Weygandt Accounting Principles, 12e
Chapter Two
Solutions to Challenge Exercises
Challenge Exercise 2-1 – Solution
1.
1 Cash………….. ........................................................... 25,000
Owner’s Capital .............................................. 25,000
2 No entry, not a transaction
3 Equipment .................................................................. 2,900
Cash…………………………………………………… 700
Accounts Payable .................................................. 2,200
6 Cash........................................................................ 600
Accounts Receivable ................................................ 3,000
Service Revenue ............................................. 3,600
27 Accounts Payable ..................................................... 900
Cash ................................................................. 900
30 Salaries and Wages Expense ................................... 2,300
Cash ................................................................. 2,300
31 Cash…. 1,200
..........................................................................
Accounts Receivable ..................................... 1,200
2. The October 31 balance of Accounts Payable is $1,300 ($2,200 - $900), and would be reported in the
liabilities section of the balance sheet.
3. The October 31 balance of Accounts Receivable is $1,800 ($3,000 - $1,200), and would be reported in
the assets section of the balance sheet.
Challenge Exercise 2-2 – Solution
(a)
General Journal J1
Date Account Titles Ref. Debit Credit
Sept. 1 Cash…. .................................................................... 101 20,000
Owner’s Capital ........................................... 301 20,000
5 Equipment .............................................................. 157 17,000
Cash ............................................................. 101 6,000
Accounts Payable ....................................... 201 11,000
11 Cash…. .................................................................... 101 1,000
Accounts Receivable ............................................. 112 2,900
Service Revenue ......................................... 400 3,900
25 Accounts Payable .................................................. 201 7,000
Cash ............................................................. 101 7,000
29 Owner’s Drawings ................................................. 306 600
Cash ............................................................. 101 600
30 Cash…. .................................................................... 101 1,500
Accounts Receivable .................................. 112 1,500
(b)
Cash No. 101
Date Explanation Ref. Debit Credit Balance
Sept. 1 J1 20,000 20,000
5 J1 6,000 14,000
11 J1 1,000 15,000
25 J1 7,000 8,000
29 J1 600 7,400
30 J1 1,500 8,900
Accounts Receivable No. 112
Date Explanation Ref. Debit Credit Balance
Sept. 11 J1 2,900 2,900
30 J1 1,500 1,400
Challenge Exercise 2-2 – Solution (Continued)
Equipment No. 157
Date Explanation Ref. Debit Credit Balance
Sept. 5 J1 17,000 17,000
Accounts Payable No. 201
Date Explanation Ref. Debit Credit Balance
Sept. 5 J1 11,000 11,000
25 J1 7,000 4,000
Owner’s Capital No. 301
Date Explanation Ref. Debit Credit Balance
Sept. 1 J1 20,000 20,000
Owner’s Drawings No. 306
Date Explanation Ref. Debit Credit Balance
Sept.29 J1 600 600
Service Revenue No. 400
Date Explanation Ref. Debit Credit Balance
Sept. 11 J1 3,900 3,900
(c) Total assets would be $27,300 ($8,900 + $1.400 + $17,000).
(d) Total liabilities would be $4,000 (just accounts payable).
