Horngren’s Accounting, Volume 1, 11th Canadian Edition by Tracie Miller-Nobles Solution manual

the accounts and their balances and serves as an early error-detection tool.
16. A compound journal entry is one that affects more than two accounts.
17. A trial balance verifies the equality of total debits and total credits of all accounts
on the trial balance and is an internal document used only by employees of the
company. The balance sheet, on the other hand, presents the business’s accounting
equation and is a financial statement that can be used by both internal and external
users.
18. This error does not cause the trial balance to be out of balance because both the total
debits and the total credits are overstated by the same amount, $5,400 ($6,000 – $600).
19. Collecting cash on account has no effect on total assets because the increase in cash,
which increases total assets, is offset by the decrease in accounts receivable, which
decreases total assets.
20. If total debits equal total credits on the trial balance, it does not mean that the trial
balance is error-free. An incorrect amount could have been used, an entry could
have been completely missed, or the wrong account title could have been debited
or credited.
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual
Copyright © 2020 Pearson Canada Inc.  2-57
Starters
(5 min.)  S2-1
a. 11
b. 7
c. 1
d. 4
e. 6
f. 3
g. 5
h. 9
i. 8
j. 10
k. 2
Note: there are 9 steps in the text. This question breaks out steps 5 and 8 into separate steps for
journalizing and posting.
(5 min.)  S2-2
“The basic summary device in accounting is the account. The left side is called the debit side,
and the right side is called the credit side. We record transactions first in a journal. Then we
post (copy the data) to the ledger. It is helpful to list all the accounts with their balances on a
trial balance.”
(10 min.)  S2-3
c  1. Credit  a. Record of transactions
d  2. Normal balance  b. Always an asset
g  3. Payable  c. Right side of an account
a  4. Journal  d. Side of an account where increases are
recorded
b  5. Receivable  e. Copying data from the journal to the ledger
j  6. Capital  f. Increases in equity from providing goods
and services
e  7. Posting  g. Always a liability
f  8. Revenue  h. Revenues – Expenses (where expenses
exceed revenues)
h  9. Net loss  i. Grouping of accounts
i  10. Ledger  j. Owner’s equity in the business
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual
2-58  Copyright © 2020 Pearson Canada Inc.
(5-10 min.)  S2-4
a. To decrease Accounts Payable: debit
e. To increase Equipment: debit
b. To increase Cash: debit
f. To increase Accounts Payable:
credit
c. To increase Note Payable: credit  g. To increase Land: debit
d. To increase Office Supplies: debit h. To increase Owner, Capital: credit
(5 min.)  S2-5
Normal Balances are:
a. Accounts Payable – credit
b. Withdrawals – debit
c. Utilities Expense – debit
d. Cash – debit
e. Service Revenue – credit
f. Rent Expense – debit
g. Accounts Receivable – debit
(5 min.)  S2-6
Debit Credit
a. Cash Capital
b. Supplies  Cash
c. Cash Service revenue
d. Equipment  Note payable
e. Supplies  Accounts payable
f. Accounts receivable Service revenue
g. Cash Accounts receivable
h. Accounts payable  Cash
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual
Copyright © 2020 Pearson Canada Inc.  2-59
(10 min.)  S2-7
Journal
Date  Account Titles and Explanations
Post.
Ref.  Debit  Credit
Sep.  1  Cash  29,000 
Jonathan Wen, Capital  29,000
Received investment from owner. 
2  Computer Equipment  9,500 
Accounts Payable  9,500
Purchased supplies on account. 
2  Rent Expense  4,100 
Cash  4,100
Paid office rent for September. 
3  Accounts Receivable  6,800 
Service Revenue  6800
Performed service for clients on account. 
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual
2-60  Copyright © 2020 Pearson Canada Inc.
(10 min.)  S2-8
Journal
Date  Account Titles and Explanations
Post.
Ref.  Debit  Credit
Sep.  22  Accounts Receivable  6,000