- •Chapter 2 Review of the Accounting Process
- •Q Questions for Review of Key Topicsuestion 2-1
- •Question 2-2
- •Question 2-3
- •Question 2-4
- •Question 2-5
- •Question 2-18
- •Question 2-19
- •Question 2-20
- •Question 2-21
- •Brief Exercises
- •Balance sheet Accounts
- •Inventory Accounts payable
- •InCome statement Accounts
- •Inventory Prepaid Insurance
- •InCome statement Accounts
- •Exercise 2-19 (continued)
- •2.Original transaction on November 1:
- •6.Original transaction during the year:
- •Cpa rEview qUestions
- •Problems
- •Problem 2-1 (continued)
- •Inventory Prepaid insurance
- •InCome statement Accounts
- •Problem 2-2 (continued)
- •Inventory Equipment
- •Problem 2-2 (continued)
- •InCome statement Accounts
- •Balance sheet Accounts
- •Problem 2-4 (continued) pastina company
- •Problem 2-4 (continued)
- •Interest expense Supplies expense
- •Insurance expense Bad debt expense
- •Income summary Retained earnings
- •Balance sheet Accounts
- •InCome statement Accounts
- •Problem 2-6 (continued)
- •Balance sheet Accounts
- •InCome statement Accounts
- •Problem 2-6 (continued)
- •Balance sheet Accounts
- •InCome statement Accounts
- •Income overstated
- •Balance sheet Accounts
- •InCome statement Accounts
- •Insurance expense Utility expense
- •Interest expense
- •Zambrano Wholesale Corporation
- •Income statement
- •Problem 2-13 (continued)
- •Excalibur corporation
Exercise 2-19 (continued)
Requirement 2
WOLKSTEIN
DRUG COMPANY
Income
Statement
For
the Year Ended December 31, 2011
Sales
revenue
$323,000
Cost of
goods sold
180,000
Gross
profit
143,000
Operating
expenses:
Wages $75,000
Rent
30,000
Depreciation 10,000
Utility 12,000
Bad
debt 7,000
Total
operating expenses
134,000
Net
income
$
9,000
Exercise 2-19 (concluded)
-
WOLKSTEIN DRUG COMPANY
Balance Sheet
At December 31, 2011
Assets
Current assets:
Cash
$ 20,000
Accounts receivable
$ 35,000
Less: Allowance for uncollectible accounts
(5,000)
30,000
Inventory
50,000
Prepaid rent
5,000
Total current assets
105,000
Property and equipment:
Equipment
100,000
Less: Accumulated depreciation
(40,000)
60,000
Total assets
$165,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
$ 23,000
Wages payable
4,000
Total current liabilities
27,000
Shareholders’ equity:
Common stock
$100,000
Retained earnings
38,000*
Total shareholders’ equity
138,000
Total liabilities and shareholders’ equity
$165,000
*Beginning balance of $29,000 plus net income of $9,000.
Exercise 2-20
Requirement 1
June 30 - adjusting entry
Wages expense ($10,000 x 3/5)6,000
Wages payable 6,000
July 1 - reversing entry
Wages payable 6,000
Wages expense 6,000
July 2 – payment of salaries
Wages expense 10,000
Cash 10,000
Requirement 2
June 30 - adjusting entry
Wages expense 6,000
Wages payable 6,000
July 2 - payment of salaries
Wages expense 4,000
Wages payable 6,000
Cash 10,000
Exercise 2-21
Requirement 1
The accountant would reverse adjusting entry 1, the accrual of interest receivable, and entry 5, the accrual of salaries payable.
Requirement 2
1.Interest receivable($90,000 x 8% x 3/12)1,800
Interest revenue 1,800
5.Salaries expense 8,000
Salaries payable 8,000
Requirement 3
1.Interest revenue 1,800
Interest receivable 1,800
5.Salaries payable 8,000
Salaries expense 8,000Exercise 2-22
Requirement 1
The transactions affected would be the prepayment of rent, transaction 2, and the purchase of supplies in transaction 6.
Requirement 2