wrd ab.az.ch02 sv analyzing transaction

8/14/2019 WRD Ab.az.Ch02 SV Analyzing Transaction

1/41

1

2

Analyzing Transactions

Student Version


2/41

1-2

2-2

2

Describe the

characteristics of anaccount and a chart of

accounts.

1

2-2


3/41

1-3

2-3

3

The T Account

Title

The left side of

the account is

called the debit

side.

Debit

1

The right side of

the account is

called the credit

side.

Credit


4/41

1-4

2-4

4

Cash(a) 25,000 (b) 20,000

(d) 7,500 (e) 3,650

(f) 950(h) 2,000

Balance 5,900Balance of the account

1


5/41

1-5

2-5

5

Assetsare resources owned by the

business entity.

1

Liabilitiesare debts owed tooutsiders (creditors).

Owners equityis the owners right

to the assets of the business.

(cont inued)

Chart of Accounts


6/41

1-6

2-6

6

Revenuesare increases in owners

equity as a result of selling services

or products to customers.

1

Chart of Accounts

Expensesare the results of using up

of assets or consuming services in the

process of generating revenues.


7/41

1-72-7

7

Describe and illustrate

journalizing transactionsusing the double-entry

accounting system.

2

2-7


8/41

1-82-8

8

On November 1, Chris Clark opens anew business and deposits $25,000 in a

bank account in the name of

NetSolutions.

Transaction A

2


9/41

1-92-9

9

Date Description Debit CreditNov. 1

2009Cash 25,000

Chris Clark, Capital 25,000

Invested cash in NetSolutions.

P.R.

JOURNAL Page 1

2


10/41

1-102-10

10

The effect of this entry is shown in the

accounts of NetSolutions as follows:Cash

Nov. 1 25,000 Nov. 1 25,000

Chris Clark, Capital

2


11/41

1-112-11

11

On November 5, NetSolutions bought

land for $20,000, paying cash.

Transaction B

2


12/41

1-122-12

12

On November 10, NetSolutions bought

supplies on account for $1,350.

Transaction C

2


13/41

1-132-13

13

On November 18, NetSolutions received

fees of $7,500 from customers for services

rendered.

Transaction D

2


14/41

1-142-14

14

Throughout the month, NetSolutions

incurred the following expenses: wages,

$2,125; rent, $800; utilities, $450; and

miscellaneous, $275.

Transaction E

2


15/41

1-152-15

15

On November 30, NetSolutions paidcreditors on account, $950.

Transaction F

2


16/41

1-162-16

16

Chris Clark determined that the costof supplies on hand on November 30

was $550.

Transaction G

2


17/41

1-172-17

17

On November 30, Chris Clark

withdrew $2,000 from NetSolutions

for personal use.

Transaction H

2


18/41

1-182-18

18

Describe and illustrate

the journalizing andposting of transactions

to accounts.

3

2-18


19/41

1-192-19

19

Dec. 1 NetSolutions paid a premium of

$2,400 for an insurance policy

for liability, theft and fire. Thepolicy covers a one-year period.

3


20/41

1-202-20

20

3

to Cash

Step 1

ep 3

Step 1

Step 2

Step 2

ep 3

(cont inued)

Exhibit 4 Diagram of the Recording and

Posting of a Debit and a Credit


21/41

1-212-21

21

3

Step 1

ep 3

Step 2

Step 1

ep 4

Step 3

Step 3

Exhibit 4 Diagram of the Recording and Posting

of a Debit and a Credit(cont inu ed)


22/41

1-222-22

22

Dec. 1 NetSolutions paid rent for December,

$800. The company from which

NetSolutions is renting its store space

now requires the payment of rent on the

first of each month, rather than at the end

of the month.

3


23/41

1-232-23

23

Dec. 1 NetSolutions received an offer from a

local retailer to rent the land purchased

on November 5. The retailer plans touse the land as a parking lot for its

employees and customers.

NetSolutions agreed to rent the land to

the retailer for three months, with therent payable in advance.

(cont inued)

3


24/41

1-242-24

24

Dec. 1 NetSolutions receives $360 for three

months rent for use of its land

beginning December 1.

3


25/41

1-252-25

25

Dec. 4 NetSolutions purchased office

equipment on account from Executive

Supply Co. for $1,800.

3


26/41

1-262-2626

Dec. 6 NetSolutions paid $180 for a newspaper

advertisement.

3


27/41

1-272-2727

Dec. 11 NetSolutions paid creditors $400.

3


28/41

1-282-2828

Dec. 13 NetSolutions paid a receptionist and

part-time assistant $950 for two weeks

wages.

3


29/41

1-292-2929

Dec. 16 NetSolutions received $3,100 from

fees earned for the first half of

December.

3


30/41

1-302-3030

Dec. 20 NetSolutions paid $900 to Executive

Supply Co. on the $1,800 debt owed

from the December 4 transaction.

3


31/41

1-312-3131

Dec. 21 NetSolutions received $650 from

customers in payment of their accounts.

3


32/41

1-322-3232

Dec. 23 NetSolutions paid $1,450 for supplies.

3


33/41

1-332-3333

Dec. 27 NetSolutions paid the receptionist and

part-time assistant $1,200 for two weeks

wages.

3


34/41

1-342-3434

Dec. 31 NetSolutions paid its $310 telephone bill

for the month.

3


35/41

1-352-3535

Dec. 31 NetSolutions paid $225 for electric usage

for the month.

3


36/41

1-362-3636

Dec. 31 NetSolutions received $2,870 from fees

earned for the second half of December.

3


37/41

1-372-3737

Dec. 31 NetSolutions earned $1,120 on account

for the second half of December.

3


38/41

1-382-3838

Dec. 31 Chris Clark withdrew $2,000 for

personal use.

3


39/41

1-392-3939

Prepare an unadjusted

trial balance and explainhow it can be used to

discover errors.

4

2-39

4


40/41

1-402-4040

4

Exhibit 6 Trial Balance


41/41

1-412-4141

wrd ab.az.ch02 sv analyzing transaction

Documents