6,000 b) Supplies expense 4,000 Accounts payable 4,000 c) Wages expense 56,000 Cash (to employees) 43,500 Payroll deductions payable 12,500 Payroll deductions payable 12,500 12,500 Note: this could be one entry, with no liability set up for the payroll deductions. In one entry, there might be two credits to cash, because there are two payees. d) Accounts receivable 87,800 Sales 87,800 e) Utilities expense 2,600 2,600 f) Preferred dividends (or retained earnings) 100,000 Preferred dividends payable 100,000 Common dividends (or retained earnings) 80,000 Common dividends payable 80,000 The dividends are to different groups, and must be reported separately. g) Cash 15,000 Accumulated depreciation, computer equipment 23,600 Computer equipment 35,900 Gain on sale ($15,000 – $12,300) 2,700 h) Accounts payable 3,000 3,000 i) Cash 65,800 Accounts receivable 65,800 Requirement 2 Using the standard method, entries a, b and possibly e (see below) would be recorded as debits to assets, rather than expenses: a) Prepaid rent 6,000 6,000 b) Supplies inventory 4,000 Accounts payable 4,000
6,000 b) Supplies expense 4,000 Accounts payable 4,000 c) Wages expense 56,000 Cash (to employees) 43,500 Payroll deductions payable 12,500 Payroll deductions payable 12,500 12,500 Note: this could be one entry, with no liability set up for the payroll deductions. In one entry, there might be two credits to cash, because there are two payees. d) Accounts receivable 87,800 Sales 87,800 e) Utilities expense 2,600 2,600 f) Preferred dividends (or retained earnings) 100,000 Preferred dividends payable 100,000 Common dividends (or retained earnings) 80,000 Common dividends payable 80,000 The dividends are to different groups, and must be reported separately. g) Cash 15,000 Accumulated depreciation, computer equipment 23,600 Computer equipment 35,900 Gain on sale ($15,000 – $12,300) 2,700 h) Accounts payable 3,000 3,000 i) Cash 65,800 Accounts receivable 65,800 Requirement 2 Using the standard method, entries a, b and possibly e (see below) would be recorded as debits to assets, rather than expenses: a) Prepaid rent 6,000 6,000 b) Supplies inventory 4,000 Accounts payable 4,000
FA2_Appendix_text_solutions.docx