Determining the Financial Statement Effects of Accounts Payable Transactions Hobson Company had the following transactions relating to its accounts payable. Use the financial statement effects template to identify the effects (both amounts and accounts) for these transactions. a. Purchases $2,772 of inventory on credit. b. Sells inventory for $3,630 on credit. c. Records $2,772 cost of sales for transaction b. d. Receives $3,630 cash toward accounts receivable. e. Pays $2,772 cash to settle accounts payable. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. Balance Sheet Income Statement Transaction Cash Asset + Noncash Assets = Liabilities + Contrib. Capital + Earned Capital Revenues – Expenses = Net Income a. Answer Answer = Answer Answer Answer Answer – Answer = Answer Answer Answer Answer Answer Answer Answer Answer b. Answer Answer = Answer Answer Answer Answer – Answer = Answer Answer Answer Answer Answer Answer Answer Answer c. Answer Answer = Answer Answer Answer Answer – Answer = Answer Answer Answer Answer Answer Answer Answer Answer d. Answer Answer = Answer Answer Answer Answer – Answer = Answer Answer Answer Answer Answer Answer Answer Answer e. Answer Answer = Answer Answer Answer Answer – Answer = Answer Answer Answer Answer Answer Answer Answer Answer PreviousSave AnswersNext

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Determining the Financial Statement Effects of Accounts Payable Transactions

Hobson Company had the following transactions relating to its accounts payable. Use the financial statement effects template to identify the effects (both amounts and accounts) for these transactions.

a. Purchases $2,772 of inventory on credit.
b. Sells inventory for $3,630 on credit.
c. Records $2,772 cost of sales for transaction b.
d. Receives $3,630 cash toward accounts receivable.
e. Pays $2,772 cash to settle accounts payable.

Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.

	Balance Sheet	Income Statement
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital	Revenues	–	Expenses	=	Net Income
a.	Answer		Answer	=	Answer		Answer		Answer	Answer	–	Answer	=	Answer
	Answer		Answer		Answer		Answer		Answer	Answer		Answer
b.	Answer		Answer	=	Answer		Answer		Answer	Answer	–	Answer	=	Answer
	Answer		Answer		Answer		Answer		Answer	Answer		Answer
c.	Answer		Answer	=	Answer		Answer		Answer	Answer	–	Answer	=	Answer
	Answer		Answer		Answer		Answer		Answer	Answer		Answer
d.	Answer		Answer	=	Answer		Answer		Answer	Answer	–	Answer	=	Answer
	Answer		Answer		Answer		Answer		Answer	Answer		Answer
e.	Answer		Answer	=	Answer		Answer		Answer	Answer	–	Answer	=	Answer
	Answer		Answer		Answer		Answer		Answer	Answer		Answer

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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