Course: Financial Accounting

Rules of Debit and Credit and Normal Balances State for each account whether it is likely to have debit entries only, credit entries only, or both debit and credit entries. Also, indicate its normal balance. Typical Entries Normal Balance 1. Accounts Payable Both debit and credit entries Credit 2. Cash Both debit and credit entries Debit 3. Dividends Debit 4. Miscellaneous Expense Debit Debit entries only Debit entries only Debit entries only Credit entries only 5. Insurance Expense Debit 6. Fees Earned Credit Journal Entry for Asset Purchase Prepare a journal entry for the purchase of office supplies on November 2 for $2,900, paying $335 cash and the remainder on account. If an amount box does not require an entry, leave it blank. Nov. 2 Office Supplies Cash 100 III Accounts Payable Journal Entry for Fees Earned Prepare a journal entry on August 13 for cash received for services rendered, $8,500. If an amount box does not require an entry, leave it blank. Aug. 13 Cash Fees Earned Journal Entry for Dividends Prepare a journal entry on June 30 for the payment of dividends of $10,000. If an amount box does not require an entry, leave it blank. June 30 Dividends Cash Missing Amount from an Account On August 1, the supplies account balance was $1,910. During August, supplies of $3,190 were purchased, and $1,440 of supplies were on hand as of August 31. Determine supplies expense for August. Trial Balance Errors 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. If the debit and credit totals would be equal, enter zero ("0") in the amount box. a. The payment of cash for the purchase of office equipment of $12,200 was debited to Land for $12,200 and credited to Cash for $12,200. The debit and credit totals would be equal by $ b. The payment of $2,310 on account was debited to Accounts Payable for for $220 and credited to Cash for $2,310. The credit total is higher by $ c. The receipt of cash on account of $2,300 was recorded as a debit to Cash for $8,300 and a credit to Accounts Receivable for $2,300. The debit total is higher by $ Correcting Entries The following errors took place in journalizing and posting the transactions below. Journalize the entries to correct the errors. a. The receipt of $7,740 for services rendered was recorded as a debit to Accounts Receivable and a credit to Fees Earned. If an amount box does not require an entry, leave it blank. Cash Accounts Receivable Feedback b. The purchase of supplies of $2,320 on account was recorded as a debit to Office Equipment and a credit to Supplies. Note: Prepare the entry to reverse the original entry first. If an amount box does not require an entry, leave it blank. Supplies Office Equipment II II II II Supplies Accounts Payable Horizontal analysis Two income statements for Paragon Company follow: Paragon Company Income Statements For the Years Ended December 31 2017 2016 Fees earned $2,280,000 $1,900,000 Expenses (1,763,200) (1,520,000) Net income $516,800 $380,000 Prepare a horizontal analysis of Paragon Company's income statements. If required, round your percentage to the nearest whole number. Paragon Company Income Statements For the Years Ended December 31 Increase/(Decrease) 2017 2016 Amount Percent Fees earned $2,280,000 $1,900,000 $ % Expenses (1,763,200) (1,520,000) % Net income $516,800 $380,000 $ %