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ch 3 - CHAPTER 3 The Accounting Information System...

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CHAPTER 3 The Accounting Information System SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 3-4 Debit Effect Credit Effect Normal Balance (a) (b) (c) (d) (e) (f) Accounts Payable Advertising Expense Service Revenue Accounts Receivable Retained Earnings Dividends Decrease Increase Decrease Increase Decrease Increase Increase Decrease Increase Decrease Increase Decrease Credit Debit Credit Debit Credit Debit BRIEF EXERCISE 3-5 Account Debited Account Credited June 1 2 3 12 Cash Equipment Rent Expense Accounts Receivable Common Stock Accounts Payable Cash Service Revenue 3-1
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BRIEF EXERCISE 3-8 (a) Basic Analysis (b) Debit-Credit Analysis Aug. 1 The asset Cash is increased; the stockholders’ equity account Common Stock is increased. Debits increase assets: debit Cash $5,000. Credits increase stockholders’ equity: credit Common Stock $5,000. 4 The asset Prepaid Insurance is increased; the asset Cash is decreased. Debits increase assets: debit Prepaid Insurance $1,500. Credits decrease assets: credit Cash $1,500. 16 The asset Cash is increased; the revenue Service Revenue is increased. Debits increase assets: debit Cash $900. Credits increase revenues: credit Service Revenue $900. 27 The expense Salaries Expense is increased; the asset Cash is decreased. Debits increase expenses: debit Salaries Expense $500. Credits decrease assets: credit Cash $500. BRIEF EXERCISE 3-10 Cash Service Revenue 5/12 1,900 5/15 2,000 5/5 2,800 5/15 2,000 Accounts Receivable 5/5 2,800 5/12 1,900 3-2
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BRIEF EXERCISE 3-12 RICHARDSON COMPANY Trial Balance December 31, 2007 Debit Credit Cash .............................................................................. Prepaid Insurance ........................................................ Accounts Payable ........................................................ Unearned Revenue ...................................................... Common Stock ............................................................. Retained Earnings ....................................................... Dividends ......................................................................
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