Mastery Problem: Analyzing Transactions KL Company Inc. In February, Katie Long formed KL Company Inc. Transactions...

Mastery Problem: Analyzing Transactions KL Company Inc. In February, Katie Long formed KL Company Inc. Transactions for the month of March have been posted to the T accounts. An intern has prepared a trial balance from th T accounts, but there seem to be some errors. T accounts Bal. 3/25 3/28 3/30 Cash 8,000 3/3 7,425 3/27 4,500 3/29 7,825 3/31 2,300 1,275 3,625 1,875 Bal. Accounts Receivable 1,950 9,875 3/30 7,825 3/18 Bal 3/7 Supplies 225 1,450 Office Equipment 19,000 3/2 Dewable

13/2 office Equipment 19,000 3/27 Accounts Payable 1,275 Bal. 3/7 1,250 1,450 Notes Payable 3/2 19,000 Common Stock Bal. 3/28 7,500 4,500 Retained Earnings Bal. 1,425 Dividends 1,875 3/31 Fees Earned 3/10 3/25 9,875 7.425

Fees Earned 3/18 3/25 9,875 7,425 3/3 Rent Expense 2,300 Wages Expense 3,625 3/29 Required: Transactions < Amount Credi Descriptions of the transactions for the month of March are provided in the following table. Each of the transactions that follow has been posted to the accounts Referring to the Taccounts, select the date on which each transaction occurred, enter the amount of the transaction, and select the account to debit and credt Transaction Date Debit Purchased equipment, giving a note payable for the purchase price. Paid rent for April. Purchased supplies on account. Recorded fees earned on account. Received cash for fees earned. Paid creditors on account. KL Company Inc. issued additional shares of common stock in exchange for cash. Paid wages. < Previous Next >

Transaction Date Amount Debit Credi Purchased equipment, giving a note payable for the purchase price Paid rent for April Purchased supplies on account. Recorded fees earned on account. Received cash for fees earned. Pald creditors on account. KL. Company Inc. issued additional shares of common stock in exchange for cash. Paid wages. Received cash from customers on account. KL Company Inc. paid dividends to its stockholders. Trial Balance: Unequal Totals The intern has prepared the following trial balance for the month of March. KL Company Inc. Unadjusted Trial Balance March 31, 2013 Account Title Debit Balances Credit Balances Cash 23,275 Accounts Receivable 4,000 Supplies Office Equipment 19,000 Accounts Pavable 1.425 1,675 < Previous Next)

KL Company Inc. Unadjusted Trial Balance March 31, 2013 Account Title Debit Balances Credit Balances Cash 23,275 Accounts Receivable 4,000 Supplies Office Equipment 1,675 19,000 Accounts Payable Notes Payable 1,425 Common Stock 19,000 12,000 Retained Earnings 1,425 Dividends 1,875 Fees Earned 9,875 3,200 Rent Expense Wages Expense 3,625 50,000 50,375 Trial Balance: Correct The Trial Balance: Unequal Totals was prepared by the intern. The intern is puzzled by the unequal totals. Prepare a corrected trial balance. If an amount box does require an entry, leave it blank. KL Company Inc. Unadjusted Trial Balance March 31, 20Y3 Account Title Dehit Ralanree Credit Balances < Previous Ne

rial Balance: Correct 50,375 The Trial Balance: Unequal Totals was prepared by the intern. The intern is puzzled by the unequal totals. Prepare a corrected trial balance. If an amount box does not require an entry, leave it blank. KL Company Inc. Unadjusted Trial Balance March 31, 2013 Account Title Debit Balances Credit Balances Cash Accounts Receivable Supplies Office Equipment Accounts Payable Notes Payable Common Stock Retained Earnings Dividends Fees Earned Rent Expense Wages Expense Previous Next

Errors on Trial Balance Compare the trial balance prepared by the intern (Trial Balance: Unequal Totals) to the trial balance that you prepared (Trial Balance: Correct). In the following table, select the accounts for each type of error. Not all accounts contain errors. Accounts Office Accounts Notes Error Type Cash Receivable Supplies Equipment Payable Payable Transposition Incorrectly reported as a debit Incorrectly reported as a credit Balance computed incorrectly Accounting Equation The intern is puzzled and asks "Are you sure the accounting equation is still in balance Using the corrected trial balance you prepared, prove that the accounting equation is in balance. Assets = Liabilities + Stockholders' Equity = $ + Still puzzled, the intern asks "Why do none of the amounts in the accounting equation equal the totals on the trial balance?" a. The accounts with debit balances are not all classified in the same element of the accounting equation. For example, not all accounts with debt balances are assets. b. This is because the revenue and expense accounts are part of the stockholders' equity element. The accounts with debit balances should be part of the total assets. c. You point out the total of the assets, liabilities and stockholders' equity is equal to the sum of the debit and credit totals on the trial balance The accounts with credit balances are not all classified in the same element of the accounting equation. For example, not all accounts with credit balances are d. liabilities. e. The accounts that make up the total for stockholders' equity have a mix of debit and credit balances. < Previous Next