FUNDAMENTALS OF FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781260664386
Author: PHILLIPS, LIBB
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 2, Problem 4E
Determining Financial Statement Effects of Several Transactions
The following events occurred for Favata Company:
- a. Received $10,000 cash from owners and issued stock to them.
- b. Borrowed $7,000 cash from a bank and signed a note due later this year.
- c. Bought and received $800 of equipment on account.
- d. Purchased land for $12.000; paid $1.000 in cash and signed a long-term note for $11.000.
- e. Purchased $3.000 of equipment, paid $1.000 in cash and charged the rest on account.
Required:
For each of the events (a) through (e), perform transaction analysis and indicate the account, amount, and direction of the effect (+ for increase and − for decrease) on the
Event Assets = Liabilities +Stockholders’ Equity
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Answer this question correctly and accurately.
Presented below are accounts of Cutie Company
Additional:
During the year, the owner made an additional investment of 20,000 and withdrawals of 50,000. Cutie company beginning capital is 617,600 and its net income for the year is 75,000.
Instructions: Prepare the Statement of Financial Position in account form and report form and determine the amount of cash.
Prepare the supporting notes.
Journalize the following:
1. On the books & records of Company A:
On May 2nd, Company A received $100 of interest income from the bank earned in April. If the books are on an accrual basis, record the entry in April and in May when cash was received
April May
2. On the books & records of Company A:
In January, Company A purchased Investment in XYZ for $100. Payment was made in cash.
In March, Company A sold Investment in XYZ for $150. Payment was received in cash.
3. On the books & records of Company A:
On April 1st, Company A paid $1,200 for insurance expense that covers the year 4/1/17-3/31/18.
Record 4/1/17 entry for payment of $1,200
Record 4/30/17 journal entry
4. There are 2 parallel funds, Fund A and Fund B. Together, the funds will make an investment of $100k, with a 65/35 split. The investment will be paid in cash, however, Fund B does not currently have any cash so Fund…
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. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 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. 11QCh. 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. 6MCCh. 2 - A company was recently formed with 50,000 cash...Ch. 2 - Which of the following statements would be...Ch. 2 - Prob. 9MCCh. 2 - Prob. 10MCCh. 2 - Prob. 1MECh. 2 - Prob. 2MECh. 2 - Matching Terms with Definitions Match each term...Ch. 2 - Prob. 4MECh. 2 - Prob. 5MECh. 2 - Prob. 6MECh. 2 - Prob. 7MECh. 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. 13MECh. 2 - Prob. 14MECh. 2 - Identifying Transactions and Preparing Journal...Ch. 2 - Prob. 16MECh. 2 - Prob. 17MECh. 2 - Prob. 18MECh. 2 - Prob. 19MECh. 2 - Prob. 20MECh. 2 - Prob. 21MECh. 2 - Prob. 22MECh. 2 - Prob. 23MECh. 2 - Prob. 24MECh. 2 - Prob. 25MECh. 2 - Prob. 1ECh. 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. 6ECh. 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. 15ECh. 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. 1PACh. 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. 2PBCh. 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. 4SDCCh. 2 - Prob. 5SDCCh. 2 - Accounting for the Establishment of a Business...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A company reported the following transactions during the year: o Issued bonds worth $100,000 o Paid $20,000 in interest o Purchased a building for $150,000 o Received dividends of $5,000 o Sold equipment for $25,000 Classify these transactions into operating, investing, and financing activities.arrow_forwardManually journalize the following: a. Bank transfer from any bank to 1612CN amounting P30,000 b. cash Payment amounting P1000 to Acme Corporation. c. the company issued ordinary share capital worth of P 5,000, payment received and deposited on its GBP Bank Account 1 Dr. GBP Bank Account 1 P 5,000 Cr. Ordinary Share Capital P 5,000 d. the company recorded a Salary Expense worth of P 2500, paid for through the company's GBP Bank Account 1. Dr. Salaries and Wages P 2500 Cr. GBP Bank Account 1 P 2500 2 e. the company will pay a total of P 1500 from the Petty Cash fund for transportation related expenses. This transaction is still subject to supervisor's approval.arrow_forwardLine following information applies to the questions displayed below.j The following transactions apply to Park Company for Year 1: 1. Received $31,000 cash from the issue of common stock. 2. Purchased inventory on account for $143,000. 3. Sold inventory for $172,500 cash that had cost $105,500. Sales tax was collected at the rate of 8 percent on the inventory sold. 4. Borrowed $24,000 from First State Bank on March 1, Year 1. The note had a 8 percent interest rate and a one-year term to maturity. 5. Paid the accounts payable (see transaction 2). 6. Paid the sales tax due on $153,500 of sales. Sales tax on the other $19,000 is not due until after the end of the year. 7. Salaries for the year for one employee amounted to $28,000. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 1.5 percent. Federal income tax withheld was $5,300. 8. Paid $2,600 for warranty repairs during the year. 9. Paid $12,000 of other operating expenses during the year. 10. Paid a…arrow_forward
- Accounting question: If you are doing a balance sheet with notes payable of 96,600. Assuming 13,600 of the note payable will be paid the following year. Where are how do you enter it. Long Term Liability?arrow_forwardDetermine the dollar effect on the accounting equation (increase or decrease assets, liabilities, or stockholders’ equity) from the following separate transactions. a. Dillon contributes $4,000 of cash to his corporation in exchange for common stock. b. Cowboy Corporation purchases equipment with a 10-year note payable for $1,600. c. Queen Bee pays off $1,300 of accounts payable.arrow_forwardDuring its first year of operations, a company entered into the following transactions: • Borrowed $5,150 from the bank by signing a promissory note. • Issued stock to owners for $11,500. • Purchased $1,150 of supplies on account. Paid $550 to suppliers as payment on account for the supplies purchased. What is the amount of total assets at the end of the year? Multiple Choice O O $17,250 $17,800 $5,750 $16,650arrow_forward
- Statement of Cash Flows Colorado Corporation was organized at the beginning of the year, with the investment of $250,000 in cash by its stockholders. The company immediately purchased an office building for $300,000, paying $210,000 in cash and signing a three-year promissory note for the balance. Colorado signed a five-year, $60,000 promissory note at a local bank during the year and received cash in the same amount. During its first year, Colorado collected $93,970 from its customers. It paid $65,600 for inventory, $20,400 in salaries and wages, and another $3,100 in taxes. Colorado paid $5,600 in cash dividends. Required Prepare a statement of cash flows for the year. What does this statement tell you that an income statement does not?arrow_forwardBill Darby started Darby Company on January 1, Year 1. The company experienced the following events during its first year of operation. 1. Earned $1,800 of cash revenue. 2. Borrowed $2,400 cash from the bank. 3. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on September 1, Year 1, had a one-year term and an 8 percent annual interest rate. Required: a. What is the amount of interest expense in Year 1? b. What amount of cash was paid for interest in Year 1? c. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases, decreases, or increases and decreases each element of the financial statements. In the Statement of Cash Flows column, designate the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction has been recorded as an example. Complete this question…arrow_forwardBill Darby started Darby Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $1,700 of cash revenue. 2. Borrowed $2,700 cash from the bank. 3. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on September 1, Year 1, had a one-year term and an 6 percent annual interest rate. Required a. What is the amount of interest expense in Year 1? b. What amount of cash was paid for interest in Year 1? c. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases (I) or decreases (D), or if there is no effect, leave the cell blank. In the Cash Flows column, designate the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction has been recorded as an example. Complete this question by entering your answers…arrow_forward
- the effects on the accounting equation under the accrual basis. A sample is provided. a. (Sample) Received $9,900 cash for consulting services rendered in January. b. Issued common stock to investors for $18,000 cash. c. Purchased $21,400 of equipment, paying 25 percent in cash and owing the rest on a note due in two years. d. Received $8,500 cash for consulting services to be performed in February. e. Bought and received $1,200 of supplies on account. f. Received utility bill for January for $1,680, due February 15. g. Consulted for customers in January for fees totaling $18,400, due in February. h. Received $21,500 cash for consulting services rendered in December. i. Paid $600 toward supplies purchased in (e). Required: Indicate the accounts, amounts, and direction of the effects on the accounting equation under the accrual basis. A sample provided. (Enter any decreases to Assets, Liabilities, and Stockholder's Equity with a minus sign.)arrow_forwardThe following events occurred for Favata Company: a. Received $14,000 cash from owners and issued stock to them. b. Borrowed $11,000 cash from a bank and signed a note due later this year. c. Bought and received $1,200 of equipment on account. d. Purchased land for $20,000; paid $1,800 in cash and signed a long-term note for $18,200. e. Purchased $7,000 of equipment; paid $1,800 in cash and charged the rest on account. Required: For each of the above events, prepare journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet < 1 Transaction a 2 Received $14,000 cash from owners and issued stock to them. Record the transaction. Note: Enter debits before credits. 3 4 Record entry 5 General Journal Clear entry Debit Credit View general journalarrow_forwardThe following transactions apply to Hooper Co. for Year 1, its first year of operations: 1. Issued $130,000 of common stock for cash. 2. Provided $100,000 of services on account. 3. Collected $88,000 cash from accounts receivable. 4. Loaned $11,000 to Mosby Co. on November 30, Year 1. The note had a one-year term to maturity and a 6 percen interest rate. 5. Paid $34,000 of salaries expense for the year. 6. Paid a $2,000 dividend to the stockholders. 7. Recorded the accrued interest on December 31, Year 1 (see item 4). 8. Estimated that 1 percent of service revenue will be uncollectible. Problem 5-26A (Algo) Part b b. Prepare the income statement, balance sheet, and statement of cash flows for Year 1.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
The ACCOUNTING EQUATION For BEGINNERS; Author: Accounting Stuff;https://www.youtube.com/watch?v=56xscQ4viWE;License: Standard Youtube License