Chapter 2&3 Review

Monday Feb 2, 2009

  1. For each of the following indicate how each account normally should be categorized on a classified balance sheet. UseCA for current asset, NCA for noncurrent asset, CL for current liability, NCL for noncurrent liability, And SE for stockholder’s equity. Also, indicate when the account normally has a debit or credit balance.

Account / Classification / Debit/Credit
1. Income Taxes Payable / CL / Credit
2. Accounts Receivable
3. Cash
4. Contributed Capital
5. Long-Term Debt
6. Property and Equipment
7. Retained Earnings
8. Accounts Payable
9. Land
10. Notes Payable (due in three months)
  1. Indicate the effects on the accounting equation for each of the following situations and prepare a journal entry

.

  1. Issued shares of stock to three investors in exchange for cash totaling $9000
  1. Acquired rakes and other hand tools (equipment) for $600, paying the hardware store $200 cash and agreeing informally to pay the balance in three months
  1. Ordered lawn mowers and edger’s costing $4,000 for XYZ Lawn Supply, Inc
  1. Purchased four acres of land for the future site of a storage garage. Paid cash, $5,000
  1. Received the mowers and edger’s that had been ordered and signed a promissory note to pay XYZ Lawn Supply in full in 60 days
  2. Sole for $1,250 one acre of land to the city for a park and accepted a note from the city indicating payment will be received by GGC in six months
  1. One of the owners borrowed $3,000 from a local bank for personal use
  1. Matching Definitions with Terms

____ 1. Expenses

____ 2. Matching principle

____ 3. Revenue principle

____ 4. Cash basis accounting

____ 5. Unearned Revenue

____ 6. Accrual basis accounting

____ 7. Prepaid Expenses

  1. Record expense when incurred in earning revenue
  2. A liability account used to record the obligation to provide future services or return cash that has been received before revenues have been earned.
  3. Costs that result when a company sacrifices resources to generate revenues
  4. Record revenues when earned, not necessarily when cash is received
  5. Record revenues when received and expense when paid
  6. A type of asset account used to record the benefits obtained when cash is paid before expenses are incurred
  7. Record revenues when earned and expenses when incurred.
  1. Use the following accounts and account balances.

Subscription Revenue / $22,222 / Advertising Revenue / $7,612
Other Revenues / $13,818 / Long-term Debt / $20,238
Salaries Expense / $10,478 / Other expenses / $27,816
Cash / $4,220 / Unearned Revenue / $1,473
Accounts Receivable / $6,411 / Equipment / $13,676
Interest Expense / $1,266 / Income tax expense / $1,187
Accounts Payable / $1,380

Calculate Net Income?

Calculate Total Expense?

Calculate Total Assets?