000

13,000
 Accounts Payable

14,000

14,000

Interest Payable

(c) 8,000 8,000

Notes Payable

80,000

80,000

Common Shares

114,000

114,000

Retained Earnings

16,000

16,000

Service Revenue

(a) 690,000

690,000

Rent Expense

(f) 124,000

124,000

Advertising Expense

(h) 26,000

26,000
 Wages Expense

(d) 379,000

379,000

Repairs and Maintenance Expense

(e) 9,000

9,000

Interest Expense

(j) 5,000

5,000

Income Tax Expense

(i) 10,300

10,300

2.
Journal
Date Account and Explanation Debit Credit
a. Accounts Receivable 690,000

Service Revenue 690,000

(Performed services on account)

b. Cash* 699,000

Accounts Receivable 699,000

(Collected cash from customers)

c. Interest Payable 8,000

Cash 8,000

(Paid interest owing)

d. Wages Expense 379,000

Cash 379,000

(Paid wages)
 e. Repairs and Maintenance Expense 9,000

Cash 9,000

(Paid for repairs and maintenance)

f. Rent Expense 124,000

Prepaid Rent 96,000

Cash 28,000

(Incurred and paid rent expense)

g. Supplies 13,000

Cash 13,000

(Purchased supplies)

h. Advertising Expense 26,000

Cash 26,000

(Paid for advertising)

i. Income Tax Expense 10,300

Cash 10,300

(Paid income taxes)

j. Interest Expense 5,000

Cash 5,000

(Paid interest)

*
4.
Mulberry Services

Trial Balance

December 31, 2022

Account Debit Credit

Cash……………………………………………………………………………… $226,700

Accounts Receivable…………………………………………………………… 121,000

Supplies………………………………………………………………………… 13,000

Accounts Payable………………………………………………………………… $14,000

Notes Payable…………………………………………………………………… 80,000

Common Shares………………………………………………………………… 114,000

Retained Earnings…………………………………………………………… 16,000

Service Revenue……………………………………………………………… 690,000

Rent Expense………………………………………………………………… 124,000

Advertising Expense……………………………………………………………… 26,000

Wages Expense………………………………………………………………… 379,000

Repairs and Maintenance Expense………………………………………… 9,000

Interest Expense…………………………………………………… 5,000

Income Tax Expense…………………………………………………… 10,300 _____

$914,000 $914,000