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

Copyright © 2020 Pearson Canada Inc.  2-65
(10 min.)  S2-17
HUNTER ENVIRONMENTAL CONSULTING
Unadjusted Trial Balance
April 30, 2019
Account
Number
Account Title  Debit  Credit
1100  Cash  $172,000 
1200  Accounts receivable  10,000 
1400  Office supplies  7,000 
1900  Land  100,000 
2100  Accounts payable  $ 2,000
3000  Lisa Hunter, capital  250,000* 
3100  Lisa Hunter, withdrawals  6,000 
4000  Service revenue  55,000
5100  Rent expense  4,000 
5200  Salary expense  6,500 
5300  Utilities expense  1,500 
Total  $557,000  $57,000
*Incorrect; should be listed as a credit.
To correct this error:
1.  Take the difference between total debits and total credits:
$557,000 – $57,000 = $500,000
2.  Divide the error by 2:
$500,000 ÷ 2 = $250,000
3.  Locate $250,000 on the trial balance. This matched the balance in the Capital account.
The Capital account should have a credit balance.
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual
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Exercises
(10-15 min.)  E2-1
TO:  Office Manager
FROM:  Student Name
Each time Prairie Tours received cash, accountants recorded the transaction in the journal by
debiting the Cash account. Accountants recorded cash payments by making a journal entry that
included a credit to Cash. Debits in the journal were posted as debits to the Cash account in the
ledger and credits were posted as credits. At the end of the period, accountants listed each
account, along with its balance, on the trial balance. Cash had a balance of $57,800.
Instructional Note: Student responses may vary considerably.
(15 min.)  E2-2
(10 min.)  E2-3
Salaries Payable  L  Salaries Expense  E
Land  A  Rent Revenue  R
L. Graham, Capital  OE  Computer Equipment  A
Rent Expense  E  Note Payable  L
Supplies  A  Prepaid Rent  A
Accounts Payable  L  L. Graham, Withdrawals  OE
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual
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(10-15 min.)  E2-4
Req. 1
Debit  Credit Credit
ASSETS  =  LIABILITIES  +  OWNER’S EQUITY
$75,500  =  $46,300  +  $28,500
($31,200 + $4,000
+ $300 + $40,000)  ($1,300 + $45,000)
This accounting equation is out of balance because the complete equity balances are not shown.
Net income or loss and withdrawals balances should be included in the equation.
Req. 2
Credit  Debit Net Credit
REVENUES  –  EXPENSES  =  NET INCOME
$7,600  –  $5,100  =  $2,500
($400 + $1,500 + $3,000 + $200)
NET INCOME would represent a net credit because revenues (credit amounts) would exceed
expenses (debit amounts).
NET LOSS would represent a net debit because expenses (debit amounts) would exceed
revenues (credit amounts).
Req. 3
John Cassiar withdrew $1,800 during the month.
Withdrawals are a debit amount.
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual
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(continued)  E2-4
Req. 4
Increase in owner’s equity (credit amount)
Net income  $2,500
Decrease in owner’s equity (debit amount)
Withdrawals  1,800
Net increase in owner’s equity (credit amount)  $ 700
(10 min.)  E2-5
Accounts Payable  L; Cr  Cash  A; Dr
Service Revenue  R; Cr  Rent Expense  E; Dr
K. Lockyer, Withdrawals  OE; Dr  Vehicles  A; Dr
Rent Revenue  R; Cr  Note Payable  L; Cr
Accounts Receivable  A; Dr  Land  A; Dr
Insurance Expense  E; Dr  K. Lockyer, Capital  OE; Cr
(10-15 min.)  E2-6
a. Increases
Dr Accounts Receivable  Dr Salaries Expense
Cr John Ladner, Capital  Cr Interest Payable
Cr Service Revenue  Dr Furniture
b. Decreases
Dr Note Payable  Cr Land
Cr Cash  Dr Accounts Payable
Dr Income Tax Payable Cr Income Tax Expense
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual
Copyright © 2020 Pearson Canada Inc.  2-69
(15-20 min.)  E2-7
Journal
Date