Exercise Chapter 2:
4. For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, (2) identify the normal balance of the account, and (3) enter debit (Dr.) or credit (Cr.) to identify the kind of entry that would increase the account balance.
b. Legal expense
c. Prepaid Insurance
e. Accounts Receivable
f. Owner Withdrawals
g. License Fee Revenue
h. Unearned Revenue
i. Fees Earned
k. Notes Payable
l. Owner Capital
6. Groro Co. bills a client $62,000 for services provided and agrees to accept the following three items in full payment: (1) $10,000 cash, (2) computer equipment worth $80,000, and (3) to assume responsibility for a $28,000 note payable related to the computer equipment. The entry Groro makes to record this transaction includes which one or more of the following?
a. $28,000 increase in a liability account
b. $10,000 increase in the Cash account
c. $10,000 increase in a revenue account
d. $62,000 increase in an asset account
e. $62,000 increase in a revenue account
f. $62,000 increase in an equity account
9. Prepare general journal entries to record the transactions below for Spade Company by using the following accounts: Cash; Account Receivable; Office Supplies; Office Equipment; Accounts Payable; K. Spade, Capital; K. Spade, Withdrawals; Fees Earned; and Rent Expense. Use the letters beside each transaction to identify entries. After recording the transactions, post them to T-accounts, which serves as the general ledger for this assignment. Determine the ending balance of each T-account.
a. Kacy Spade, owner, invested $100,750 cash in the company.
b. The company purchased office supplies for $1,250 cash.
c. The company purchased $10,050 of office equipment on credit.