Q11E - Horngren'S Financial And Managerial Accounting

Question

Creating a chart of accounts Raymond Autobody Shop has the following accounts: 

Accounts Payable         Service Revenue 

Cash                                Equipment 

Utilities Expense           Common Stock 

Automotive Supplies   Advertising Expense 

Dividends                      Unearned Revenue 

Retained Earnings 

Create a chart of accounts for Raymond Autobody Shop using the standard numbering system. Each account is separated by a factor of 10. For example, the first asset account will be 100 and the next asset account will 110

Step-by-Step Solution

Answer

A chart of accounts helps the business to organize all the accounts and the required chart of accounts is prepared. A Detailed chart of accounts is shown in step 2.

Step 1: Definition of Chart of Accounts

The chart of accounts is the account that is prepared which shows the list of all company accounts with the accounts number.

Step 2 Preparation of Chart of Accounts

Balance Sheet and statement of retained earnings accounts
Assets	Liabilities	Equity
100 Cash	200 Accounts Payable	300 Common Stock
110 Automotive Supplies	210 Unearned Revenue	310 Retained Earnings
120 Equipment		320 Dividends
	Income Statement Accounts (Part of Equity)
	Revenues	Expenses
	400 Service Revenue	500 Utility Expense
		510 Advertising Expense