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Exam 2: Analyzing Transactions

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Question 21

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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 note payable for the balance. Prepare the journal entry to record this transaction.

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Question 22

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

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A chart of accounts is setup by assignin...

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Question 23

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In which of the following types of accounts are increases recorded by credits?

Journalizing eliminates fraud.

Which of the following will increase retained earnings?

The double-entry accounting system records each transaction twice.

Exhibit 2-1 All nine transactions for Ralston Sports Co. for September 2011, the first month of operations, are recorded in the following T accounts: Refer to Exhibit 2-1. Prepare a trial balance, listing the accounts in their proper order.

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 totals to be unequal, indicate whether the debit or credit total is higher and by how much.

Increases and decreases in various types of accounts are listed below. In each case, indicate by "Dr." or "Cr." (a) whether the change in the account would be recorded as a debit or a credit and (b) whether the normal balance of the account is a debit or a credit.

Once journal entries are posted to accounts, each account will show a new balance after each entry.

On January 1, 2011, Cary Parsons established Cary's Catering Service. Listed below are accounts to use for transactions (a) through (e), each identified by a number. Following this list are the transactions that occurred during the first month of operations. You are to indicate for each transaction the accounts that should be debited and credited by placing the account number(s) in the appropriate box.

To determine the balance in a prepaid expense account, subtract credits from debits.

For a month's transactions for a typical medium-sized business, the accounts payable account is likely to have only credit entries.

The bookkeeper for Brockton Industries prepared the following journal entries and posted the entries to the general ledger as indicated in the T accounts presented. Assume that the dollar amounts and the descriptions of the entries are correct. REQUIRED: If you assume that all journal entries have been recorded correctly, use the above information to: (1) Identify the postings to the general ledger that were made incorrectly. (2) Describe how each incorrect posting should have been made.

Record the following selected transactions for April in a two-column journal, identifying each entry by letter:

The erroneous arrangement of digits, such as writing $45 as $54, is called a slide.

The balance of the account can be determined by adding all of the debits, adding all of the credits, and adding the amounts together.

The following errors took place in journalizing and posting transactions: Journalize the entries to correct the errors. Omit the explanations.

Debiting the cash account will increase the account.

When a transposition error is made on the trial balance, the difference between the debit and credit totals on the trial balance will be