Chapter 3 --- Recording Transactions

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True/False

Indicate whether the sentence or statement is true or false.

Account titles are written in the general journal exactly as they appear in the

chart of accounts.

A journal entry can consist of no more than one account to be debited and one

account to be credited.

When a transaction is journalized, the total of the amounts debited must equal the

total of the amounts credited.

A ledger is sometimes referred to as a record of original entry.

The number of the journal page is recorded in the Posting Reference column of

the ledger account to indicate that the posting procedure is complete.

The revenue accounts come before the expense accounts in the general ledger.

The temporary accounts come before the permanent accounts in the general ledger.

The general ledger contains the accounts that are used to prepare the financial

statements.

The credit portion of a general journal entry is always recorded first.

10.

The general journal can accommodate all kinds of transactions that a business

may have.

11.

Posting references provide a useful cross-reference when entries must be traced

and verified.

Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.

12.

The Posting Reference column of a journal is used to

a.	record the date on which an amount is posted to a ledger account.
b.	record the number of the ledger account to which the information is posted.
c.	record the number of amounts posted to that ledger account since the beginning of the current accounting period.
d.	record the page number of the ledger account.

13.

When an entry is made in the general journal,

a.	the accounts to be credited should be indented.
b.	the first account entered should be indented.
c.	liability, capital, and revenue accounts should be indented.
d.	asset accounts should be indented.

14.

The journal entry to record the sale of services on credit should include,

a.	a debit to Accounts Receivable and a credit to Capital.
b.	a debit to Cash and a credit to Accounts Receivable.
c.	a debit to Fees Income and a credit to Accounts Receivable.
d.	a debit to Accounts Receivable and a credit to Fees Income.

15.

The journal entry to record the purchase of equipment for a $100 cash down

payment and a balance of $400 due in 30 days would include

a.	a debit to Equipment for $100 and a credit to Cash for $100.
b.	a debit to Equipment for $500, a credit to Cash for $100, and a credit to Accounts Payable for $400.
c.	a debit to Equipment for $100 and a credit to Accounts Payable for $400.
d.	debit to Equipment for $500 and a credit to cash for $500.

16.

When an entry is made in the general journal,

a.	assets should be listed first.
b.	accounts to be debited should be listed first.
c.	accounts to be increased should be listed first.
d.	accounts may be listed in any order.

17.

If a transaction is properly analyzed and recorded,

a.	only two accounts will be used to record the transaction.
b.	one account balance will increase and another will decrease.
c.	one asset account will be debited and one liability account will be credited.
d.	the total amount debited will equal the total amount credited.

18.

The general ledger accounts are usually arranged in the following order:

a.	first the balance sheet accounts, then the income statement accounts.
b.	first the accounts with debit balances, then the accounts with credit balances.
c.	first the temporary accounts, then the permanent accounts.
d.	first the accounts used most often, then those used less frequently.

19.

The journal entry to record the payment of a monthly utility bill would include

a.	a debit to Utilities Expense and a credit to Capital.
b.	a debit to Capital and a credit to Cash.
c.	a debit to Utilities Expense and a credit to Cash.
d.	a debit to Utilities Expense and a credit to Accounts Payable.

20.

The Accounts Payable account has a $3,000 credit balance. An entry for the

payment of $1,000 on the amount owed is recorded and posted. The new

balance of the Accounts Payable account is recorded as

a.	a $2,000 credit balance.	c.	a $2,000 debit balance.
b.	a $4,000 credit balance.	d.	a $4,00 debit balance.

21.

The journal entry to record the payment of salaries should include

a.	a debit to Salaries Expense, and a credit to Cash.
b.	a debit to Capital and a credit to Cash.
c.	a debit to Cash and a credit to Salaries Expense.
d.	a debit Salaries Expense and a credit to Accounts Payable.

Numeric Response For questions 22-30, use the chart of accounts provided to enter the

ACCOUNT NUMBER to indicate which account should be debited or credited.

22.

Issued a check for $800 to pay the monthly rent. What account should be debited?

100	Cash	201	Accounts Payable	600	Salaries Expense
104	Accounts Receivable	203	Salaries Payable	604	Deprec. Expense--Equip.
120	Supplies	221	Notes Payable	608	Supplies Expense
122	Prepaid Rent	301	Capital	676	Rent Expense
150	Equipment	302	Drawing	678	Utilities Expense
151	Accum.Deprec.--Equip.	407	Fees Earned	698	Miscellaneous Expense

23.

Collected $325 from credit customers. What account should be credited?

100	Cash	201	Accounts Payable	600	Salaries Expense
104	Accounts Receivable	203	Salaries Payable	604	Deprec. Expense--Equip.
120	Supplies	221	Notes Payable	608	Supplies Expense
122	Prepaid Rent	301	Capital	676	Rent Expense
150	Equipment	302	Drawing	678	Utilities Expense
151	Accum.Deprec.--Equip.	407	Fees Earned	698	Miscellaneous Expense

24.

Purchased supplies for $180 on credit. What account should be credited?

100	Cash	201	Accounts Payable	600	Salaries Expense
104	Accounts Receivable	203	Salaries Payable	604	Deprec. Expense--Equip.
120	Supplies	221	Notes Payable	608	Supplies Expense
122	Prepaid Rent	301	Capital	676	Rent Expense
150	Equipment	302	Drawing	678	Utilities Expense
151	Accum.Deprec.--Equip.	407	Fees Earned	698	Miscellaneous Expense

25.

Performed services for $4,500 cash. What account should be credited?

100	Cash	201	Accounts Payable	600	Salaries Expense
104	Accounts Receivable	203	Salaries Payable	604	Deprec. Expense--Equip.
120	Supplies	221	Notes Payable	608	Supplies Expense
122	Prepaid Rent	301	Capital	676	Rent Expense
150	Equipment	302	Drawing	678	Utilities Expense
151	Accum.Deprec.--Equip.	407	Fees Earned	698	Miscellaneous Expense

26.

Purchased new equipment for $1,700. Issued a check to pay for it. What account

should be debited?

100	Cash	201	Accounts Payable	600	Salaries Expense
104	Accounts Receivable	203	Salaries Payable	604	Deprec. Expense--Equip.
120	Supplies	221	Notes Payable	608	Supplies Expense
122	Prepaid Rent	301	Capital	676	Rent Expense
150	Equipment	302	Drawing	678	Utilities Expense
151	Accum.Deprec.--Equip.	407	Fees Earned	698	Miscellaneous Expense

27.

Issued a check for $700 to pay a creditor on account. What account should be

debited?

100	Cash	201	Accounts Payable	600	Salaries Expense
104	Accounts Receivable	203	Salaries Payable	604	Deprec. Expense--Equip.
120	Supplies	221	Notes Payable	608	Supplies Expense
122	Prepaid Rent	301	Capital	676	Rent Expense
150	Equipment	302	Drawing	678	Utilities Expense
151	Accum.Deprec.--Equip.	407	Fees Earned	698	Miscellaneous Expense

28.

Purchased supplies for $200 cash. What account should be credited?

100	Cash	201	Accounts Payable	600	Salaries Expense
104	Accounts Receivable	203	Salaries Payable	604	Deprec. Expense--Equip.
120	Supplies	221	Notes Payable	608	Supplies Expense
122	Prepaid Rent	301	Capital	676	Rent Expense
150	Equipment	302	Drawing	678	Utilities Expense
151	Accum.Deprec.--Equip.	407	Fees Earned	698	Miscellaneous Expense

29.

Provided services for $6,800 on credit. What account should be debited?

100	Cash	201	Accounts Payable	600	Salaries Expense
104	Accounts Receivable	203	Salaries Payable	604	Deprec. Expense--Equip.
120	Supplies	221	Notes Payable	608	Supplies Expense
122	Prepaid Rent	301	Capital	676	Rent Expense
150	Equipment	302	Drawing	678	Utilities Expense
151	Accum.Deprec.--Equip.	407	Fees Earned	698	Miscellaneous Expense

30.

Returned damaged supplies and received $50 cash. What account should be

credited?

100	Cash	201	Accounts Payable	600	Salaries Expense
104	Accounts Receivable	203	Salaries Payable	604	Deprec. Expense--Equip.
120	Supplies	221	Notes Payable	608	Supplies Expense
122	Prepaid Rent	301	Capital	676	Rent Expense
150	Equipment	302	Drawing	678	Utilities Expense
151	Accum.Deprec.--Equip.	407	Fees Earned	698	Miscellaneous Expense

31.

From the following account balances enter the AMOUNT for the Net Income.

Cash; 15,490	Capital; 40,000
Accounts Receivable; 50	Drawing; 1,200
Supplies; 400	Income from Services; 3,870
Prepaid Insurance; 360	Wages Expense; 930
Equipment; 26,940	Rent Expense; 500
Accounts Payable; 400	Advertising Expense; 180
Notes Payable; 2,000	Utilities Expense; 220

32.

From the following account balances enter the AMOUNT for the Total Assets.

Cash; 15,490	Capital; 40,000
Accounts Receivable; 50	Drawing; 1,200
Supplies; 400	Income from Services; 3,870
Prepaid Insurance; 360	Wages Expense; 930
Equipment; 26,940	Rent Expense; 500
Accounts Payable; 400	Advertising Expense; 180
Notes Payable; 2,000	Utilities Expense; 220