CHAPTER 2 — PRACTICE WORKSHEET

Debits & Credits · work it on paper, then check yourself

Try every exercise on paper BEFORE you check the answers. The attempt is where it sticks.

The exercises

1. Exercise 1 — Analyze a transaction

Marlow Interiors buys $1,300 of supplies, paying cash. Work through the debit/credit analysis.

a
Which account is DEBITED?
a) Cash b) Supplies c) Accounts Payable d) Owner's Capital
b
Is that debited account increased or decreased?
a) Increased b) Decreased
c
Which account is CREDITED?
a) Supplies b) Service Revenue c) Cash d) Accounts Payable
d
What is the normal balance of Cash?
a) Debit b) Credit

2. Exercise 2 — Journalize the opening entries

Cedar Peak Realty opens for business. Journalize its first three transactions.

a
The owner invests $18,000 cash to open Cedar Peak Realty.
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense
b
Paid $1,200 cash for the first month's office rent.
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense
c
Purchased $900 of office supplies on account.
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense

3. Exercise 3 — Notes and a compound entry

Brightwave Consulting records three financing and purchase transactions.

a
Borrowed $7,000 from the bank, signing a note payable.
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense
b
Bought equipment for $9,500, paying $2,500 cash and signing a note for the rest (add a third row).
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense
c
Purchased $600 of supplies for cash.
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense

4. Exercise 4 — Effect on the accounting equation

For each Northwind Studio transaction, choose the effect on Assets = Liabilities + Owner's Equity.

a
The owner invests $12,000 cash.
a) Assets +12,000 and Owner's Equity +12,000 b) Assets +12,000 and Liabilities +12,000 c) Assets −12,000 and Owner's Equity −12,000 d) No effect on the equation
b
Buys $2,000 of equipment for cash.
a) Assets +2,000 and Liabilities +2,000 b) One asset +2,000 and another asset −2,000 (totals unchanged) c) Assets +2,000 and Owner's Equity +2,000 d) No effect on the equation
c
Performs $3,400 of services on account.
a) Assets +3,400 and Owner's Equity +3,400 b) Assets +3,400 and Liabilities +3,400 c) Liabilities +3,400 and Owner's Equity −3,400 d) No effect on the equation
d
Pays $500 to a creditor on account.
a) Assets −500 and Owner's Equity −500 b) Assets −500 and Liabilities −500 c) Assets +500 and Liabilities −500 d) No effect on the equation
e
The owner withdraws $900 cash.
a) Assets −900 and Liabilities −900 b) Assets −900 and Owner's Equity −900 c) Assets +900 and Owner's Equity +900 d) No effect on the equation

5. Exercise 5 — Normal balances

Identify the normal balance of each account.

a
The normal balance of Accounts Payable is a:
a) Debit b) Credit
b
The normal balance of Owner's Drawings is a:
a) Debit b) Credit
c
The normal balance of Service Revenue is a:
a) Debit b) Credit
d
Which of these normally has a DEBIT balance?
a) Unearned Revenue b) Notes Payable c) Prepaid Insurance d) Owner's Capital

6. Exercise 6 — Post to the Cash T-account

Vantage Dental's Cash account started at top at $0. During the month it was debited for $22,000, $3,600, and $1,900, and credited for $5,400, $2,100, and $800.

a
Total of the DEBIT side
b
Total of the CREDIT side
c
Ending Cash balance (a debit balance)

7. Exercise 7 — Prepare the trial balance

Harborline Freight's ledger shows: Cash $9,300; Accounts Receivable $4,700; Supplies $1,200; Equipment $18,000; Accounts Payable $6,200; Notes Payable $8,000; Owner's Capital $12,000; Owner's Drawings $1,500; Service Revenue $15,400; Salaries Expense $5,600; Rent Expense $1,300.

a
Total of the DEBIT column
b
Total of the CREDIT column

8. Exercise 8 — Find the missing figure

Summit Couriers' trial balance is complete except for Cash. The other balances are: Accounts Receivable $3,800; Equipment $16,000; Accounts Payable $5,100; Owner's Capital $18,000; Service Revenue $9,700; Salaries Expense $4,200; Rent Expense $1,000.

a
Total of the CREDIT column
b
Total of the known DEBIT accounts (everything except Cash)
c
Therefore the Cash balance must be

9. Exercise 9 — Errors and the trial balance

Decide how each independent posting error affects the trial balance.

a
A $540 debit to Supplies was posted, but the matching $540 credit to Cash was never posted. Will the trial balance balance?
a) Yes b) No
b
By how much will the two columns differ?
c
Which column will be larger?
a) Debit b) Credit
d
A $250 cash rent payment was posted correctly as Debit Rent Expense, Credit Cash. Does the trial balance still balance?
a) Yes b) No
e
A $700 debit to Equipment was mistakenly posted as $70. Will the trial balance balance?
a) Yes b) No
f
By how much will the columns differ from that $700-as-$70 error?
g
Which column will be larger because of that error?
a) Debit b) Credit

10. Exercise 10 — Correct a trial balance that won't balance

Avondale Repair's trial balance doesn't balance. The bookkeeper listed Owner's Drawings of $1,600 in the CREDIT column by mistake. Before fixing, the debit column totals $24,800 and the credit column totals $28,000.

a
Owner's Drawings normally has which balance (which column does it belong in)?
a) Debit b) Credit
b
By how much do the two columns currently differ?
c
After moving the $1,600 to the correct column, what is the corrected total of EACH column?

11. Exercise 11 — Revenue on account, then collection

Riverside Tutoring earns revenue on account and later collects it.

a
Performed $2,600 of tutoring on account (billed the client).
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense
b
When is the revenue recorded?
a) When the cash is collected b) When the service is performed c) At the end of the year d) Only if the client pays
c
Two weeks later, collected the $2,600 from the client.
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense
d
Does collecting the cash create new revenue?
a) Yes b) No

12. Exercise 12 — Unearned revenue, prepaids, and drawings

Journalize four Lakeside Events transactions.

a
Received $1,800 cash in advance for an event next month.
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense
b
Paid $960 cash for a one-year insurance policy.
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense
c
Paid the $300 monthly utility bill in cash.
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense
d
The owner withdrew $1,100 cash for personal use.
Accounts available: Cash · Accounts Receivable · Supplies · Prepaid Insurance · Equipment · Accounts Payable · Notes Payable · Unearned Revenue · Owner's Capital · Owner's Drawings · Service Revenue · Salaries Expense · Rent Expense · Utilities Expense · Advertising Expense

Answers

Part of the free Accounting 1 course — Chapter 2: Debits & Credits

ANSWERS — do not read these until you have finished

1. Exercise 1 — Analyze a transaction

a
Supplies
Supplies (an asset) increases, and assets increase on the debit side.
b
Increased
The business now has more supplies, so Supplies increases.
c
Cash
Cash is paid out, so Cash (an asset) decreases — recorded with a credit.
d
Debit
Cash is an asset, so its normal balance is a debit.

Solution: Debit Supplies 1,300; Credit Cash 1,300. Both are assets; Supplies goes up (debit) and Cash goes down (credit).

2. Exercise 2 — Journalize the opening entries

a
Account Debit Credit
Cash 18,000
Owner's Capital 18,000
Cash up → debit; Owner's Capital (equity) up → credit.
b
Account Debit Credit
Rent Expense 1,200
Cash 1,200
Rent Expense up → debit; Cash down → credit.
c
Account Debit Credit
Supplies 900
Accounts Payable 900
Supplies (asset) up → debit; Accounts Payable (liability) up → credit.

Account	Debit	Credit
Cash	18,000
Owner's Capital		18,000

Account	Debit	Credit
Rent Expense	1,200
Cash		1,200

Account	Debit	Credit
Supplies	900
Accounts Payable		900

Solution: 1) Dr Cash 18,000 / Cr Owner's Capital 18,000. 2) Dr Rent Expense 1,200 / Cr Cash 1,200. 3) Dr Supplies 900 / Cr Accounts Payable 900.

3. Exercise 3 — Notes and a compound entry

a
Account Debit Credit
Cash 7,000
Notes Payable 7,000
Cash up → debit; Notes Payable (liability) up → credit.
b
Account Debit Credit
Equipment 9,500
Cash 2,500
Notes Payable 7,000
Equipment up → debit 9,500. Cash down → credit 2,500. Notes Payable up → credit 7,000. Debits 9,500 = credits 9,500.
c
Account Debit Credit
Supplies 600
Cash 600
Supplies up → debit; Cash down → credit.

Account	Debit	Credit
Cash	7,000
Notes Payable		7,000

Account	Debit	Credit
Equipment	9,500
Cash		2,500
Notes Payable		7,000

Account	Debit	Credit
Supplies	600
Cash		600

Solution: 1) Dr Cash 7,000 / Cr Notes Payable 7,000. 2) Dr Equipment 9,500 / Cr Cash 2,500 / Cr Notes Payable 7,000. 3) Dr Supplies 600 / Cr Cash 600.

4. Exercise 4 — Effect on the accounting equation

a
Assets +12,000 and Owner's Equity +12,000
Cash (asset) up and Owner's Capital (equity) up by the same 12,000.
b
One asset +2,000 and another asset −2,000 (totals unchanged)
Equipment up 2,000, Cash down 2,000 — an asset swap, so totals don't change.
c
Assets +3,400 and Owner's Equity +3,400
Accounts Receivable (asset) up and revenue raises Owner's Equity by 3,400.
d
Assets −500 and Liabilities −500
Cash down 500 and Accounts Payable (liability) down 500.
e
Assets −900 and Owner's Equity −900
Cash down 900; drawings reduce Owner's Equity by 900.

Solution: Invest: A+/OE+. Buy equipment for cash: asset swap, totals unchanged. Services on account: A+/OE+. Pay creditor: A−/L−. Withdrawal: A−/OE−.

5. Exercise 5 — Normal balances

a
Credit
A liability — credit-normal.
b
Debit
Drawings sit on the debit side of DEALER — debit-normal.
c
Credit
Revenue — credit-normal.
d
Prepaid Insurance
Prepaid Insurance is an asset (debit-normal); the other three are credit-normal.

Solution: Accounts Payable credit; Owner's Drawings debit; Service Revenue credit; Prepaid Insurance debit.

6. Exercise 6 — Post to the Cash T-account

a
27,500
22,000 + 3,600 + 1,900 = 27,500.
b
8,300
5,400 + 2,100 + 800 = 8,300.
c
19,200
27,500 − 8,300 = 19,200, on the debit side (Cash is debit-normal).

Solution: Debits 27,500 − credits 8,300 = $19,200 debit balance.

7. Exercise 7 — Prepare the trial balance

a
41,600
Debit-normal accounts: 9,300 + 4,700 + 1,200 + 18,000 + 1,500 + 5,600 + 1,300 = 41,600.
b
41,600
Credit-normal accounts: 6,200 + 8,000 + 12,000 + 15,400 = 41,600. The two columns must match.

Solution: Debit column 41,600 = credit column 41,600.

8. Exercise 8 — Find the missing figure

a
32,800
Credit-normal: 5,100 + 18,000 + 9,700 = 32,800.
b
25,000
3,800 + 16,000 + 4,200 + 1,000 = 25,000.
c
7,800
Debits must equal credits: 32,800 − 25,000 = 7,800.

Solution: Cash = 32,800 − 25,000 = $7,800, which makes both columns 32,800.

9. Exercise 9 — Errors and the trial balance

a
No
One side of the entry is missing, so the columns won't be equal.
b
540
The missing credit is $540, so the columns differ by 540.
c
Debit
The credit was omitted, so the debit column is larger by 540.
d
Yes
A correct, complete entry keeps debits equal to credits.
e
No
The debit side is understated, so the columns won't match.
f
630
700 − 70 = 630 of debit is missing.
g
Credit
The debit was understated by 630, so the credit column is larger.

Solution: Omitted $540 credit: out of balance by 540, debit larger. Correct rent entry: still balances. $700 posted as $70: out of balance by 630, credit larger.

10. Exercise 10 — Correct a trial balance that won't balance

a
Debit
Drawings is debit-normal, so it belongs in the debit column.
b
3,200
28,000 − 24,800 = 3,200. Placing a $1,600 debit item in the credit column throws the totals off by 2 × 1,600.
c
26,400
Debit becomes 24,800 + 1,600 = 26,400; credit becomes 28,000 − 1,600 = 26,400. They now match.

Solution: Drawings is debit-normal. Current gap 3,200. Move the $1,600 to the debit side → both columns 26,400.

11. Exercise 11 — Revenue on account, then collection

a
Account Debit Credit
Accounts Receivable 2,600
Service Revenue 2,600
Accounts Receivable up → debit; Service Revenue up → credit — revenue is earned now.
b
When the service is performed
Revenue is recorded when it is earned (the service is performed), not when the cash arrives.
c
Account Debit Credit
Cash 2,600
Accounts Receivable 2,600
Cash up → debit; Accounts Receivable down → credit.
d
No
No — the revenue was already recorded when the service was performed.

Account	Debit	Credit
Accounts Receivable	2,600
Service Revenue		2,600

Account	Debit	Credit
Cash	2,600
Accounts Receivable		2,600

Solution: 1) Dr Accounts Receivable 2,600 / Cr Service Revenue 2,600. 2) Dr Cash 2,600 / Cr Accounts Receivable 2,600. Revenue is recorded once, when earned.

12. Exercise 12 — Unearned revenue, prepaids, and drawings

a
Account Debit Credit
Cash 1,800
Unearned Revenue 1,800
Cash up → debit; the work isn't done, so Unearned Revenue (liability) up → credit.
b
Account Debit Credit
Prepaid Insurance 960
Cash 960
The benefit is future, so Prepaid Insurance (asset) up → debit; Cash down → credit.
c
Account Debit Credit
Utilities Expense 300
Cash 300
Utilities Expense up → debit; Cash down → credit.
d
Account Debit Credit
Owner's Drawings 1,100
Cash 1,100
Owner's Drawings up → debit; Cash down → credit. Drawings is not an expense.

Account	Debit	Credit
Cash	1,800
Unearned Revenue		1,800

Account	Debit	Credit
Prepaid Insurance	960
Cash		960

Account	Debit	Credit
Utilities Expense	300
Cash		300

Account	Debit	Credit
Owner's Drawings	1,100
Cash		1,100

Solution: 1) Dr Cash 1,800 / Cr Unearned Revenue 1,800. 2) Dr Prepaid Insurance 960 / Cr Cash 960. 3) Dr Utilities Expense 300 / Cr Cash 300. 4) Dr Owner's Drawings 1,100 / Cr Cash 1,100.

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