EX 2-3 Chart of accounts

LeadCo School is a newly organized business that teaches people how to inspire and influence others. The list of accounts to be opened in the general ledger is as follows:

Accounts Payable 

Prepaid Insurance

Accounts Receivable 

Rent Expense

Cash Retained 

Earnings

Common Stock 

Supplies

Dividends 

Supplies Expense

Equipment 

Unearned Rent

Fees Earned 

Wages Expense

Miscellaneous Expense

List the accounts in the order in which they should appear in the ledger of LeadCo School and assign account numbers. Each account number is to have two digits: the first digit is to indicate the major classification (1 for assets, etc.), and the second digit is to identify the specific account within each major classification (11 for Cash, etc.).

Answer:

Balance Sheet Accounts Income Statement Accounts 

1.  Assets  4.  Revenue 

11 Cash 41   Fees Earned 

12 Accounts Receivable 

13 Supplies 5.Expenses 

14 Prepaid Insurance 51   Wages Expense 

15 Equipment 52   Rent Expense 

53   Supplies Expense 

2.Liabilities 

21 Accounts Payable 

22 Unearned Rent 

59   Miscellaneous Expense 

3.Stockholders’ Equity 

31 Common Stock 

32 Retained Earnings 

33 Dividends 

Note:  The order of some of the accounts within the major classifications is 

somewhat arbitrary, as in accounts 13–14, accounts 21–22, and accounts 51–53. 

In a new business, the order of magnitude of balances in such accounts is not 

determinable in advance. The magnitude may also vary from period to period.