Ronald Hicks uses these accounts in his business, Wilderness Rentals.

$$\begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} & \text{301 Ronald Hicks, Capital}\\ \text{105 Accounts Receivable—} & \text{305 Ronald Hicks, Withdrawals}\\ \text{Helen Katz} & \text{401 Equipment Rental Revenue}\\ \text{120 Office Equipment} & \text{505 Maintenance Expense}\\ \text{125 Camping Equipment} & \text{525 Utilities Expense}\\ \end{matrix}$$

Analyze each of the following trans actions using the format shown in the example. Record your answers in your working papers. a. Explain the debit. b. Explain the credit. On Jan. 2 Ronald Hicks paid the bill for office cleaning, $100. a. The expense account 505 Maintenance Expense is increased. Increases in expenses are recorded as debits. b. The asset account 101 Cash in Bank is decreased. Decreases in assets are recorded as credits.$

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{Jan. 3} & \text{1. Ronald Hicks withdrew $\$500$ from his business for his own use, Check 225.}\\ \text{8} & \text{2. The business received $\$1,200$ cash in rental fees from various customers. }\\ \text{12} & \text{3. The business paid a telephone bill of $\$85$, Check 226.}\\ \end{array}$$

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Listed here are the account names and balances for Wilderness Rentals. Accounts Payable $7000 Accounts Receivable$2,000 Camping Equipment $12,000 Cash in Bank$5,000 Office Equipment 3,000 Ronald Hicks, Capital $15,000. Using these account names and balances: 1. List and total the assets of the business. 2. Determine the amount owed by the business. 3. Give the amount of the owner’s equity in the business.

John Albers uses the following accounts in his business.

$$\begin{matrix} \text{General Ledger} & \text{ } & \text{ }\\ \hline \text{Cash in Bank} & \text{John Albers, Capital} & \text{Advertising Expense}\\ \text{Accounts Receivable} & \text{John Albers, Withdrawals} & \text{Rent Expense}\\ \text{Office Equipment} & \text{Service Fees} & \text{Utilities Expense}\\ \text{Accounts Payable} & \text{ } & \text{ }\\ \end{matrix}$$

In your working papers: 1. Identify the two accounts affected by each of the following transactions. 2. Indicate whether each account is debited or credited.

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{July 1} & \text{1. Issued Check 543 to pay the electric bill for the month.}\\ \text{3} & \text{2. Billed a customer for services provided on account.}\\ \text{10} & \text{3. John Albers took cash from the business for his personal use.}\\ \text{17} & \text{4. Issued Check 544 to pay for an advertisement.}\\ \end{array}$$

The ending balances in the general ledger accounts of Wilderness Rentals for the period ended May 31 follow.

$$\begin{array}{llll} \text{ } & \text{ } & \text{Debit} & \text{Credit}\\ \text{ } & \text{ } & \text{Balances} & \text{Balances}\\ \text{101} & \text{Cash in Bank} & \text{$\$ 5,814$} & \text{ }\\ \text{105} & \text{Accts. Rec. - Helen Katz} & \text{717} & \text{ }\\ \text{110} & \text{Accts. Rec. - Polk and Co.} & \text{590} & \text{ }\\ \text{115} & \text{Office Supplies} & \text{847} & \text{ }\\ \text{120} & \text{Office Equipment} & \text{$4,360$} & \text{ }\\ \text{125} & \text{Camping Equipment} & \text{$6,130$} & \text{ }\\ \text{201} & \text{Accts. Pay. - Adventure Equipment Inc.} & \text{ } & \text{$\$ 1,680$}\\ \text{203} & \text{Accts. Pay. - Digital Tech Computers} & \text{ } & \text{$3,554$}\\ \text{205} & \text{Accts. Pay. - Greg Mollaro} & \text{ } & \text{635}\\ \text{301} & \text{Ronald Hicks, Capital} & \text{ } & \text{$12,760$}\\ \text{305} & \text{Ronald Hicks, Withdrawals} & \text{1,200} & \text{ }\\ \text{310} & \text{Income Summary} & \text{\_\_\_} & \text{\_\_\_}\\ \text{401} & \text{Equipment Rental Revenue} & \text{ } & \text{9,716}\\ \text{501} & \text{Advertising Expense} & \text{$1,940$} & \text{ }\\ \text{505} & \text{Maintenance Expense} & \text{$1,083$} & \text{ }\\ \text{515} & \text{Rent Expense} & \text{$3,500$} & \text{ }\\ \text{525} & \text{Utilities Expense} & \text{$2,164$} & \text{ }\\ \end{array}$$

Prepare a work sheet for the period ended May 31. 1. Write the heading on the work sheet. 2. List all of the accounts in the Account Name and Trial Balance sections. For each account, include the account number, name, and balance. 3. Total and rule the Trial Balance section. Do total debits equal total credits? If not, find and correct the problem before continuing. 4. Extend the appropriate amounts to the Balance Sheet section. 5. Extend the appropriate amounts to the Income Statement section. 6. Total the amount columns in the Income Statement and Balance Sheet sections. 7. Enter the amount of net income or net loss in the appropriate columns in the Income Statement and Balance Sheet sections. 8. Total and rule the Income Statement and Balance Sheet sections. Identify the permanent accounts on the work sheet that have normal debit balances.

The work sheet for Wilderness Rentals for the month ended September 30, 20-- is in your working papers. Using the work sheet, prepare an income statement for Wilderness Rentals.

The accounts used by Wilderness Rentals have been opened and are included in the working papers accompanying this textbook. The general journal transactions for March of the current year are also included.

Hot Suds Car Wash uses the following accounts:

$$\begin{matrix} \text{Assets} & \text{$=$} & \text{Liabilities} & \text{$+$} & \text{Owner’s Equity}\\ \hline \text{Cash in Bank} & \text{ } & \text{Accounts Payable} & \text{ } & \text{Regina Delgado,}\\ \text{Accounts Receivable} & \text{ } & \text{ } & \text{ } & \text{Capital}\\ \text{Office Equipment} & \text{ } & \text{ } & \text{ } & \text{ }\\ \text{Office Furniture} & \text{ } & \text{ } & \text{ } & \text{ }\\ \text{Car Wash Equipment} & \text{ } & \text{ } & \text{ } & \text{ }\\ \end{matrix}$$

Use a form similar to the one that follows. For each transaction: 1. Identify the accounts affected. 2. Classify the accounts. 3. Determine the amount of the increase (+) or decrease (-) for each account affected. The first transaction is completed as an example.

$$\begin{matrix} \text{Trans.} & \text{Accounts } & \text{Classification} & \text{Amount of Increase (+)}\\ \text{ } & \text{Affected} & \text{ } & \text{or Decrease (-)}\\ \hline \text{1.} & \text{Cash in Bank} & \text{Asset} & \text{$+\$25,000$}\\ \text{ } & \text{Regina} & \text{ } & \text{ }\\ \text{ } & \text{Delgado,} & \text{ } & \text{ }\\ \text{ } & \text{Capital} & \text{Owner’s Equity} & \text{$+\$25,000$}\\ \end{matrix}$$

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{Jan. 1} & \text{1.Regina Delgado, the owner, invested $\$25,000$ cash in the business.}\\ \text{4} & \text{2.Bought car wash equipment with cash for $\$12,000$.}\\ \text{5} & \text{3.Purchased, on account, $\$2,500$ of office equipment.}\\ \text{10} & \text{4.Wrote a check for the monthly rent, $\$800$.}\\ \text{12} & \text{5.Received cash for services performed, $\$1,000$.}\\ \text{15} & \text{6. The owner withdrew $\$600$ cash from the business for personal use.}\\ \text{20} & \text{7. Purchased a desk for $\$1,000$, paying $\$200$ cash and agreeing to pay the balance of $\$800$ in 30 days.}\\ \text{25} & \text{8. Provided services worth $\$600$ on account.}\\ \end{array}$$

Regina Delgado owns a business called Hot Suds Car Wash. She uses the following chart of accounts.

$$\begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} & \text{401 Wash Revenue}\\ \text{105 Accts. Rec.—Linda Brown} & \text{405 Wax Revenue}\\ \text{110 Accts. Rec.—Valley Auto} & \text{410 Interior Detailing Revenue}\\ \text{125 Office Equipment} & \text{501 Advertising Expense}\\ \text{130 Office Furniture} & \text{505 Equipment Rental Expense}\\ \text{135 Car Wash Equipment} & \text{510 Maintenance Expense}\\ \text{201 Accts. Pay.—Allen} & \text{520 Rent Expense}\\ \text{Vacuum Systems} & \text{525 Salaries Expense}\\ \text{205 Accts. Pay.—O’Brian’s} & \text{530 Utilities Expense}\\ \text{Office Supply} & \text{ }\\ \text{301 Regina Delgado, Capital} & \text{ }\\ \text{305 Regina Delgado, Withdrawals} & \text{ }\\ \text{310 Income Summary} & \text{ }\\ \end{matrix}$$

Record the following transactions on page 1 of the general journal in your working papers.

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{Jan. 1} & \text{Regina Delgado invested $\$ 12,000$ in the business, Memorandum 41.}\\ \text{5} & \text{Purchased $\$ 5,000$ in desks, chairs, and cabinets from O'Brian's Office Supply on account, Invoice 1632.}\\ \text{8} & \text{Deposited $\$ 1,600$ for income received from car washes for the week, Receipt 101.}\\ \text{10} & \text{Paid the Village Bulletin $\$ 75$ for running an ad, Check 301.}\\ \text{13} & \text{Regina Delgado withdrew $\$ 900$ for personal use, Check 302.}\\ \text{17} & \text{Billed Valley Auto $\$ 400$ for interior detailing, Sales Invoice 102.}\\ \text{18} & \text{Paid O' Brian's Office Supply $\$ 2,500$ as an installment payment on account, Check 303.}\\ \text{20} & \text{Regina Delgado transferred to the business an electronic calculator valued at $\$ 350$, Memorandum 42.}\\ \text{22} & \text{Wrote Check 304 for $\$ 600$ to Shadyside Realty for the office rent. }\\ \text{24} & \text{Purchased $\$ 1,500$ in car wash equipment from Allen Vacuum Systems on account, Invoice 312.}\\ \text{26} & \text{Received a $\$ 400$ check from Valley Auto in full payment of its account, Receipt 102.}\\ \text{30} & \text{Issued Check 305 for $\$ 2,500$ to $\mathrm{O}^{\prime}$ Brian's Office Supply for the balance due on account.}\\ \end{array}$$

The general ledger for Hot Suds Car Wash shows the following account balances on May 31, the end of the period.

$$\begin{array}{lll} \text{101} & \text{Cash in Bank} & \text{$\$ 9,400$}\\ \text{105} & \text{Accts. Rec. - Linda Brown} & \text{429}\\ \text{110} & \text{Accts. Rec. - Valley Auto} & \text{372}\\ \text{115} & \text{Detailing Supplies} & \text{694}\\ \text{120} & \text{Detergent Supplies} & \text{418}\\ \text{125} & \text{Office Equipment} & \text{$15,195$}\\ \text{130} & \text{Office Furniture} & \text{$2,029$}\\ \text{135} & \text{Car Wash Equipment} & \text{$7,486$}\\ \text{201} & \text{Accts. Pay. - Allen Vacuum Systems} & \text{$4,346$}\\ \text{205} & \text{Accts. Pay. - O'Brian's Office Supply} & \text{$2,730$}\\ \text{301} & \text{Regina Delgado, Capital} & \text{$26,530$}\\ \text{305} & \text{Regina Delgado, Withdrawals} & \text{$2,500$}\\ \text{310} & \text{Income Summary} & \text{ }\\ \text{401} & \text{Wash Revenue} & \text{$7,957$}\\ \text{405} & \text{Wax Revenue} & \text{$5,329$}\\ \text{410} & \text{Interior Detailing Revenue} & \text{$2,970$}\\ \text{501} & \text{Advertising Expense} & \text{$1,940$}\\ \text{505} & \text{Equipment Rental Expense} & \text{$3,836$}\\ \text{510} & \text{Maintenance Expense} & \text{$1,424$}\\ \text{520} & \text{Rent Expense} & \text{$3,500$}\\ \text{530} & \text{Utilities Expense} & \text{639}\\ \end{array}$$

Prepare a work sheet for Hot Suds Car Wash in your working papers. Identify the temporary accounts on the work sheet that have normal credit balances.

The ledger accounts for Hot Suds Car Wash are shown in your working papers. Prepare a trial balance as of March 31 of the current year.

Regina Delgado owns a business called Hot Suds Car Wash. She uses the following accounts:

$$\begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} & \text{201 Accounts Payable—}\\ \text{110 Accounts Receivable—} & \text{Allen Vacuum Systems}\\ \text{Valley Auto} & \text{301 Regina Delgado, Capital}\\ \text{125 Office Equipment} & \text{ }\\ \text{130 Office Furniture} & \text{ }\\ \text{135 Car Wash Equipment} & \text{ }\\ \end{matrix}$$

For each transaction: 1. Determine which accounts are affected. 2. Prepare T accounts for the accounts affected. 3. Enter the debit and credit amounts in the T accounts.

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{May 5} & \text{1. Regina Delgado invested an additional $\$40,000$ cash in her business.}\\ \text{12} & \text{2. Bought another car wash system on account for $\$27,000$ from Allen Vacuum Systems.}\\ \text{17} & \text{3. Regina Delgado transferred some of her personal office furniture, valued at $\$3,750$, to her business.}\\ \text{24} & \text{4. Hot Suds Car Wash purchased additional office equipment for $\$7,500$. Payment was made by check.}\\ \text{29} & \text{5. Hot Suds Car Wash sold some surplus car washing equipment on account to Valley Auto for $\$1,200$.}\\ \end{array}$$

Caroline Palmer uses the following accounts in her San Francisco–Los Angeles commuter shuttle service.

$$\begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{Cash in Bank} & \text{Caroline Palmer, Capital}\\ \text{Advertising Expense} & \text{Accounts Receivable}\\ \text{Caroline Palmer, Withdrawals} & \text{Food Expense}\\ \text{Airplanes} & \text{Flying Fees}\\ \text{Fuel and Oil Expense} & \text{Accounts Payable}\\ \text{Repairs Expense} & \text{ }\\ \end{matrix}$$

In the form provided in your working papers, provide the following information for each account. The first account is completed as an example. 1. Classify the account as an asset, liability, owner’s equity, revenue, or expense account. 2. Indicate whether the increase side is a debit or a credit. 3. Indicate whether the decrease side is a debit or a credit. 4. Indicate whether the account has a normal debit balance or a normal credit balance.

$$\begin{matrix} \text{Account} & \text{Account} & \text{Increase} & \text{Decrease} & \text{Normal}\\ \text{Name} & \text{Classification} & \text{Side} & \text{Side} & \text{Balance}\\ \hline \text{Cash in Bank} & \text{Asset} & \text{Debit} & \text{Credit} & \text{Debit}\\ \end{matrix}$$

Greg Failla owns Showbiz Video. He uses the following accounts to record business transactions.

$$\begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} & \text{205 Accounts Payable—}\\ \text{105 Accounts Receivable—} & \text{Computer Horizons}\\ \text{Gabriel Cohen} & \text{207 Accounts Payable—}\\ \text{110 Accounts Receivable—} & \text{New Media Suppliers}\\ \text{James Coletti} & \text{301 Greg Failla, Capital}\\ \text{140 Computer Equipment} & \text{305 Greg Failla, Withdrawals}\\ \text{145 Video Tapes} & \text{401 Video Rental Revenue}\\ \text{ } & \text{405 VCR Rental Revenue}\\ \text{ } & \text{505 Equipment Repair Expense}\\ \text{ } & \text{520 Rent Expense}\\ \text{ } & \text{530 Utilities Expense}\\ \end{matrix}$$

For each transaction: 1. Prepare a T account for each account listed above. 2. Analyze and record each of the following transactions using the appropriate T accounts. Identify each transaction by number. 3. After recording all transactions, compute a balance for each account. 4. Test for the equality of debits and credits.

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{Jan. 1} & \text{1. Greg Failla invested $\$ 17,500$ cash in Showbiz Video.}\\ \text{3} & \text{2. Purchased computer equipment on account from Computer Horizons for $\$ 2,400$.}\\ \text{8} & \text{3. Purchased videos on account from New Media Suppliers for $\$ 375.$}\\ \text{10} & \text{4. Paid monthly rent of $\$ 750$, Check 1183.}\\ \text{13} & \text{5. Wrote Check 1184 to pay for new videos, $\$ 265$.}\\ \text{14} & \text{6. Sent a bill for $\$ 67$ to Gabriel Cohen for a VCR rental.}\\ \text{16} & \text{7. Deposited the receipts from video rentals, $\$ 233$.}\\ \text{19} & \text{8. Paid the gas and electric bill of $\$ 125,$ Check $1185 .$}\\ \text{21} & \text{9. Sent Check 1186 for $\$ 375$ to New Media Suppliers as payment on account.}\\ \text{22} & \text{10. Greg Failla withdrew $\$ 150$ for his personal use, Check $1187 .$}\\ \text{25} & \text{11. Paid $\$ 45$ for $\mathrm{VCR}$ repair, Check 1188.}\\ \text{30} & \text{12. Deposited VCR rental receipts of $\$ 264$ in the bank.}\\ \end{array}$$

All accounts belong in one of the following classifications: Asset, Liability, Owner’s Equity. In your working papers, indicate the classification for each of the following accounts. 1. John Jones, Capital 2. Cash in Bank 3. Accounts Receivable 4. Accounts Payable 5. Office Equipment 6. Delivery Equipment 7. Camping Equipment 8. Building 9. Land 10. Computer Equipment