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Assignment 2.1 Handout 1. Review basic accounting definitions by completing the following crossword puzzle. 2. Sharpen your use of accounting terms by working this crossword puzzle. 1 3. Jane's Cream Soda, Inc., makes specialty soft drinks. At the end of 2010, Jane's had total assets of $300,000 and liabilities totaling $220,000. Requirements R1. Write the company's accounting equation, and label each amount as a debit or a credit. R2. The business's total revenues for 2010 were $460,000, and total expenses for the year were $380,000. How much was the business's net income (or net loss) for 2010? Write the equation to compute the company's net income, and indicate which element is a debit and which is a credit. Does net income represent a net debit or a net credit? 4. The following transactions occurred for Advanced Engineering: Requirement R1. Record the transactions in the journal. 5. The journal of Bell Technology Solutions, Inc., includes the following entries for August, 2010: Requirements R1. Describe each transaction. R2. Set up T-accounts using the following account numbers: Cash, 110; Accounts receivable, 120; Supplies, 130; Accounts payable, 210; Common stock, 310; Service revenue, 410; Rent expense, 510; Salary expense, 520. R3. Post to the accounts. Write dates and journal references in the accounts. Compute the balance of each account after posting. R4. Prepare the trial balance of Bell Technology Solutions at August 31, 2010. 2 6. Bridget Battle has trouble keeping her debits and credits equal. During a recent month, Bridget made the following accounting errors: Requirements R1. For each of these errors, state whether total debits equal total credits on the trial balance. R2. Identify each account that has an incorrect balance, and indicate the amount and direction of the error (such as \"Accounts receivable $500 too high\"). 7. Mike Smith started an environmental consulting company and during the first month of operations (December 2012) the business completed the following transactions: Requirements R1. Open the following four-column accounts: Cash, Accounts receivable, Office supplies, Office furniture, Building, Accounts payable, Common stock, Dividends, Service revenue, Salary expense, Rent expense, Advertising expense, and Utilities expense. R2. Record each transaction in the journal. Use the letters to identify the transactions. R3. Post to the accounts and keep a running balance for each account. R4. Prepare the trial balance of Smith Environmental Consulting Company at December 31, 2012. 8. After completing the trial balance in the previous problem, prepare the following financial statements for Smith Environmental Consulting Company: Requirements R1. Income statement for the month ended December 31, 2012. R2. Statement of retained earnings for the month ended December 31, 2012. The beginning balance of retained earnings was $0. R3. Balance sheet at December 31, 2012. 3
