Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 4, Problem 4.9E
Transaction Analysis: Journal
| Cash | $40,000 |
| 100,000 | |
| Equipment | 550,000 |
| Accounts Payable | 14,500 |
| Salaries Payable | 6,000 |
| Notes Payable | 108,000 |
| Common Stock | 235,000 |
| 326,500 |
The following transactions occurred during the current year
- a. On January 1, the owners invested a total of $150,000 (the par value of the stock) as an additional capital contribution. In exchange, the corporation issued the owners 50,000 shares of common stock.
- b. On March 23, the company paid cash to purchase office equipment for $108,000.
- c. On April 18, the company made a payment on the note due to a bank, $10,000.
- d. On May 5, collected the balance of accounts receivable due from the prior year.
- e. On May 31, salaries were accrued for time worked in May in the amount of $2,000 These salaries will be paid in June.
- f. On June 30, the company paid cash to employees for salaries accrued on May 31 as well as the balance due from the prior year.
- g. On July 8, the company paid cash for accounting fees in the amount of $6,000.
- h. On September 6, the company performed repair work on a fleet of vehicles at a total charge of $76,000. The customer paid cash for half of the transaction and put the other half on its credit account with G&S.
- i. On November 9, the customer who engaged G&S to do the repair work on September 6 paid off its account balance with cash.
- j. On December 15, the company made a $10,000 cash payment to purchase parts and supplies (record in Parts and Supplies Inventory).
Required
- a. Show the effect of each transaction on assets, liabilities, and equity using the
accounting equation. - b. Prepare the
journal entry for each transaction. Omit explanations. - c. Post each journal entry to the t-accounts and determine the ending balances of each account at the end of the year.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Gojo Company had the following transactions involving current assets and current liabilities
during February 2021.
Feb 3 Collected accounts receivable of $15,000.
7 Purchased equipment for $23,000 cash.
14 Paid accounts payable of S12,000.
18 Declared cash dividends, $4,000. The dividend will be paid next month.
Additional information:
As of 1* February 2020, current assets were $120,000 and current liabilities were $40,000.
Required:
1) Compute the current ratio as of the beginning of the month.
2) Compute the current ratio after evaluating the effect of each transaction (Consider the
effect of each transaction continuously). Did Gojo Company's current ratio improve,
deteriorate, or hold steady after each transaction? Show detailed workings to support your
answer.
Indigo Company has been operating for several years, and on December 31, 2025, presented the following balance sheet.
Cash
Receivables
Inventory
Plant assets (net)
(a) Current ratio
(b)
(c)
(d)
INDIGO COMPANY
Balance Sheet
December 31, 2025
$40,800 Accounts payable
74,700 Mortgage payable
The net income for 2025 was $24,828. Assume that total assets are the same in 2024 and 2025.
Compute each of the following ratios. (Round answers to 2 decimal places, e.g. 1.59 or 45.87%.)
Acid-test ratio
88,900
209,400
$413,800
Debt to assets ratio
Common stock ($1 par)
Retained earnings
Return on assets
%
$70,000
126,555
164,500
52,745
%
$413,800
Skysong, Inc. had the following transactions involving current assets and current liabilities during February 2019.
Feb. 3
Collected accounts receivable of $18,900.
7
Purchased equipment for $36,800 cash.
11
Paid $3,500 for a 1-year insurance policy.
14
Paid accounts payable of $12,400.
18
Declared cash dividends, $8,500.
Additional information:As of February 1, 2019, current assets were $135,000 and current liabilities were $35,400.Compute the current ratio as of the beginning of the month and after each transaction. (Round all answers to 2 decimal places, e.g. 1.83 : 1.)
Current ratio as of February 1, 2019
enter current ratio
:1
Feb. 3
enter the current ratio as of February 3
:1
Feb. 7
enter the current ratio as of February 7
:1
Feb. 11
enter the current ratio as of February 11
:1
Feb. 14
enter the current ratio as of February 14
:1
Feb. 18
enter the current ratio as of February 18
:1
Chapter 4 Solutions
Intermediate Accounting (2nd Edition)
Ch. 4 - Prob. 4.1QCh. 4 - ShoeBuy uses reversing entries for events such as...Ch. 4 - What is equity? What are the three components of...Ch. 4 - Prob. 4.4QCh. 4 - Will all transactions have a dual effect on the...Ch. 4 - Prob. 4.6QCh. 4 - What is meant by the term normal balance? Provide...Ch. 4 - Why is the general journal referred to as the book...Ch. 4 - Are account balances found in the general ledger?...Ch. 4 - What is the purpose of an unadjusted trial...
Ch. 4 - Explain the difference between the accrual basis...Ch. 4 - Under the accrual basis of accounting when do...Ch. 4 - Why are adjusting journal entries made? When do...Ch. 4 - What is a deferred revenue? When will the full...Ch. 4 - What is the purpose of the adjusted trial...Ch. 4 - Which statements can be prepared from the adjusted...Ch. 4 - Prob. 4.17QCh. 4 - Jefferson, CPAs provides accounting services for a...Ch. 4 - Gates Accounting Services (GAS), a sole...Ch. 4 - Prob. 4.3MCCh. 4 - State University sold all of its basketball...Ch. 4 - Prob. 4.5MCCh. 4 - Sampson Manufacturing Company (SMC) has an empty...Ch. 4 - On July 15, Year 1, Southeastern University hired...Ch. 4 - Embree Corp. purchased a four-year insurance...Ch. 4 - The Cougars football team sells season tickets in...Ch. 4 - Prob. 4.10MCCh. 4 - Prob. 4.1BECh. 4 - Transaction Analysis. Florences Floral...Ch. 4 - Journal Entries. Using the information provided in...Ch. 4 - Transaction Analysis; Journal Entries. Cals...Ch. 4 - Transaction Analysis; Journal Entries. Using the...Ch. 4 - Journal Entries; T-accounts. Using the information...Ch. 4 - Retained Earnings. In its first year of...Ch. 4 - Retained Earnings. Using the information provided...Ch. 4 - Prob. 4.9BECh. 4 - Prob. 4.10BECh. 4 - Adjusting Journal Entries. Barnard and Associates...Ch. 4 - Prob. 4.12BECh. 4 - Prob. 4.13BECh. 4 - Prob. 4.14BECh. 4 - Prob. 4.15BECh. 4 - Closing Entries. Using the information provided in...Ch. 4 - Closing Entries. At year-end Nelsons Nursery, Inc...Ch. 4 - Closing Entries. Readers, Inc., an online...Ch. 4 - Adjusting Journal Entries. Barnard and Associates...Ch. 4 - Prob. 4.20BECh. 4 - Adjusting Journal Entries. Gerhard News collects...Ch. 4 - Prob. 4.22BECh. 4 - Prob. 4.23BECh. 4 - Prob. 4.24BECh. 4 - Transaction Analysis. The following transactions...Ch. 4 - Prob. 4.2ECh. 4 - Transaction Analysis; Journal Entries. Master Mind...Ch. 4 - Prob. 4.4ECh. 4 - Prob. 4.5ECh. 4 - Posting to the General Ledger. Using the...Ch. 4 - Preparing Journal Entries in the General Journal....Ch. 4 - Preparing the T-accounts. Using the information...Ch. 4 - Transaction Analysis: Journal Entries and Posting...Ch. 4 - Transaction Analysis: Journal Entries and Posting...Ch. 4 - Prob. 4.11ECh. 4 - Adjusting Journal Entries: T-accounts. Fanatical...Ch. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Prob. 4.15ECh. 4 - Prob. 4.16ECh. 4 - Prob. 4.17ECh. 4 - Adjusting Journal Entries; Adjusted Trial Balance....Ch. 4 - Preparing Financial Statements. Using the adjusted...Ch. 4 - Prob. 4.20ECh. 4 - Prob. 4.21ECh. 4 - Closing Entries. Diane s Dairy Sales Delivery...Ch. 4 - Prob. 4.23ECh. 4 - Prob. 4.24ECh. 4 - Transaction Analysis; Journal Entries; Adjusting...Ch. 4 - Transaction Analysis; Journal Entries; Adjusting...Ch. 4 - Journal Entries; Post to the General Ledger;...Ch. 4 - Prob. 4.4PCh. 4 - Prob. 4.5PCh. 4 - Journal Entries; Post to the General Ledger;...Ch. 4 - Preparing the Trial Balance; Adjusting Journal...Ch. 4 - Transaction Analysis; Journal Entries; Adjusting...Ch. 4 - Closing Process. Using the information in P4-6 and...Ch. 4 - Closing Process. Sherlock Locksmiths, Inc has the...Ch. 4 - Transaction Analysis; Journal Entries, Posting,...Ch. 4 - Transaction Analysis; Journal Entries, Posting,...
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. Below are the accounts of Agatha Trading for the year ended December 31, 2019. Accounts Payable 100,000.00 Accounts Receivable 140,000.00 Capital 1,840,000.00 Cash 1,000,000.00 Inventories 450,000.00 Long term debt 300,000.00 Notes Payable 100,000.00 Notes Receivable 100,000.00 Property, Plant & Equipment 550,000.00 Supplies and other prepayments 100,000.00 B. Prepare a statement of financial position and label its parts. After which, answer the following questions. a. How much is the total current liability of the entity? b. How much is the total non current asset of the entity? c. How much is the total current liability of the entity? d. How much is the total non current liability of the entity? e. How much is the total asset of the entity?arrow_forwardThe following transactions apply to Hooper Co. for 2018, its first year of operations: Issued $60,000 of common stock for cash. Provided $90,000 of services on account. Collected $78,000 cash from accounts receivable. Loaned $20,000 to Mosby Co. on November 30, 2018. The note had a one-year term to maturity and a 6 percent interest rate. Paid $26,000 of salaries expense for the year. Paid a $2,000 dividend to the stockholders. Recorded the accrued interest on December 31, 2018 (see item 4). Estimated that 1 percent of service revenue will be uncollectible Prepare the income statement, balance sheet, and statement of cash flows for 2018.arrow_forwardUse the following information from Dubuque Company's financial statements. From the Dec.31, 2018 balance sheet, changes from prior year: Accounts Receivable $8,600 Inventory 3,400 Prepaid Insurance (2,200) Accounts Payable (4,000) Sales Tax Payable 1,900 From the 2018 Income Statement: Gain From Sale of Investments $12,000 Depreciation Expense 26,500 Net Income 79,300 Prepare the operating activities section of the statement of cash flows (indirect method) for the year 2018. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments. Dubuque Company Partial Statement of Cash Flows (Indirect Method) For the Year Ended December 31, 2018 Operating Activities: Net Income Depreciation Expense Gain From Sale of Investments Accounts Receivable, Inventory %24arrow_forward
- On December 31, 2019, Clean and White Linen Supplies Ltd. had the following account balances: Cash $90,000 Accumulated Depreciation, Equipment S90,000 Accounts Receivable 96,000 Accounts Payable 60,000 Inventory 60,000 Wages Payable 8,000 Supplies 2,000 Bank Loan Payable 150,000 Long-Term Investment 80,000 Common Shares 250,000 Equipment 330,000 Retained Earnings 100,000 In 2020, the following transactions occurred: On January 1, paid $4,200 for a three-year fire insurance policy. Purchased additional uniform inventory on credit for $147,100. 1. Sold uniforms for S192,100 on account. The inventory that was sold had been purchased for $100,000. 3. Performed cleaning services for customers for $544,400. One-quarter of this amount was paid in cash and the remainder was on account. 4. Paid $139,200 to suppliers to settle some of the accounts payable. Received $246,000 from customers to settle amounts owed to the company. 7. Paid $15,200 for advertising. At the end of 2020, paid the…arrow_forwardOn December 31, 2019, Clean and White Linen Supplies Ltd. had the following account balances: Cash S90,000 Accumulated Depreciation, Equipment S90,000 Accounts Receivable 96,000 Accounts Payable 60,000 Inventory 60,000 Wages Payable 8,000 Supplies 2,000 Bank Loan Payable 150,000 Long-Term Investment 80,000 Common Shares 250,000 Equipment 330,000 Retained Earnings 100,000 In 2020, the following transactions occurred: On January 1, paid S4,200 for a three-year fire insurance policy. 1. 2. Purchased additional uniform inventory on credit for $147,10o. Sold uniforms for S192,100 on account. The inventory that was sold had been purchased for $100,000. 3. Performed cleaning services for customers for $544,40o. One-quarter of this amount was paid in cash and the remainder was on account. 4. Paid $139,200 to suppliers to settle some of the accounts payable. Received $246,000 from customers to settle amounts owed to the company. 7. Paid $15,200 for advertising. At the end of 2020, paid the…arrow_forwardFollowing data reselected information on Marbel Company for the year 2019: Cash balance, January 1 130,000 Accounts receivable, January 1 190,000 Collections from customers 2,100,000 Stockholders’ equity, January 1 380,000 Total assets, January 1 750,000 Total assets, December 31 880,000 Cash balances, December 31 160,000 Accounts receivable, December 31 360,000 Total liabilities, December 31 390,000 The net income of Marbel for 2019 is: A. 490,000 B. 150,000 C. 110,000 D. 70,000arrow_forward
- Sheridan Company has been operating for several years, and on December 31, 2025, presented the following balance sheet. Cash Receivables Inventory Plant assets (net) (a) (b) (c) (d) Current ratio Acid-test ratio SHERIDAN COMPANY Balance Sheet December 31, 2025 $40,600 Accounts payable 77,900 Mortgage payable 99,000 203,500 $421,000 The net income for 2025 was $23,155. Assume that total assets are the same in 2024 and 2025. Compute each of the following ratios. (Round answers to 2 decimal places, e.g. 1.59 or 45.87%.) Debt to assets ratio Return on assets Common stock ($1 par) Retained earnings % $75,000 % 114,450 142,500 89,050 $421,000arrow_forwardAccountants for Johnson, Inc. have assembled the following data for the year ended December 31, 2018: 2018 2017 Current Assets Cash $124,700 $26,000 Accounts Receivable 64,500 69,400 Merchandise Inventory 82,000 79,000 Current Liabilities Accounts Payable 57,700 55,500 Income Tax Payable 14,300 17,100 Transaction Data for 2018: Issuance of common stock for cash $43,000 Payment of notes payable $44,100 Depreciation expense 26,000 Payment of cash dividends 51,000 Purchase of equipment with cash 69,000 Issuance of notes payable to borrow cash 66,000 Acquisition of land by issuing long-term notes payable 115,000 Gain on sale of building 6,500 Book value of building sold 56,000 Net income 70,500 Prepare Johnson's statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and financing activities.arrow_forwardThe AHAI Company's balance sheet of December 31, 2018 is given below: Accounts payable Notes payable Accrued wages and taxes Long-term debt Common equity Total liabilities & equity Cash Accounts receivable Inventory Net fixed assets Total assets O a. $6 O b. $7 O c. $8 O d. $40 O e. $5 $10 25 40 95 $170 $20 25 15 30 80 $170 Sales during the past year were $1,000, and they are expected to increase to $2,000 during 2019. AHAI's fixed assets were used to 60% of capacity during 2018, but its current assets were at their proper levels. All assets except fixed assets increase at the same rate as sales, and fixed assets would also increase at the same rate if the current excess capacity did not exist. Assume that AHAI's profit margin will remain constant at 4.25 percent and that the company will continue to pay out 40 percent of its earnings as dividends. What amount of additional funds (AFN) will be needed during the next year assuming the company would use up the excess capacity before…arrow_forward
- Data for Lozano Chip Company and its industry averages follow. Lozano Chip Company: Balance Sheet as of December 31, 2019(Thousands of Dollars) Cash $ 220,000 Accounts payable $ 600,000 Receivables 1,575,000 Notes payable 100,000 Inventories 1,150,000 Other current liabilities 525,000 Total current assets $2,945,000 Total current liabilities $1,225,000 Net fixed assets 1,325,000 Long-term debt 400,000 Common equity 2,645,000 Total assets $4,270,000 Total liabilities and equity $4,270,000 Lozano Chip Company: Income Statement for Year Ended December 31, 2019(Thousands of Dollars) Sales $7,500,000 Cost of goods sold 6,375,000 Selling, general, and administrative expenses 923,000 Earnings before interest and taxes (EBIT) $ 202,000 Interest expense 40,000 Earnings before taxes (EBT) $ 162,000 Federal and state income taxes (25%) 40,500 Net income $ 121,500 Calculate the indicated ratios for Lozano. Do…arrow_forwardMaguindanao Computer, Inc., reports the following statement of financial position amounts as of June 30,2020 Current asset P 2,440,500 Noncurrent assets 6,285,500 Current liabilities 1,386,000 Noncurrent liabilities 900,000 Owner’s equity 6,440,000 A review of account balances reveals the following data a. An analysis of current assets discloses the following: Cash P 422,500 Investment securities-trading 600,000 Trade accounts receivable 568,000 Inventories, including advertising supplies of P20,000 850,000 2,440,500 b. Noncurrent assets include the following: Property, plant and equipment: Depreciated book value (cost P 6,560,000) 5,490,000 Deposit with a supplier for merchandise…arrow_forwardJamison Corp.'s balance sheet accounts as of December 31, 2018 and 2017 and information relating to 2018 activities are presented below. Dece mber 31, 2018 2017 Assets Cash $ 440,000 $ 200,000 Short-term investments 600,000 Accounts receivable (net) 1,020,000 1,020,000 1,380,000 Inventory 1,200,000 Long-term investments 600,000 Plant assets 400,000 3,400,000 2,000,000 Accumulated depreciation (900,000) Patent (900,000) 180,000 200,000 Total assets $6,520,000 $4,320,000 Liabilities and Stockholders' Equity раyable $1,660,000 Accounts and accrued liabilities $1,440,000 Notes payable (nontrade) 580,000 Common stock, $10 par 1,600,000 1,400,000 Additional paid- in capital Retained earnings 800,000 500,000 1,880,000 980,000 Total liabilities and stockholders' equity $6,520,000 $4,320,000 Information relating to 2018 activities: Net income for 2018 was $1,500,000. Cash dividends of $600,000 were declared and paid in 2018. Equipment costing $1,000,000 and having a carrying amount of $320,000…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY