Reference no: EM132613155

Exercise 1: Debit/credit terminology

Required

For each of the following independent events, identify the account that would be debited and Sac. count that would be credited. The accounts for the first event are identified as an example.

Event       Account Debited           Account Credited
    a                Cash                       Common Stock

a. Received cash by issuing common stock.

b. Received cash for services to be performed in the future.
c. Paid salaries payable.
d. Provided services on account.
e. Paid cash for operating expenses.
f. Purchased supplies on account.
g. Recognized revenue for services completed. Cash had been collected in Event b.
h. Recognized accrued salaries expense.
i. Recognized expense for supplies used during the period.
j. Performed services for cash.
k. Paid accounts payable.

Exercise 2: Identifying increases and decreases in T-account

Required

For each of the following Taccounts, indicate the side of the account that should be used to record an increase or decrease in the account balance:

Exercise 3: Recording transactions in the general journal and T-accounts
The following events apply to Montgomery Company for Year 1, its first year of operation:
1. Received cash of $36,000 from the issue of common stock.
2. Performed $48,000 of services on account.
3. Incurred $6,500 of other operating expenses on account.
4. Paid $21,000 cash for salaries expense.
5. Collected $34,500 of accounts receivable.
6. Paid a $3,000 dividend to the stockholders.
7. Performed $9,500 of services for cash.
8. Paid $5,500 of the accounts payable.

Exercise 4:

Prepare a trial balance

Required

On December 31, Year 1, Morgan Company had the following normal account balances in its gene, ledger. Use this information to prepare a trial balance.