Financial Accounting (12th Edition) (What's New in Accounting)

12th Edition

ISBN: 9780134725987

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

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Textbook Question

Chapter 2, Problem 2.71CEP

(Learning Objectives 2, 3, 4: Analyze the impact of business transactions; analyze the impact of errors and compute correct amounts; journalize and post transactions in the books) Backline Advertising creates, plans, and handles advertising campaigns in a three-state area. Recently, Backline had to replace an inexperienced office worker in charge of bookkeeping because of some serious mistakes that had been uncovered in the accounting records. You have been hired to review these transactions to determine any corrections that might be necessary. In all cases, the bookkeeper made an accurate description of the transaction.

Chapter 2, Problem 2.71CEP, (Learning Objectives 2, 3, 4: Analyze the impact of business transactions; analyze the impact of

Requirements

1. 1 For each of the preceding entries, indicate the effect of the error on cash, total assets, and net income. The answer for the first transaction has been provided as an example.

Date	Effect on Cash	Effect on Total Assets	Effect on Net Income
May 1	Understated $1,700	Overstated $1,700	Overstated $1,700

2. What is the correct balance of cash if the balance of cash on the books before correcting the preceding transactions was $6,300?
3. What is the correct amount of total assets if the total assets on the books before correcting the preceding transactions was $20,000?
4. What is the correct net income for May if the reported income before correcting the preceding transactions was $9,000?

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 2.70CEP

Chapter 2, Problem 2.72SC

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Chapter 2 Solutions

Financial Accounting (12th Edition) (What's New in Accounting)

Ch. 2 - All of the following events at a sandwich shop are...Ch. 2 - Identify the asset from the following list of...Ch. 2 - Amounts owed to a company by its customers would...Ch. 2 - Thorpe Corporation purchases a new delivery truck...Ch. 2 - Adam Corporation issues stock to Cara Riley in...Ch. 2 - Blake Company completed a consulting job and...Ch. 2 - Prob. 7QC Ch. 2 - Accounts Payable had a normal beginning balance of...Ch. 2 - Which of the following debit and credit rules is...Ch. 2 - A companys beginning Cash balance was 8,000. At...

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Solution Summary: The author explains that an error is a mistake committed in the process of book-keeping or in accounting.

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