Chapter 2 Homework Submit your answers in CANVAS before it

| Chapter 2 Homework Submit your answers in CANVAS before it is due Use the following to answer questions 1 -5 the normal balance is a Debit) or a Credit (C). Normal D or C put only the first letter of the answer(perc Account Dividends Notes payable Prepaid rent -Salaries Retained earnings Use the following to answer questions6-8 ndicate whether the transaction: Analyze each transaction. Under each category in the accounting equation, A. increases B. decreases, or C has no effect. The item (a) is provided as an example. (a) Purchased a truck by paying cash. (Assets Increase, Assets decrease by the same amount (NE), Liabilities and Stockholders\' Equity No Effect). 6. Pravided services to customers and receive cash. 7. Purchased supplies on credit from the supply store. 8. Paid the electric bill for the electricity used this month. Asset Liability Stockholders\' Equity- 6. 8. 9. At the beginning of January, the balance in the Retained Earnings account is $72,000 for TAR Corporation. During the month of January, TAR had the following external transactions. $50,000 (a) Issue common stock for cash (b) Purchase equipment and pay cash (c) Provide services to customers in exchange for cash 75,000 (d) Provide services to customers on account (e) Pay workers salaries for the month 0) Pay rent for the month 25,000 3,400 8,600 (g) Pay dividends to stockholders -Determine ending Retained Earnings for January 31st. Chapter 2 Spring 2018 Page 2-7

Solution

Answer to Question No. 1-5

No

Normal Balance

Account

1

D

Dividends

2

C

Notes Payable

3

D

Prepaid Rent

4

D

Salaries

5

C

Retained Earnings

Answer to Question No. 6-8

Asset

Liability

Stockholder’s Equity

6.

A

C

A

7.

A

A

C

8.

B

C

B

Answer to Question No. 9

Ending Retained Earning, January 31 = Beginning Retained Earning, January 1 + Net Income – Dividend
Net Income = Revenue – Expenses
Revenue = $75,000 + $25,000 = $100,000
Expenses = $60,000 + $3,400 = $63,400
Net Income = $100,000 - $63,400 = $36,600

Ending Retained Earning, January 31 = $72,000 + $36,600 - $8,600
Ending Retained Earning, January 31 = $100,000

Answer to Question No. 10-13

Account Debited

Account Credited

10.

Incurred the rent for the office which had already been paid

I

H

11.

Utility Invoice arrived in the mail, will pay it next week

O

A

12.

Purchased Equipment and will make 60 monthly payments

F

A

13.

Paid Salaries that had been incurred last week.

L

C

No	Normal Balance	Account
1	D	Dividends
2	C	Notes Payable
3	D	Prepaid Rent
4	D	Salaries
5	C	Retained Earnings