a. Analysis Assets increase. Equity increases.

Debit the cash account for $32,600.

Journal entry analysis
Credit the William Curtis, Capital account for $32,600.

Journal entry

Date Account titles and Explanation Debit Credit

Oct. 2 32,600

32,600

Investment by Owner.

b. Analysis Assets increase. Assets decreases.

Debit the supplies accounts for $925.

Journal entry analysis
Credit the cash account for $925.

Journal entry

Date Account titles and Explanation Debit Credit

Oct. 4 Office Supplies 925

Cash 925

Purchased supplies for cash.

c. Analysis Assets increase. Equity increases.

Debit the Offices Equipment accounts by $13,600.

Journal entry analysis
Credit the Accounts Payable account by $13,600.

Journal entry

Date Account titles and Explanation Debit Credit

Oct. 6 Office Equipment ………………………… 13,600

Account Payable………………………………. 13,600

Purchased office equipment on credit

d. Analysis Assets increase. Equity increases.

Debit the cash accounts for $3,000.

Journal entry analysis
Credit the Revenue account for $3,000.

Journal entry

Date Account titles and Explanation Debit Credit

Oct. 10 Cash ………………………… 3,000

Revenue……………..………………………………………. 3,000

Cash collected for services provided

e. Analysis Assets decrease. Liabilities decreases.

Debit the Accounts Payable account for $13,600.

Journal entry analysis
Credit the cash account for $13,600.

Journal entry

Date Account titles and Explanation Debit Credit

Oct. 12 Accounts Payable ………………………… 13,600

Cash……………..………………………………………. 13,600

Paid office equipment with cash.

f. Analysis Assets increase. Equity increases.

Debit the Accounts Receivable account by $5,400.

Journal entry analysis
Credit the Revenue account by $5,400.

Journal entry

Date Account titles and Explanation Debit Credit

Oct. 16 Accounts Receivable ………………………… 5,400

Revenue……………..………………………………………. 5,400

Customer billed for services provided.

g. Analysis Assets decrease. Equity decreases.

Debit the Rent Expense account for $3,500.

Journal entry analysis
Credit the Cash account by $3,500.

Journal entry

Date Account titles and Explanation Debit Credit

Oct. 18 Rent Expense ………………………… 3,500

Cash……………..………………………………………. 3,500

Paid October rent with cash.

h. Analysis Assets increase. Assets decreases.

Debit the Cash account for $5,400.

Journal entry analysis
Credit the Accounts Receivable account for $5,400.

Journal entry

Date Account titles and Explanation Debit Credit

Oct. 26 Cash ………………………… 5,400

Accounts Receivable …………………………. 5,400

Collected amounts owing on account.

i. Analysis Assets decrease. Equity decreases.

Debit William Curtis, Withdrawals $5,000.

Journal entry analysis
Credit the Cash account by $5,000.

Journal entry

Date Account titles and Explanation Debit Credit

Oct. 31 William Curtis, Withdrawals …………… 5,000

Cash………………………………… 5,000

Owner billed for the expense.

Exercise 2-6:
Cash Accounts Payable
(a) 32,600 925 (b) (e) 13,600 13,600 (c)
(d) 3,000 13,600 (e) 0 Balance
(h) 5,400 3,500 (g)
5,000 (i) William Curtis, Capital
Balance 17,975 32,600 (a)
32,600 Balance
Accounts Receivable
(f) 5,400 5,400 (h) William Curtis, Withdrawals
Balance 0 (i) 5,000
Balance 5,000
Office Supplies
(b) 925 Revenue
Balance 925 3,000 (d)
5,400 (f)
Office Equipment 8,400 Balance
(c) 13,600
Balance 13,600 Rent Expense
(g) 3,500
Balance 3,500
Exercise 2.7

Date Account titles and Explanation Debit Credit

A Cash ………………………… 76,500

Todd Inver, Capital account for ……. 76,500

Owner Investment

Date Account titles and Explanation Debit Credit

B Accounts Receivable ………………………… 7,200

Services Revenue ………………. 2,700

Provided services on credit

Date Account titles and Explanation Debit Credit

C Cash ………………………… 3,150

Services Revenue ……………. 3,150

Provided services for cash

 Date Account titles and Explanation Debit Credit

D Cash ………………………… 18,300

Unearned Revenue ……………. 18.300

To record deposited for work to be completed next year

Revenues are inflows of assets (or decreases in liabilities) received in exchange for goods or
services provided to customers. The other transactions did not create revenues for the following
reasons:
a. This transaction brought in cash, but it was an owner investment in the company.
d. This transaction brought in cash, but it also created a liability because the services have not
yet been provided to the client.
e. This transaction changed the form of the asset from accounts receivable to cash. Total assets
were not increased. Revenue was not generated.
f. This transaction brought cash into the company and increased assets, but it also increased a
liability by the same amount.
Exercise 2.8

Date Account titles and Explanation Debit Credit

b Salaries Expense ………………………… 1,125

Cash …………………………. 1,125

Paid the salary of the receptionist.

Date Account titles and Explanation Debit Credit

d Utilities Expense ………………………… 930

Cash …………………………………………. 930

Paid the utilities bill for the office.

Expenses are outflows or using up of assets (or the creation of liabilities) that occur in the
process of providing goods or services to customers. The transactions labelled a, c, and e were
not expenses for the following reasons:
a. This transaction decreased assets in settlement of a previously existing liability. Thus, the
using up of assets did not reduce equity.
c. This transaction was the purchase of an asset. The form of the company’s assets changed, but
total assets did not change, and the equity did not decrease.
e. This transaction was a distribution of cash to the owner. Even though equity decreased, the
decrease did not occur in the process of providing goods or services to customers.
Exercise 2.9
General Journal

Date Account Titles and Explanation PR Debit Credit

Cash ……………………………… 101 5,000
July Manny Gill Capital …………………….. 301 5,000
2017 1 To record investment by owner.
Equipment…………………………………… 150 2,500
10 Accounts Payable ……………………… 201 2,500
Purchased equipment on credit

Cash……………………………………………………………. 101 10,000

12 Revenue………………………………………… 401 10,000

Performed services for cash

Expenses………………………………………………… 501 3,500

14 Cash…………………………………………………… 101 3,500
Paid expenses

Accounts Receivable…………………………………… 101 1,500

15 Revenue…………………………………………………. 401 1,500
Completed services on account.

Manny Gill, Withdrawals…………………………… 302 250

31 Cash………………………………………………………. 101 250
Owner withdrew cash
Part 1 and 3

Cash 101
July 1 5,000 3,500 July 14

12 10,000 250 31
Balance 11,250

Accts. Receivable
106
July 15 1,500

Equipment 150
July 10 2,500

Accts. Payable 201

2,500 July 10

Manny Gill
Capital 301
5,000 July 1

Manny Gill
Withdrawals 302
July 31 250

Cash 101
10,000 July 12

1,500 15
11,500 Balance
Part 1 and 3
Cash Account No. 101
Date Explanation PR Debit Credit Balance
2017
July 1 G1 5,000 5,000
12 G1 10,000 15,000
14 G1 3,500 11,500
31 G1 250 11,250

Accounts Receivable Account No. 106

Date Explanation PR Debit Credit Balance
2017
July 15 G1 1,500 1,500

Equipment Account No. 150

Date Explanation PR Debit Credit Balance
2017
July 10 G1 2,500 2,500

Accounts Payable Account No. 201

Date Explanation PR Debit Credit Balance
2017
July 10 G1 2,500 2,500

Manny Gill, Capital Account No. 301

Date Explanation PR Debit Credit Balance
2017
July 1 G1 5,000 5,000

Manny Gill, Withdrawals Account No. 302

Date Explanation PR Debit Credit Balance
2017
July 31 G1 250 250

Revenue Account No. 401

Date Explanation PR Debit Credit Balance
2017
July 12 G1 10,000 10,000
15 G1 1,500 11,500

Expenses Account No. 501

Date Explanation PR Debit Credit Balance
2017
July 14 G1 3,500 3,500
Part 4
Wild West Secure
Trial Balance
July 31, 2017
Acct.
No. Account Title Debit Credit
101 Cash ....................................................... $11,250
106 Accounts receivable ............................. 1,500
150 Equipment.............................................. 2,500
201 Accounts payable.................................. $ 2,500
301 Manny Gill, capital ................................. 5,000
302 Manny Gill, withdrawals ........................ 250
401 Revenue ................................................. 11,500
501 Expenses................................................ 3,500
Totals .................................................. $19,000 $19,000