Using Your Knowledge Exercise 1, p Exercise 2, p. 165 B B B B J J B D B B BIANCO COMPANY INCOME STATEMENT YEAR ENDED DECEMBER 31, 20

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1 CHAPTER 5 REVIEW EXERCISES (page 164) Using Your Knowledge Exercise 1, p. 164 A. Asset debit Dr Cr. Asset credit 1. Purchase a new car on account. 1. A D C. Liability debit 2. Receive payment on account from a customer. 2. A D. Liability credit 3. Owner withdraws cash for personal use. 3. G E. Capital debit 4. Owner starts a new business by investing cash. 4. A F. Capital credit 5. The car is repaired and paid for in cash immediately. 5. K G. Drawings debit 6. Perform a service for a customer for cash. 6. A H. Drawings credit 7. Perform a service for a customer on account. 7. A I. Revenue debit 8. Purchase supplies for cash. 8. A J. Revenue credit 9. Receive a bill for gas and oil for the car. 9. K K. Expense debit 10. Pay a creditor on account. 10. C L. Expense credit 11. Throw out some ruined supplies. 11. K J J D Exercise 2, p. 165 IANCO COMPANY INCOME STATEMENT YEAR ENDED DECEMER 31, 20 Revenue $ Operating Expenses Car Expense Utilities Expense Wages Expense Total Expenses $ $ Accounting 1 Teacher s Key Copyright 2013 Pearson Canada Inc.

2 Exercise 3, p. 165 A. Debits Credits Account(s) Amount Account(s) Amount 1. P. Garside, Capital 150 Revenue P. Garside, Drawings 500 Wages Expense Car Expense 400 Automobiles Equipment 110 Car Expense 110 ank A/R P. Alder A/R A. Jackson Supplies Equipment Automobiles A/P & Stone A/P Century Finance P. Garside, Capital P. Garside, Drawings Revenue Car Expense Utilities Expense Wages Expense The corrected net income will be $4700. Copyright 2013 Pearson Canada Inc. Chapter 5 The Expanded Ledger: Revenue, Expense, and Drawings 95

3 Exercise 4, p. 166 A. ATLAS ASSOCIATES INCOME STATEMENT MONTH ENDED NOVEMER 30, 20 Revenue $ Expenses Salaries Expense General Expense Advertising Expense Car Expenses Utilities Expense Total Expenses $ $ The clerk violated the matching principle (GAAP and ASPE) or the framework of reliability under IFRS. The wage advance should be accounted for in the month it is earned so it can be matched with the revenue it helped generate. C. $ ($ $1400) = $4700 The November net income should be $4700. D. The net income in December would be higher if the matching principle was not followed. Exercise 5, p. 166 Assets = Liabilities + eginning Capital + Revenues Expenses Drawings End of Year = End of Year = End of Year = End of Year = Exercise 6, p. 167 Assets Liabilities Equity End of 201 $ $ $ End of 202 $ $ $ Accounting 1 Teacher s Key Copyright 2013 Pearson Canada Inc.

4 Comprehensive Exercise Exercise 7, p. 167 A.,. ank A/RJenkins and Co. Office Supplies Office Equipment Automobile ank Loan A/POffice Equippers N.A. James, Capital N.A. James, Drawings Advertising Expense Car Expense Donations Expense Miscellaneous Expense Copyright 2013 Pearson Canada Inc. Chapter 5 The Expanded Ledger: Revenue, Expense, and Drawings 97

5 Exercise 7, p. 167 (continued) C. N.A. JAMES TRIAL ALANCE OCTOER 31, 20 ACCOUNTS DEIT CREDIT ank A/R Jenkins and Co Office Supplies Office Equipment 1100 Automobile A/P Office Equippers ank Loan N.A. James, Capital N.A. James, Drawings Advertising Expense Car Expense Donations Expense Miscellaneous Expense D. N.A. JAMES INCOME STATEMENT MONTH ENDED OCTOER 31, 20 Revenue $ Expenses Advertising Expense $ Car Expense Donations Expense Miscellaneous Expense Total Expenses 1140 $ Accounting 1 Teacher s Key Copyright 2013 Pearson Canada Inc.

6 Exercise 7, p. 167 (continued) E. N.A. JAMES ALANCE SHEET OCTOER 31, 20 ASSETS Current Assets ank A/R Jenkins and Co. Office Supplies Total Current Assets $ $ Long-Term Assets Office Equipment Automobile Total Long-Term Assets Total Assets $ $ LIAILITIES Current Liabilities A/P Office Equippers ank Loan Total Current Liabilities $ $ OWNER S EQUITY N.A. James, Capital alance October 1 Less: Drawings Decrease in Capital alance October 31 Total Liabilities and Owner s Equity $ ( ) $ (9 6 5 ) $ Copyright 2013 Pearson Canada Inc. Chapter 5 The Expanded Ledger: Revenue, Expense, and Drawings 99