Chapter 2 Review of the Accounting Process Problem 2–1

Problem 2–1 Requirement 1 2013 Jan. 1 Cash ...................................................... Common stock ................................. Debit 100,000 Jan. 2 Inventory .............................................. Accounts payable ............................. 35,000 Jan. 4 Prepaid insurance ................................. Cash .................................................. 2,400 Jan. 10 Accounts receivable ............................. Sales revenue .................................... 12,000 Jan. 10 Cost of goods sold ................................ Inventory .......................................... 7,000 Jan. 15 Cash ...................................................... Note payable .................................... 30,000 Jan. 20 Wages expense ..................................... Cash .................................................. 6,000 Jan. 22 Cash ...................................................... Sales revenue .................................... 10,000 Jan. 22 Cost of goods sold ................................ Inventory .......................................... 6,000 Jan. 24 Accounts payable ................................. Cash .................................................. 15,000 Jan. 26 Cash ...................................................... Accounts receivable ......................... 6,000 Jan. 28 Utilities expense ................................... Cash .................................................. 1,000 Jan. 30 Prepaid rent .......................................... Rent expense ........................................ Cash ................................................... 2,000 2,000 Credit 100,000 35,000 2,400 12,000 7,000 30,000 6,000 10,000 6,000 15,000 6,000 1,000 4,000 2– Solutions Manual, Vol.1, Chapter 2 43 Problem 2–1 (continued) Requirement 2 BALANCE SHEET ACCOUNTS Cash Accounts receivable ___________________________ ___________________________ 1/1 Bal. 1/1 1/15 1/22 1/26 0 100,000 30,000 10,000 6,000 1/31 Bal. 117,600 2,400 6,000 15,000 1,000 4,000 _______________ 1/4 1/20 1/24 1/28 1/30 0 35,000 1/31 Bal. 22,000 7,000 6,000 _______________ 1/10 1/22 1/1 Bal. 1/30 0 2,000 6,000 0 2,400 ______________ 2,400 Accounts payable ___________________________ 15,000 0 35,000 20,000 0 30,000 1/1 Bal. 1/15 _______________ 30,000 1/26 1/1 Bal. 1/2 ______________ 2,000 Note payable ___________________________ 2–44 1/1 Bal. 1/4 1/24 _______________ 1/31 Bal. 6,000 Prepaid insurance ___________________________ 1/31 Bal. Prepaid rent ___________________________ 0 12,000 ______________ 1/31 Bal. Inventory ___________________________ 1/1 Bal. 1/2 1/1 Bal. 1/10 1/31 Bal. Common stock ___________________________ 0 100,000 1/1 Bal. 1/1 ______________ 1/31 Bal. 100,000 1/31 Bal. Problem 2–1 (continued) INCOME STATEMENT ACCOUNTS Sales revenue ____________________________ 0 12,000 10,000 _______________ 22,000 1/1 Bal. 1/10 1/1 Bal. 1/10 1/22 1/22 1/31 Bal. 1/31 Bal. Wages expense ____________________________ 1/1 Bal. 1/20 1/31 Bal. Cost of goods sold ____________________________ 0 6,000 _______________ 6,000 0 7,000 6,000 ______________ 13,000 Rent expense ____________________________ 1/1 Bal. 1/30 0 2,000 ______________ 1/31 Bal. 2,000 Utilities expense ____________________________ 1/1 Bal. 1/28 1/31 Bal. 0 1,000 _______________ 1,000 2– Solutions Manual, Vol.1, Chapter 2 45 Problem 2–1 (concluded) Requirement 3 Account Title Cash Accounts receivable Inventory Prepaid insurance Prepaid rent Accounts payable Note payable Common stock Sales revenue Cost of goods sold Wages expense Utilities expense Rent expense Totals 2–46 Debits 117,600 6,000 22,000 2,400 2,000 13,000 6,000 1,000 2,000 172,000 Credits 20,000 30,000 100,000 22,000 ______ 172,000