Practice Problems

Complete these exercises and practice problems. Check your answers after you finish.

Demonstration problem

Green Hills Riding Stable, Incorporated, had the following balance sheet on 2010 June 30:

Balance sheet 2010 June 30
Cash $7,500
Accounts receivable 5,400
land 40,000
total assets $52,900
Liabilities and Stockholders' Equity
Accounts payable $800
Notes payable 40,000
Total liabilities  $40,800
Stockholders' equity:
Capital stock  $10,000
Retained earnings  2,100
Total stockholders' equity 12,100
Total liabilities and stockholders' equity  $52,900

a. Prepare the journal entries to record the transactions for July 2010.

b. Post the journal entries to the ledger accounts after entering the beginning balances in those accounts. Insert cross-indexing references in the journal and ledger. Use the following chart of accounts:

100 Cash 320 Dividends
103 Accounts Receivable 402 Horse Boarding Fees Revenue
130 Land 404 Riding and Lesson Fees Revenue
140 Buildings  507 Salaries Expense
200 Accounts Payable   513 Feed Expense
201 Notes Payable   540 Interest Expense
300 Capital Stock   568 Miscellaneous Expense
310 Retained Earnings

c. Prepare a trial balance.

Source: Textbook Equity,
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