Book 1 - Chapter 24

Multiple Choice

1.	a
2.	d
3.	a	Total assets are the same, but Supplies is understated by $100 and Prepaid Insurance is overstated by $100.
4.	c	Account balances are only found in the ledger.
5.	c	Because increasing an expense is a debit entry, and debits are placed first. All the other examples are credits.
6.	c
7.	a
8.	d	(a) is incorrect because the rule for which item to record first is to record debits before credits. (b) is incorrect because a line should be skipped between transactions, not between each debit and credit. (c) is incorrect because the date to use is the date the transaction occurred, not the date it was recorded.
9.	c
10.	c
11.	c
12.	d
13.	d
14.	d	All the entries are either debited or credited incorrectly, or they do not balance.
15.	b

Reinforcement Problems
LG	24-1. T account analysis for transactions:

The owner of the Sacramento Company invests $15,000 in his business.

A = L + OE

Cash
15,000

B. Gasoway, Capital
	15,000

Palomar Company uses up $200 of supplies.

A = L + OE

Supplies
	200

Supplies Expense
200

Note: An increase in an expense decreases the owner’s equity, and the equation stays in balance.

Mira Costa Enterprises collects $850 owing from customers.

A = L + OE

Cash
850

Accounts Receivable
	850

Learning Goal 24

SOLUTIONS

Learning Goal 24: Use a Journal

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