6th Edition

ISBN: 9781260823875

Author: PHILLIPS

Publisher: MCGRAW-HILL CUSTOM PUBLISHING

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Textbook Question

Chapter 2, Problem 11E

Recording Journal Entries and Preparing a Classified Balance Sheet

Assume Down.com was organized on May 1 to compete with Despair.com—a company that sells de-motivational posters and office products. The following events occurred during the first month of Down.com's operations.

a. Received $60,000 cash from the investors who organized Down.com Corporation.
b. Borrowed $20,000 cash and signed a note due in two years.
c. Ordered equipment costing $16.000.
d. Purchased $9,000 in equipment, paying $2,000 in cash and signing a six-month note for the balance.
e. Received the equipment ordered in (c), paid for half of it, and put the rest on account.

Required:

1. Summarize the financial effects of items (a)−(e) in a table or spreadsheet similar to Exhibit 2.5.
2. Prepare journal entries for each transaction. Be sure to use referencing and categorize each account as an asset (A), liability (L), or stockholders’ equity (SE). If a transaction does not require a journal entry, explain the reason.
3. Prepare a classified balance sheet at May 31. Include Retained Earnings with a balance of zero.

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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Chapter 2, Problem 10E

Chapter 2, Problem 12E

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Chapter 2 Solutions

FUNDAMENTALS OF FINANCIAL ACCOUNTING

Ch. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Define a transaction anti give an example of each...Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the basic accounting equation?Ch. 2 - Prob. 5Q Ch. 2 - Prob. 6Q Ch. 2 - Prob. 7Q Ch. 2 - What is a journal entry? What is the typical...Ch. 2 - What is a T-account? What is its purpose?Ch. 2 - Prob. 10Q

Ch. 2 - Prob. 11Q Ch. 2 - Which of the following is not an asset account? a....Ch. 2 - Which of the following statements describe...Ch. 2 - Total assets on a balance sheet prepared on any...Ch. 2 - The duality of effects can best be described as...Ch. 2 - The T-account is used to summarize which of the...Ch. 2 - Prob. 6MC Ch. 2 - A company was recently formed with 50,000 cash...Ch. 2 - Which of the following statements would be...Ch. 2 - Prob. 9MC Ch. 2 - Prob. 10MC Ch. 2 - Prob. 1ME Ch. 2 - Prob. 2ME Ch. 2 - Matching Terms with Definitions Match each term...Ch. 2 - Prob. 4ME Ch. 2 - Prob. 5ME Ch. 2 - Prob. 6ME Ch. 2 - Prob. 7ME Ch. 2 - Identifying Events as Accounting Transactions Half...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Preparing Journal Entries For each of the...Ch. 2 - Posting to T-Accounts For each of the transactions...Ch. 2 - Reporting a Classified Balance Sheet Given the...Ch. 2 - Prob. 13ME Ch. 2 - Prob. 14ME Ch. 2 - Identifying Transactions and Preparing Journal...Ch. 2 - Prob. 16ME Ch. 2 - Prob. 17ME Ch. 2 - Prob. 18ME Ch. 2 - Prob. 19ME Ch. 2 - Prob. 20ME Ch. 2 - Prob. 21ME Ch. 2 - Prob. 22ME Ch. 2 - Prob. 23ME Ch. 2 - Prob. 24ME Ch. 2 - Prob. 25ME Ch. 2 - Prob. 1E Ch. 2 - Identifying Account Titles The following are...Ch. 2 - Classifying Accounts and Their Usual Balances As...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Recording Journal Entries Refer to E2-4. Required:...Ch. 2 - Prob. 6E Ch. 2 - Recording Journal Entries Refer to E2-6. Required:...Ch. 2 - Analyzing the Effects of Transactions in...Ch. 2 - Inferring Investing and Financing Transactions and...Ch. 2 - Analyzing Accounting Equation Effects, Recording...Ch. 2 - Recording Journal Entries and Preparing a...Ch. 2 - Analyzing the Effects of Transactions Using...Ch. 2 - Explaining the Effects of Transactions on Balance...Ch. 2 - Calculating and Evaluating the Current Ratio...Ch. 2 - Prob. 15E Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Prob. 1PA Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Prob. 2PB Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Finding and Analyzing Financial Information Refer...Ch. 2 - Finding and Analyzing Financial Information Refer...Ch. 2 - Prob. 4SDC Ch. 2 - Prob. 5SDC Ch. 2 - Accounting for the Establishment of a Business...

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Solution Summary: The author explains the accounting equation, which creates a relationship between the resources of the company, and creditors and the owners. The journal entries of Company D are as follows:

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