ACC 250 · Introduction to Financial Accounting
Three questions on transactions, the trial balance and the current ratio,
then one month of transactions to record and two ending balances to work out.
Fall 2026
Step 1 · Is it a transaction?
Rivertown Print Shop took the five actions below during June. Which one of them requires no journal entry?
A. A transaction has to move the company’s own accounting equation. When one investor buys shares from another, the cash and the shares pass between those two people and not one of the shop’s accounts changes — the chapter’s own example of an activity that is not a transaction. Option D reads almost the same but is the opposite case: there the shop issues the shares and takes in the cash. B moves no cash and C only settles an old liability, but both still change two accounts.
Step 4 · The trial balance
Rivertown Print Shop prepares a trial balance, and its total debits and its total credits both come to $88,000. What can the shop conclude?
B. Equal totals show only that every entry had a debit side equal to its credit side. An entry posted to the wrong account, or left out altogether, keeps the two columns equal, so the check catches some errors and not others — which is why options A and E are wrong. The $88,000 is the sum of one column of the ledger, not a figure that appears on any statement.
Classified balance sheet · current ratio
On December 31 Rivertown Print Shop holds Cash of $14,000, Supplies of $4,000 and a printing press that cost $34,000, and it owes Accounts Payable of $12,000 and a four-year Notes Payable of $30,000. What is its current ratio?
C. Only what turns into cash or is used up within a year is current, so the press is left out and current assets are $14,000 + $4,000 = $18,000. Only what is due within a year is current, so the four-year note is left out and current liabilities are $12,000. The ratio is $18,000 ÷ $12,000 = 1.50, and being above 1 it says the shop can pay its current liabilities.
Questions 4–9 · The accounts
Write the number of the account that belongs on each line of the journal entry. Every entry draws on the ten accounts below, and an account may be used more than once, or not at all.
Q4 · Transaction A — The owners invest
Transaction A. Three investors each contributed $15,000 to Pine Ridge Cycles in exchange for shares of its stock. Record transaction A.
Account choices
| Account | Debit | Credit |
|---|---|---|
| 2. Cash (+A) | 45,000 | |
| 3. Common Stock (+SHE) | 45,000 |
2, then 3. Cash comes into the company, so the asset Cash rises by $45,000 and is debited. The investors receive stock in return, so Common Stock, a shareholders’ equity account, rises by the same $45,000 and is credited.
Q5 · Transaction B — The bank loan
Transaction B. Pine Ridge Cycles received $60,000 of cash from a bank and signed a note promising to repay the amount in three years. Record transaction B.
Account choices
| Account | Debit | Credit |
|---|---|---|
| 2. Cash (+A) | 60,000 | |
| 7. Notes Payable (+L) | 60,000 |
2, then 7. Cash rises by $60,000 and is debited. The written promise to repay is an obligation, so Notes Payable, a liability, rises by $60,000 and is credited. Borrowing raises capital rather than earning it, so none of the $60,000 is revenue.
Q6 · Transaction C — The logo, paid in cash
Transaction C. Pine Ridge Cycles paid $2,000 of cash to a designer for the shop’s logo. Record transaction C.
Account choices
| Account | Debit | Credit |
|---|---|---|
| 6. Logo and Trademarks (+A) | 2,000 | |
| 2. Cash (−A) | 2,000 |
6, then 2. The company now owns a logo it will use for years, so the asset Logo and Trademarks rises by $2,000 and is debited. Cash goes out, so the asset Cash falls by $2,000, and a decrease in a debit account is recorded as a credit. One asset was traded for another, so total assets do not change.
Q7 · Transaction D — Equipment on account
Transaction D. Pine Ridge Cycles received repair equipment costing $18,000 and promised to pay the supplier at the end of the month. Record transaction D.
Account choices
| Account | Debit | Credit |
|---|---|---|
| 4. Equipment (+A) | 18,000 | |
| 1. Accounts Payable (+L) | 18,000 |
4, then 1. The equipment has been received, so the asset Equipment rises by $18,000 and is debited, recorded at the $18,000 the company agreed to pay for it. The shop now owes the supplier, so Accounts Payable, a liability, rises by $18,000 and is credited. What makes this a transaction is that the equipment arrived, not that cash moved — none has.
Q8 · Transaction E — Paying the supplier
Transaction E. Pine Ridge Cycles paid the supplier $11,000 of the amount it owed for the equipment. Record transaction E.
Account choices
| Account | Debit | Credit |
|---|---|---|
| 1. Accounts Payable (−L) | 11,000 | |
| 2. Cash (−A) | 11,000 |
1, then 2. Settling part of a debt makes a liability smaller, and a liability is a credit account, so an $11,000 decrease in Accounts Payable is recorded as a debit. Cash goes out, so the asset Cash falls by $11,000 and is credited. Both sides of the accounting equation fall by $11,000, and the equipment itself is untouched — it was already recorded in transaction D.
Q9 · Transaction F — Software, part cash and part credit
Transaction F. Pine Ridge Cycles received $7,000 of inventory-management software, paid $3,000 of cash for it, and promised to pay the remaining $4,000 next month. Record transaction F.
Account choices
| Account | Debit | Credit |
|---|---|---|
| 9. Software (+A) | 7,000 | |
| 2. Cash (−A) | 3,000 | |
| 1. Accounts Payable (+L) | 4,000 |
9, then 2, then 1. The whole $7,000 of software has been received, so the asset Software is debited for all of it. The credits split the way it was paid for: Cash falls by $3,000 and Accounts Payable rises by $4,000. An entry may run to more than two lines, but the single debit of $7,000 still equals the two credits of $3,000 + $4,000.
Q10 · The ending balance of Cash
Pine Ridge Cycles opened in March, so every account started at zero. Post transactions A to F to a T-account for Cash. What is its ending balance?
The six transactions
Cash — March 31
Ending balance: $89,000
$89,000, a debit balance. Cash was debited twice, for A’s $45,000 and B’s $60,000, and credited three times, for C’s $2,000, E’s $11,000 and F’s $3,000: $105,000 − $16,000 = $89,000. D never touched Cash at all, because the equipment was bought on account. Cash is an asset, so its balance ends on the debit side.
Q11 · The ending balance of Accounts Payable
Now post the same six transactions to a T-account for Accounts Payable. What is its ending balance?
The six transactions
Accounts Payable — March 31
Ending balance: $11,000
$11,000, a credit balance. The payable was credited for D’s $18,000 and F’s $4,000 and debited for E’s $11,000 payment: $22,000 − $11,000 = $11,000 still owed to suppliers. It is a liability, so its balance ends on the credit side — the opposite side from Cash, even though both accounts were worked out the same way.
A = L + SHE. Assets sit on the left and are debit accounts; liabilities and shareholders’ equity sit on the right and are credit accounts.
A debit account increases with a debit and decreases with a credit; a credit account does the opposite.
Every journal entry has at least two lines, and its total debits must equal its total credits.