PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
7th Edition
ISBN: 9780357033647
Author: Billingsley
Publisher: CENGAGE L
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Chapter 2, Problem 2FPE
Preparing financial statements. Hugo Garcia is preparing his
- a. Hugo rents a house for $1,350 a month.
- b. On June 21, 2020 Hugo bought diamond earrings for his wife and charged them using his Visa card. The earrings cost $900, but he hasn’t yet received the bill.
- c. Hugo borrowed $3,500 from his parents last fall, but so far, he has made no payments to them.
- d. Hugo makes monthly payments of $225 on an installment loan; about half of it is interest, and the balance is repayment of principal. He has 20 payments left, totaling $4,500.
- e. Hugo paid $3,800 in taxes during the year and is due a tax refund of $650, which he hasn’t yet received.
- f. Hugo invested $2,300 in a mutual fund.
- g. Hugo’s Aunt Lydia gave him a birthday gift of $300.
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Hugo Garcia is preparing his balance sheet and income and expense statement for the year ending December 31, 2020. He is having difficulty classifying a few items and asks for your help.
Which of the transactions are assets, liabilities, income, or expense items?
a. Hugo rents a house for $1,350 a month.
b. Hugo bought diamond earrings for his wife and charged them using his Visa card. The earrings cost $900, but he hasn’t yet received the bill.
c. Hugo borrowed $3,500 from his parents last fall, but so far, he has made no payments to them.
d. Hugo makes monthly payments of $225 on an installment loan; about half of it is interest, and the balance is repayment of principal. He has 20 payments left, totaling $4,500.
e. Hugo paid $3,800 in taxes during the year and is due a tax refund of $650, which he hasn’t yet received.
f. Hugo invested $2,300 in a mutual fund.
g. Hugo’s Aunt Lydia gave him a birthday gift of $300.
S. Waweru starts business on 1st July 2020, when he deposits Shs. 18,000 into his business bank account and Shs. 2,500 in his cash account. During the month of July, he undertakes the following transactions:-
2020
July 3 He purchases shop fittings for sh. 2,500 and pays by cheque.
July 4 He buys a motor vehicle from AB & Co. on credit Sh. 3,000.
July 6 He buys stock for Sh. 1,500 and pays through bank.
July 8 He sells goods for cash Sh.1,000.
July 10 Buys goods on credit from XY & Co. for Sh. 1,200
July 12 Sells goods to A. Smith for Sh. 900 on credit
July 13 Pays wages Sh. 120 by cash
July 14 A. Smith returns goods worth Sh. 200
July 15 Pays to AB & Co. Sh. 3,000 by cheque
July 17 Goods returned to XY & Co. amounting to Sh. 350
July 21 Receives from A. Smith a cheque for Sh. 700
July 25 Sells goods for cash Sh. 300.
July 30…
S. Waweru starts business on 1st July 2020, when he deposits Shs. 18,000 into his business bank account and Shs. 2,500 in his cash account. During the month of July, he undertakes the following transactions:-
2020
July 3 He purchases shop fittings for sh. 2,500 and pays by cheque.
July 4 He buys a motor vehicle from AB & Co. on credit Sh. 3,000.
July 6 He buys stock for Sh. 1,500 and pays through bank.
July 8 He sells goods for cash Sh.1,000.
July 10 Buys goods on credit from XY & Co. for Sh. 1,200
July 12 Sells goods to A. Smith for Sh. 900 on credit
July 13 Pays wages Sh. 120 by cash
July 14 A. Smith returns goods worth Sh. 200
July 15 Pays to AB & Co. Sh. 3,000 by cheque
July 17 Goods returned to XY & Co. amounting to Sh. 350
July 21 Receives from A. Smith a cheque for Sh. 700
July 25 Sells goods for cash Sh. 300.
July 30…
Chapter 2 Solutions
PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
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