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Unformatted text preview: Analyze statements about accounting and the recording process. (SO 1) Identify debits, credits, and normal balances. (SO 2) EXERCISES: SET B E2-1B Mai Finly has prepared the following list of statements about accounts. 1. An account is an accounting record of either a specific asset or a specific owners equity item. 2. An account shows both increases and decreases in the item it relates to. 3. Some items, such as Accounts Payable and Accounts Receivable, are combined into one account. 4. An account has a left, or debit side, and a right, or credit side. 5. A simple form of an account consisting of just the account title, and one column, is called a T-account. Instructions Identify each statement as true or false. If false, indicate how to correct the statement. E2-2B Selected transactions for B. Boyce, a colerer, in her first month of business, are as follows. Jan. 2 Invested $20,000 cash in business. 3 Paid $500 cash for advertising. 9 Purchased equipment for $7,000 cash. 11 Billed customers $2,300 for services performed. 16 Purchased supplies on account for $700. 20 Received $1,100 cash from customers billed on January 11. 23 Paid creditor $400 cash on balance owed. 28 Withdrew $1,200 cash for personal use by owner. Instructions For each transaction indicate the following. (a) The basic type of account debited and credited (asset, liability, owners equity). (b) The specific account debited and credited (cash, rent expense, service revenue, etc.). (c) Whether the specific account is increased or decreased. (d) The normal balance of the specific account. Use the following format, in which the January 2 transaction is given as an example. Account Debited Account Credited (a) (b) (c) (d) (a) (b) (c) (d) Basic Specific Normal Basic Specific Normal Date Type Account Effect Balance Type Account Effect Balance Jan. 2 Asset Cash Increase Debit Owners B. Boyce, Increase Credit Equity Capital E2-3B Data for B. Boyce, interior decorator, are presented in E2-2B. Instructions Journalize the transactions using journal page J1. (You may omit explanations.) E2-4B Presented below is information related to East Lake Real Estate Agency....
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- Fall '10