Financial Accounting, 8th Edition
8th Edition
ISBN: 9780078025556
Author: Robert Libby, Patricia Libby, Daniel Short
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 2, Problem 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.
a.
Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts
(including + or -) for each transaction.
b.
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, 8th Edition
Ch. 2 - Prob. 1QCh. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Prob. 3QCh. 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 - Prob. 1MECh. 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 - Prob. 5MECh. 2 - Prob. 6MECh. 2 - Prob. 7MECh. 2 - Prob. 8MECh. 2 - Prob. 9MECh. 2 - Prob. 10MECh. 2 - Prob. 11MECh. 2 - Prob. 12MECh. 2 - Prob. 13MECh. 2 - Prob. 1ECh. 2 - Prob. 2ECh. 2 - Prob. 3ECh. 2 - Prob. 4ECh. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 6ECh. 2 - Prob. 7ECh. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Prob. 9ECh. 2 - Prob. 10ECh. 2 - Prob. 11ECh. 2 - Prob. 12ECh. 2 - Prob. 13ECh. 2 - Prob. 14ECh. 2 - Prob. 15ECh. 2 - Prob. 16ECh. 2 - Inferring Typical Investing and Financing...Ch. 2 - Prob. 18ECh. 2 - Prob. 19ECh. 2 - Prob. 20ECh. 2 - Identifying Accounts on a Classified Balance Sheet...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 1APCh. 2 - Prob. 2APCh. 2 - Prob. 3APCh. 2 - Prob. 4APCh. 2 - Prob. 1CPCh. 2 - Prob. 2CPCh. 2 - Prob. 3CPCh. 2 - Prob. 4CPCh. 2 - Prob. 5CPCh. 2 - Prob. 6CPCh. 2 - Prob. 7CPCh. 2 - Prob. 8CPCh. 2 - Prob. 1CC
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- [The following information applies 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. Retained eamings, October 1 as $0. $ 9,390 16,020 3,830 45,980 18,55e 9, 860 84,580 Cash dividends Cash Accounts receivable Office supplies Land Office equipment Accounts payable Common stock $ 2,650 Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses 16,020 4, 190 7,570 830 650 Exercise 1-15 Preparing an Income statement LO P2 Using the above information prepare an October income statement for the business. ERN ST CON SULTING Income Statementarrow_forward[The following information applies 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. Retained eamings, October 1 as $0. $ 9,390 16,020 3,830 45,980 18,550 9,060 84,580 Cash dividends Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses $ 2,650 16,820 4,190 7,570 830 650 Cash Accounts receivable Office supplies Land office equipment Accounts payable Common stock Exercise 1-17 Preparlng a balance sheet LO P2 Using the above information prepare an October 31 balance sheet for Ernst Consulting. ERNST CONSULTING Balance Sheet 2$arrow_forwardhi can anyone help herearrow_forward
- 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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