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Accounting 2

The primary purpose of the trial balance is to prove the equality of the debit and credit amounts after posting journal entries to ledger accounts.

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Minas Syd
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92 views

Accounting 2

The primary purpose of the trial balance is to prove the equality of the debit and credit amounts after posting journal entries to ledger accounts.

Uploaded by

Minas Syd
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

The primary purpose of the trial balance is to


a. disclose the complete effect of a transaction in one place.
b. make sure a journal entry is not posted twice.
c. transfer journal entries to the ledger accounts.
d. prove the equality of the debit and credit amounts after posting.

EXERCISES
1. Presented here are five economic events. For each item, indicate whether the event increased (+),
decreased (–), or had no effect (NE) on assets, liabilities, and stockholders’ equity.

Stockholders’
Assets = Liabilities + Equity
a. Received cash for services rendered.
b. Purchased supplies on account.
c. Paid employees' salaries.
d. Dividends paid in cash.
e. Expenses paid in cash.

2. For each of the following accounts indicate the effect of a debit or a credit on the account and the
normal balance (Debit or Credit). Increase (+), Decrease (–).

Debit _Credit_ Normal Balance


a. Salaries and Wages Expense.
b. Accounts Receivable.
c. Service Revenue.
d. Dividends
e. Retained Earnings.

3. Prepare a trial balance from the ledger accounts of Swisher Company as of January 31, 20XX.

Accounts Payable 1,500 Rent Expense $ 500


Accounts Receivable 2,500 Service Revenue 3,500
Cash 1,600 Supplies 200
Common Stock 2,200 Salaries and Wages Expense 1,000
Dividends 1,400
4. Selected accounts from the ledger of McDaniel Corporation appear below. For each account, indicate
the following:

(a) In the first column at the right, indicate the nature of each account, using the following
abbreviations:

Asset - A Liability - L None of the above -N


Expense - E Revenues - R

(b) In the second column, indicate the normal balance by inserting Dr. or Cr.

Type of Normal
Account Balance
a. Supplies ………………………………..
b. Notes Payable ………………………….
c. Service Revenue……………………….
d. Dividends……………………………….
e. Accounts Payable……………………..
f. Salaries and Wages Expense…………
g. Common Stock…………………………
h. Accounts Receivable…………………..
i. Equipment……………………………..
j. Notes Receivable………………………

5. Journalize the following business transactions in general journal form. Identify each transaction by number. You
may omit explanations of the transactions. (USE THE LINES ON THE NEXT PAGE TO RECORD YOUR JOURNAL
ENTRIES)
Jan. 1 Stockholders invest $40,000 in cash in starting a real estate office operating as a corporation.
Jan. 5 Purchased $500 of supplies on credit.
Jan. 10 Purchased equipment for $25,000, paying $3,500 in cash and signed a 30-day, $21,500, note payable.
Jan. 15 Real estate commissions billed to clients amount to $4,000.
Jan. 20 Paid $700 in cash for the current month's rent.
Jan. 25 Paid $250 cash on account for office supplies purchased in transaction 2.
Jan. 28 Received a bill for $800 for advertising for the current month.
Jan. 31 Paid $2,500 cash for office salaries.
Jan. 31 Paid $1,200 cash dividends to stockholders.
Jan. 31 Received a check for $2,000 from a client in payment on account for commissions billed in transaction 4.
Example: Bought supplies for $500 on Jan. Date Debit Credit
1.
Supplies Jan. 1 500
Cash 500

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