Financial Accounting

Financial Accounting

1.    The chart of accounts classify the accounts to make identification of the accounts easier. Discuss how companies set up their chart of accounts for use in their business

2.    On September 1st, Erika Company purchased land for $47,500 cash. Write the journal entry in the space below.

3.    On October 10th, Nikle Company purchased supplies worth $2,750 on account.
(a)  Write the journal entry in the space below.

(b) Nikle Company paid this bill on October 25th. Write the journal entry in the space below.

4.    On October 17th Nikle Company purchased a building and a plot of land for $750,000. The building was valued at $500,000 while the land carried a value of $250,000. Nikle paid $300,000 down in cash and signed a notes payable for the balance. In the space below write the journal entry.

5.    On November 1st Nikle Company made a cash payment of $200,000 on a note payable that was generated in the purchase of a building and land plot. Write the journal entry for this payment in the space below.

6.    Damien Lawson invests $45,000 to initiate the operation of his business, JumpStart, on January 7th. Journalize this transaction.

7.    On January 8th, Damien Lawson transfers ownership of several pieces of office equipment to his new business, JumpStart. When new, these items were worth $72,500. The fair market value of the equipment is $60,000. Journalize this transfer.

8.    On August 30th JumpStart  pays numerous bills which include:
Payment to the landlord for August rent – $950
Payment to the Gas & Electric Company for August’s bill – $525
Payment of employee wages for the last half of August – $1,880
Payment of shopping center’s parking lot cleaning fee – $275
Journalize these payments as one compound journal entry.

9.    On October 30th Damien Lawson withdraws $3,330 from JumpStart for personal use. Journalize this event.

10.    Prepare a journal entry for the purchase of a truck on April 4 for $85,700, paying $15,000 cash and the remainder on account.

11.    Prepare a journal entry on October 12 for the fees earned on account, $14,600.

12.    Prepare a journal entry on March 27 for the payment of $8,000 to the owner of Credit Consultant Company, Neal Stone, for personal use.

13.    State for each account whether it is likely to have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries.  Also, indicate the normal balance of each account.

1.    Fees Earned    4.    Supplies
2.    Utilities Expense    5.    Cash
3.    Accounts Payable    6.    Accounts Receivable
14.    On June 1, the cash account balance was $75,880.  During June, cash receipts totaled $305,000 and the June 30 balance was $96,750.  Determine the cash payments made during June.

15.    For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal.  If the error would cause the trial balance total to be unequal, indicate whether the debit or credit total is higher and by how much.
A.    Payment of a cash withdrawal of $6,800 was journalized and posted as a debit of $8,600 to Salaries Expense and a credit of $8,600 to Cash.
B.    A fee of $9,780 earned was debited to Accounts Receivable for $7,980 and credited to Fees Earned for $9,780.
C.    A payment of $3,000 to a creditor was posted as a credit of $3,000 to Accounts Payable and a credit of $3,000 to Cash.

16.    The following errors took place in journalizing and posting transactions:

A.    A withdrawal of $5,000 by Stan Norton, owner of the business, was recorded as a debit to Office Expense and a credit to Cash.
B.    Accounts receivable payment for $7,800 was recorded as a debit to Cash and a credit to Fees Earned.

Journalize the entries to correct the errors.  Omit the explanations.

17.    Discuss and describe how errors in accounts can be found.

18.    On November 30th, Damien Lawson is informed by his accountant that $550 of a transaction recording the purchase of office supplies was really office equipment. He has been asked to correct this journal entry. Write the journal entry to correct this situation.

19.    Journalize the entries to correct the following errors:

(a)    A purchase of supplies for $200 on account was recorded and posted as a debit to Supplies for $500 and as a credit to Accounts Receivable for $500.
(b)    A receipt of $4,000 from Fees Earned was recorded and posted as a debit to Fees Earned for $4,000 and a credit to Cash for $4,000.

20.    For the following, mark an “D” if the following account normally has a debit balance and mark a “C” if the following account normally has a credit balance.

_____1. Notes Payable
_____2. Mortgage Payable
_____3. Drawing
_____4. Accounts Receivable
_____5. Capital
_____6. Rent Revenue
_____7. Unearned Income
_____8. Utility Expense
_____9. Automobiles


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