Chapter_3_HW_Solution_final - AEM 221 Financial Accounting...

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AEM 221 Financial Accounting Spring 2007 Chapter 3 Homework Solution P3-1 Recording Non-quantitative Journal Entries The following list includes a series of accounts for Choudhury Corporation that has been operating for three years. These accounts are listed and numbered for identification. Following the accounts is a series of transactions. For each transaction, indicate the account(s) that should be debited and credited by entering the appropriate account number(s) to the right of each transaction. If no journal entry is needed, use number 16. If there is more than one account, separate your answer with a comma. The first transaction is used as an example. Account No. Account Title Account No. Account Title 1 Cash 9 Wages payable 2 Accounts receivable 10 Income taxes payable 3 Supplies on hand 11 Contributed capital 4 Prepaid expense 12 Retained earnings 5 Equipment 13 Service revenue 6 Patents 14 Operating expenses (wages, supplies, interest) 7 Accounts payable 15 Income tax expense 8 Note payable 16 None of these Required: Transactions Debit Credit a. Purchased equipment for use in the business; paid one-third cash and signed a note payable for the balance. 5 1, 8 b. Issued stock to new investors. 1 11 c. Paid cash for salaries and wages. 14 1 d. Collected cash for services performed this period. 1 13 e. Collected cash on accounts receivable for services performed last period. 1 2 f. Performed services this period on credit. 2 13 g. Paid operating expenses incurred this period. 14 1 h. Paid cash on accounts payable for expenses incurred last period. 7 1 i. Incurred operating expenses this period to be paid next period. 14 7 j. Purchased supplies to be used later; paid cash. 3 1 k. Used some of the supplies inventory for operations. 14 3 l. Purchased a patent (an intangible asset); paid cash. 6 1 m. Made a payment on the equipment note in (a); the payment was part principal and part interest expense. 8, 14 1 1
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n. Paid three-fourths of the income tax expense for the year; the balance will be paid next year. 15 1,10 o. On the last day of the current period, paid cash for an insurance policy covering the next two years. 4
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Chapter_3_HW_Solution_final - AEM 221 Financial Accounting...

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