Financial Accounting
9th Edition
ISBN: 9781259738692
Author: Libby
Publisher: MCG
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Textbook Question
Chapter 2, Problem 2.3ME
Identifying Events as Accounting Transactions
LO2-2 For each of the following events, which ones result in an exchange transaction for Dittman Company (Y for yes and N for no)?
______ (1) Six investors in Dittman Company sold their stock to another investor.
______ (2) The founding owner, Megan Dittman, purchased additional stock in another company.
______ (3) The company borrowed $2,500,000 from a local bank.
______ (4) Dittman Company purchased a machine that it paid for by signing a note payable.
______ (5) The company lent $300,000 to a supplier.
______ (6) Dittman Company ordered supplies from Staples to be delivered next week.
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a.
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Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts
(including + or -) for each transaction.
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C.
Required information
[The following information applies to the questions displayed below.]
C.
a. On March 22, purchased 880 shares of RPI Company stock at $24 per share. Duke's stock investment results in it
having an insignificant influence over RPI.
b. On July 1, received a $3 per share cash dividend on the RPI stock purchased in part a.
c. On October 8, sold 440 shares of RPI stock for $34 per share.
Assets
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Liabilities
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Equity
A. Tell Me the Truth
Directions: Read each sentence carefully and determine whether the statement is TRUE or FA LSE.
1. The equity section of the statement of financial position of a sole proprietorship
business shows more than one equity component.
2. Mr. D's equity at the beginning of the period has a balance of P50. During the
period Ms. D earns a profit of P20 and makes total drawings of P5. The net change
in Ms. D's equity during the period is an increase of P20.
3. Mr. C's equity at the end of the period has a balance of Pl15. During the peri od
Mr. C earns profit of P20 and makes total drawings of P5. Mr. C's equity at the
beginring of the period is P100.
4. Mr. B's equity at the beginning of the period has a balance of P20. During the
period Mr. B incurs loss of P2 and makes total drawings of P5. Mr. B's equity at
the end of the period is P13.
5. Mr. A's equity at the beginning of the period has a balance of P100. During the
period Mr. A earns profit of P20 ad makes total…
Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming George Company unes
(a) the fair value method and (b) the equity method for accounting for its investments in Tiffany Company
(a) Fair Value Method.
Transaction
(b) Equity Method
Investment Dividend Investment Investment
Account
Revenue
Account
Revenue
1. At the beginning of Year 1. George bought 40% of Tiffany's common stock at its book value. Total book value of all Tiffany's
common stock was $1,000,000 on this date.
2. During Year 1, Tiffany reported $50,000 of net income and paid $50,000 of dividends.
3. During Year 2, Tiffany reported $100,000 of net income and paid $20,000 of dividends.
4. During Year 3, Tiffany reported a net loss of $15,000 and paid $5,000 of dividends.
5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and
investment revenue.…
Chapter 2 Solutions
Financial Accounting
Ch. 2 - Prob. 1QCh. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Explain what the following accounting terms mean:...Ch. 2 - Why are accounting assumptions necessary?Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the fundamental accounting model?Ch. 2 - Prob. 7QCh. 2 - Explain what debit and credit mean.Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - How is the current ratio computed and interpreted?Ch. 2 - Prob. 14QCh. 2 - Prob. 1MCQCh. 2 - Which of the following is not an asset? a....Ch. 2 - Total liabilities on a balance sheet at the end of...Ch. 2 - The dual effects concept can best be described as...Ch. 2 - The T-account is a tool commonly used for...Ch. 2 - Prob. 6MCQCh. 2 - The Cash T-account has a beginning balance of...Ch. 2 - Prob. 8MCQCh. 2 - At the end of a recent year, The Gap, Inc.,...Ch. 2 - Prob. 10MCQCh. 2 - Matching Definitions with Terms Match each...Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Events as Accounting Transactions...Ch. 2 - Classifying Accounts on a Balance Sheet The...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 2.6MECh. 2 - Prob. 2.7MECh. 2 - Prob. 2.8MECh. 2 - Prob. 2.9MECh. 2 - Prob. 2.10MECh. 2 - Prob. 2.11MECh. 2 - Computing and Interpreting the Current Ratio...Ch. 2 - Identifying Transactions as Investing or Financing...Ch. 2 - Matching Definitions with Terms Match each...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 - Determining Financial Statement Effects of Several...Ch. 2 - Recording Investing and Financing Activities Refer...Ch. 2 - Prob. 2.7ECh. 2 - Recording Investing and Financing Activities...Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Prob. 2.11ECh. 2 - Inferring Investing and Financing Transactions and...Ch. 2 - Recording Journal Entries Nathanson Corporation...Ch. 2 - Prob. 2.14ECh. 2 - Analyzing the Effects of Transactions Using...Ch. 2 - Prob. 2.16ECh. 2 - Prob. 2.17ECh. 2 - Prob. 2.18ECh. 2 - Inferring Typical Investing and Financing...Ch. 2 - Prob. 2.20ECh. 2 - Identifying the Investing and Financing Activities...Ch. 2 - Prob. 2.22ECh. 2 - Identifying Accounts on a Classified Balance Sheet...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Prob. 2.3PCh. 2 - Prob. 2.4PCh. 2 - Prob. 2.5PCh. 2 - Prob. 2.6PCh. 2 - Prob. 2.1APCh. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions in T-Accounts, Preparing...Ch. 2 - Prob. 2.4APCh. 2 - Accounting for the Establishment of a New Business...Ch. 2 - Prob. 2.1CPCh. 2 - Prob. 2.2CPCh. 2 - Prob. 2.3CPCh. 2 - Prob. 2.4CPCh. 2 - Prob. 2.5CPCh. 2 - Prob. 2.6CPCh. 2 - Prob. 2.7CPCh. 2 - Prob. 2.8CP
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- omework i es Transactions 1. Wildcat issues common stock to Falcon. 2. Wildcat lends to Falcon by accepting a note. 3. Wildcat receives services from Falcon. 4. Wildcat receives interest from Falcon on lending. Search Saved Wildcat Corporation has the following transactions with Falcon Incorporated. Required: 1. For each transaction, indicate whether Wildcat would report the related account in the balance sheet or income statement. 2. For accounts in the balance sheet, indicate whether it would be classified as an asset, liability, or stockholders' equity. For accounts in the income statement, indicate whether it would be classified as a revenue or an expense. 3. Indicate whether each transaction is classified as operating, investing, or financing activity. Wildcat's Related Account Common stock Notes receivable Service fee expense Interest revenue Help Account Save & Exit Check my Activity ENG INarrow_forward[The following information applles to the questions displayed below.] On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,580 in assets In exchange for Its common stock to launch the business. On October 31, the company's records show the following Items and amounts. Retalned earnings, October 1 as $0. $ 9,390 16,020 3,83e 45,98e 18,55e 9,e6e 84,580 Cash dividends Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses $ 2,650 16,e20 4,190 7,570 830 Cash Accounts receivable office supplies Land office equipment Accounts payable Common stock 650 Exercise 1-15 Preparing an income statement LO P2 Using the above Information prepare an October Income statement for the business. ERNST CONSULTING Income Statement For Month Ended October 31 Revenues Consulting revenue Expenses Rent expense Salaries expense Telephone expense Miscellaneous expenses Net incomearrow_forwardI want the Answer of this Questionarrow_forward
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- Required information [The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $85,160 in assets in exchange for its common stock to launch the business. On December 31, the company's records show the following items and amounts. Cash Accounts receivable office supplies Office equipment Land Accounts payable Common stock ERNST CONSULTING Statement of Retained Earning Retained earnings, December 1 Add: Net income Using the above information prepare a December statement of retained earnings for Ernst Consulting. Hint: Retained Earnings on December 1 was $0. Less: Dividends $ $ 7,520 Cash dividends 17,950 4,310 19,190 46,000 9,600 85,160 $ Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses $ 3,190 17,950 4,720 8,220 900 710 3,450 3,450 6,900 3,190 3,710arrow_forwardces Required information [The following information applies to the questions displayed below.] On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,780 in assets in exchange for its common stock to launch the business. On October 31, the company's records show the following items and amounts. Retained earnings, October 1 as $0. Cash Accounts receivable Office supplies Land Office equipment Accounts payable Common stock $ 8,990 16,540 3,930 45,980 18,660 9,170 84,780 Cash dividends Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses ERNST CONSULTING Statement of Retained Earnings Using the above information prepare an October statement of retained earnings for Ernst Consulting. $ 2,830 16,540 4,300 7,740 850 670 Sarrow_forwardDon't give answer in image formatarrow_forward
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