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Reinforcement Problems
LG 26-1.
Overland Park Company Trial Balance December 31, 2008 Account Name Dr. Cr.     Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,281       Accounts receivable . . . . . . . . . . . . . . . . . . . .    7,227       Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       425       Prepaid insurance . . . . . . . . . . . . . . . . . . . . . .       800       Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .  10,500       Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35,780       Wages payable . . . . . . . . . . . . . . . . . . . . . . . .   $ 1,500     Unearned revenue . . . . . . . . . . . . . . . . . . . . . .      1,250     R. Wills, capital . . . . . . . . . . . . . . . . . . . . . . .         R. Wills, drawing. . . . . . . . . . . . . . . . . . . . . . .    1,000       Service revenue . . . . . . . . . . . . . . . . . . . . . . . .      8,400     Interest earned . . . . . . . . . . . . . . . . . . . . . . . . .         125     Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . .       800       Utilities expense. . . . . . . . . . . . . . . . . . . . . . . .       202       Wages expense . . . . . . . . . . . . . . . . . . . . . . . . .    3,500       Repairs expense. . . . . . . . . . . . . . . . . . . . . . . . .    1,315                                              Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LG 26-2. The major problem with this “balance sheet” is that the student is confused about the       difference between a trial balance and a balance sheet. The entire format is incorrect.
Errors:       Financial statements NEVER have debits and credits! Most people do not know what they are.       This statement is prepared in the columnar format of a trial balance, showing the debit and credit totals. Debits and credits have nothing whatsoever to do with where numbers are written on a financial statement.       Owner’s equity should just be one number, showing the final balance of Wayne Grey-Eagle, Capital. This statement has made the owner’s equity section into a miniature version of the statement of owner’s equity.       The title of the statement does not show the date.

S2

Section V · Using a Basic Accounting System

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