WeyAP 9e SM Ch02 Final

CHAPTER 2The Recording ProcessASSIGNMENT CLASSIFICATION TABLEDo It!AExercises Problems211, 2, 542, 4, 6,7, 1410, 19466, 7Explain what a journal isand how it helps in therecording process.11, 12, 13,14, 163, 673, 5, 6, 710, 11, 125.Explain what a ledger isand how it helps in therecording process.176.Explain what posting isand how it helps in therecording process.15, 177, 87.Prepare a trial balanceand explain its purposes.18, 209, 10Study ObjectivesQuestions1.Explain what an accountis and how it helps in therecording process.12.Define debits and creditsand explain their use inrecording businesstransactions.2, 3, 4, 5,6, 7, 8, 9,14, 213.Identify the basic steps inthe recording process.4.Copyright 2009 John Wiley & Sons, Inc.BriefExercisesBProblems1A, 2A,3A, 5A1B, 2B,3B, 5B1A, 2A,3A, 5A1B, 2B,3B, 5B9, 122A, 3A, 5A2B, 3B, 5B9, 10, 11,13, 142A, 3A,4A, 5A2B, 3B,4B, 5B8Weygandt, Accounting Principles, 9/e, Solutions Manual(For Instructor Use Only)2-1

ASSIGNMENT CHARACTERISTICS e Allotted(min.)1AJournalize a series of transactions.Simple20–302AJournalize transactions, post, and prepare a trial balance.Simple30–403AJournalize and post transactions, and prepare a trial balance.Moderate40–504APrepare a correct trial balance.Moderate30–405AJournalize transactions, post, and prepare a trial balance.Moderate40–501BJournalize a series of transactions.Simple20–302BJournalize transactions, post, and prepare a trial balance.Simple30–403BJournalize transactions, post, and prepare a trial balance.Moderate40–504BPrepare a correct trial balance.Moderate30–405BJournalize transactions, post, and prepare a trial balance.Moderate40–50Copyright 2009 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 9/e, Solutions Manual(For Instructor Use Only)

WEYGANDT ACCOUNTING PRINCIPLES 9ECHAPTER 2THE RECORDING PROCESSNumberSOBTDifficultyTime EX72–4APSimple8–10EX85KSimple2–4EX96, 7APSimple10–12EX104, 7APModerate10–12EX114, 7APModerate12–15EX124, 6APModerate12–15EX137ANModerate6–8EX142, 7APSimple8–10Copyright 2009 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 9/e, Solutions Manual(For Instructor Use Only)2-3

THE RECORDING PROCESS (Continued)NumberSOBTDifficultyTime (min.)P1A2, 4APSimple20–30P2A2, 4, 6, 7APSimple30–40P3A2, 4, 6, 7APModerate40–50P4A7ANModerate30–40P5A2, 4, 6, 7APModerate40–50P1B2, 4APSimple20–30P2B2, 4, 6, 7APSimple30–40P3B2, 4, 6, 7APModerate40–50P4B7ANModerate30–40P5B2, 4, 6, 7APModerate40–50BYP12CSimple8–10BYP22, 6ANSimple8–10BYP3—APSimple15–20BYP46, 7AP, SModerate20–30BYP53, 6SSimple10–15BYP67AN, t 2009 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 9/e, Solutions Manual(For Instructor Use Only)

Copyright 2009 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 9/e, Solutions ManualExplain what a ledger is andhow it helps in the recordingprocess.Explain what posting is andhow it helps in the recordingprocess.5.6.Broadening Your PerspectivePrepare a trial balance andexplain its purposes.Explain what a journal is andhow it helps in the recordingprocess.4.7.Identify the basic steps inthe recording 16BE2-3BE2-6DI2-2E2-3E2-5E2-6E2-6E2-7BE2-2 E2-6BE2-5 E2-7DI2-1 E2-14E2-2 P2-1AE2-4 P2-5AP2-2BP2-3BP2-5BE2-12 P2-2BP2-2A P2-3BP2-3A P2-5BP2-5AE2-7E2-10E2-11E2-12P2-1AP2-2AP2-3AP2-3A P2-5BP2-5AP2-1BP2-2BP2-3BApplicationFinancial Reporting Decision MakingAcross theOrganizationExploring the mprehensionQ2-10Define debits and credits and Q2–21explain their use in recordingbusiness transactions.2.3.Explain what an accountis and how it helps in therecording process.Q2-1E2-1Knowledge1.Study ObjectiveP2-4BSynthesisEvaluationComparative Analysis Communication All About YouDecision Making Ethics CaseAcross ation Chart between Bloom’s Taxonomy, Study Objectives and End-of-Chapter Exercises and ProblemsBLOOM’S TAXONOMY TABLE(For Instructor Use Only)2-5

ANSWERS TO QUESTIONS1.A T account has the following parts: (a) the title, (b) the left or debit side, and (c) the right or credit side.2.Disagree. The terms debit and credit mean left and right respectively.3.Jeff is incorrect. The double-entry system merely records the dual effect of a transaction on theaccounting equation. A transaction is not recorded twice; it is recorded once, with a dual effect.4.Maria is incorrect. A debit balance only means that debit amounts exceed credit amounts in anaccount. Conversely, a credit balance only means that credit amounts are greater than debitamounts in an account. Thus, a debit or credit balance is neither favorable nor unfavorable.5.(a)(b)(c)Asset accounts are increased by debits and decreased by credits.Liability accounts are decreased by debits and increased by credits.Revenues and owner’s capital are increased by credits and decreased by debits. Expensesand owner’s drawing are increased by debits and decreased by credits.6.(a)(b)(c)(d)(e)(f)(g)Accounts Receivable—debit balance.Cash—debit balance.Owner’s Drawing—debit balance.Accounts Payable—credit balance.Service Revenue—credit balance.Salaries Expense—debit balance.Owner’s Capital—credit balance.7.(a)(b)(c)(d)(e)Accounts Receivable—asset—debit balance.Accounts Payable—liability—credit balanceEquipment—asset—debit balance.Owner’s Drawing—owner’s equity—debit balance.Supplies—asset—debit balance.8.(a)(b)(c)Debit Supplies and credit Accounts Payable.Debit Cash and credit Notes Payable.Debit Salaries Expense and credit Cash.9.(1)(2)(3)(4)(5)(6)Cash—both debit and credit entries.Accounts Receivable—both debit and credit entries.Owner’s Drawing—debit entries only.Accounts Payable—both debit and credit entries.Salaries Expense—debit entries only.Service Revenue—credit entries only.10.2-6The basic steps in the recording process are:(1) Analyze each transaction for its effect on the accounts.(2) Enter the transaction information in a journal.(3) Transfer the journal information to the appropriate accounts in the ledger.Copyright 2009 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 9/e, Solutions Manual(For Instructor Use Only)

Questions Chapter 2 (Continued)11.The advantages of using the journal in the recording process are:(1) It discloses in one place the complete effects of a transaction.(2) It provides a chronological record of all transactions.(3) It helps to prevent or locate errors because the debit and credit amounts for each entry canbe easily compared.12.(a)(b)13.When three or more accounts are required in one journal entry, the entry is referred to as acompound entry. An example of a compound entry is the purchase of equipment, part of which ispaid for with cash and the remainder is on account.14.(a)(b)15.The advantage of the last step in the posting process is to indicate that the item has been posted.16.(a)(b)(c)(d)17.The debit should be entered first.The credit should be indented.No, debits and credits should not be recorded directly in the ledger.The advantages of using the journal are:1. It discloses in one place the complete effects of a transaction.2. It provides a chronological record of all transactions.3. It helps to prevent or locate errors because the debit and credit amounts for each entrycan be easily compared.Cash .Hector Molina, Capital .(Invested cash in the business)9,000Prepaid Insurance .Cash.(Paid one-year insurance policy)800Supplies.Accounts Payable.(Purchased supplies on account)2,000Cash .Service Revenue .(Received cash for services rendered)7,5009,0008002,0007,500(a) The entire group of accounts maintained by a company, including all the asset, liability, andowner’s equity accounts, is referred to collectively as the ledger.(b) A chart of accounts is a list of accounts and the account numbers that identify their location inthe ledger. The chart of accounts is important, particularly for a company that has a large numberof accounts, because it helps organize the accounts and define the level of detail that acompany desires in its accounting system.Copyright 2009 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 9/e, Solutions Manual(For Instructor Use Only)2-7

Questions Chapter 2 (Continued)18.A trial balance is a list of accounts and their balances at a given time. The primary purpose of atrial balance is to prove (check) that the debits equal the credits after posting. A trial balance alsofacilitates the discovery of errors in journalizing and posting. In addition, it is useful in preparingfinancial statements.19.No, Jim is not correct. The proper sequence is as follows:(b) Business transaction occurs.(c) Information entered in the journal.(a) Debits and credits posted to the ledger.(e) Trial balance is prepared.(d) Financial statements are prepared.20.(a)(b)21.The normal balances are Cash debit, Accounts Payable credit, and Interest Expense debit.2-8The trial balance would balance.The trial balance would not balance.Copyright 2009 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 9/e, Solutions Manual(For Instructor Use Only)

SOLUTIONS TO BRIEF EXERCISESBRIEF EXERCISE 2-11.2.3.4.5.6.Accounts PayableAdvertising ExpenseService RevenueAccounts ReceivableA. J. Ritter, CapitalA. J. Ritter, editDebitCreditDebitCreditDebitBRIEF EXERCISE 2-2June 12312Account DebitedCashEquipmentRent ExpenseAccounts ReceivableAccount CreditedHank Norris, CapitalAccounts PayableCashService RevenueBRIEF EXERCISE 2-3June 12312Cash.Hank Norris, Capital .5,000Equipment .Accounts Payable .900Rent Expense.Cash.800Accounts Receivable .Service Revenue.300Copyright 2009 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 9/e, Solutions Manual5,000900800(For Instructor Use Only)3002-9

BRIEF EXERCISE 2-4The basic steps in the recording process are:1.Analyze each transaction. In this step, business documents are examinedto determine the effects of the transaction on the accounts.2.Enter each transaction in a journal. This step is called journalizing andit results in making a chronological record of the transactions.3.Transfer journal information to ledger accounts. This step is calledposting. Posting makes it possible to accumulate the effects ofjournalized transactions on individual accounts.BRIEF EXERCISE 2-5(a)Aug.2-10Effect on Accounting Equation(b)Debit-Credit Analysis1The asset Cash is increased; theowner’s equity accountT. J. Carlin, Capital is increased.Debits increase assets:debit Cash 8,000.Credits increase owner’s equity:credit T. J. Carlin, Capital 8,000.4The asset Prepaid Insurance isincreased; the asset Cash isdecreased.Debits increase assets:debit Prepaid Insurance 1,800.Credits decrease assets:credit Cash 1,800.16The asset Cash is increased; therevenue Service Revenue isincreased.Debits increase assets:debit Cash 800.Credits increase revenues:credit Service Revenue 800.27The expense Salaries Expense isincreased; the asset Cash isdecreased.Debits increase expenses:debit Salaries Expense 1,000.Credits decrease assets:credit Cash 1,000.Copyright 2009 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 9/e, Solutions Manual(For Instructor Use Only)

BRIEF EXERCISE 2-6Aug. 141627Cash .T. J. Carlin, Capital .8,000Prepaid Insurance.Cash.1,800Cash .Service Revenue.800Salaries Expense.Cash.1,0008,0001,8008001,000BRIEF EXERCISE 2-7Cash5/122,4005/153,000Ending Bal. 5,4005/5Service Revenue5/55,0005/153,000Ending Bal. 8,000Accounts Receivable5,000 5/122,400Ending Bal. 2,600BRIEF EXERCISE 2-8CashDateMay 1215ExplanationCopyright 2009 John Wiley & Sons, Inc.Ref.J1J1Debit2,4003,000Weygandt, Accounting Principles, 9/e, Solutions ManualCreditBalance2,4005,400(For Instructor Use Only)2-11