Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance sheet category and on net income by entering for each account affected the account name and amount and indicating whether it is an addition (+) or a subtraction (-). Transaction a has been done as an illustration. Net income is not affected by every transaction. In some cases only one column may be affected because all of the specific accounts affected by the transaction are included in that category. a. Accrued interest revenue of $30 on a note receivable. b. Determined that the Allowance for Bad Debts account balance should be increased by $2,050. c. Recognized bank service charges of $22 for the month. d. Received $29 cash for interest accrued in a prior month. e. Purchased 3 units of a new item of inventory on account at a cost of $31 each. Perpetual inventory is maintained. f. Purchased 14 more units on account of the above item at a cost of $36 each. Perpetual inventory is maintained. g. Sold 12 of the items purchased (in e and f) and recognized the cost of goods sold using the FIFO cost flow assumption. Perpetual inventory is maintained. Transaction a. b. C. Current Assets Interest receivable +30 Current Liabilities. Stockholders' Equity Ne Interest revenue +3
Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance sheet category and on net income by entering for each account affected the account name and amount and indicating whether it is an addition (+) or a subtraction (-). Transaction a has been done as an illustration. Net income is not affected by every transaction. In some cases only one column may be affected because all of the specific accounts affected by the transaction are included in that category. a. Accrued interest revenue of $30 on a note receivable. b. Determined that the Allowance for Bad Debts account balance should be increased by $2,050. c. Recognized bank service charges of $22 for the month. d. Received $29 cash for interest accrued in a prior month. e. Purchased 3 units of a new item of inventory on account at a cost of $31 each. Perpetual inventory is maintained. f. Purchased 14 more units on account of the above item at a cost of $36 each. Perpetual inventory is maintained. g. Sold 12 of the items purchased (in e and f) and recognized the cost of goods sold using the FIFO cost flow assumption. Perpetual inventory is maintained. Transaction a. b. C. Current Assets Interest receivable +30 Current Liabilities. Stockholders' Equity Ne Interest revenue +3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the
effect of the transaction or adjustment on the appropriate balance sheet category and on net income by entering for each account
affected the account name and amount and indicating whether it is an addition (+) or a subtraction (-). Transaction a has been done as
an illustration. Net income is not affected by every transaction. In some cases only one column may be affected because all of the
specific accounts affected by the transaction are included in that category.
a. Accrued interest revenue of $30 on a note receivable.
b. Determined that the Allowance for Bad Debts account balance should be increased by $2,050.
c. Recognized bank service charges of $22 for the month.
d. Received $29 cash for interest accrued in a prior month.
e. Purchased 3 units of a new item of inventory on account at a cost of $31 each. Perpetual inventory is maintained.
f. Purchased 14 more units on account of the above item at a cost of $36 each. Perpetual inventory is maintained.
g. Sold 12 of the items purchased (in e and f) and recognized the cost of goods sold using the FIFO cost flow assumption. Perpetual
inventory is maintained.
Transaction
a.
b.
C.
d.
Current Assets
Interest receivable +30
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Stockholders' Equity
Ne
Interest revenue +3
Mar 4
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