Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN: 9781305654174
Author: Gary A. Porter, Curtis L. Norton
Publisher: Cengage Learning
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Question
Chapter 1, Problem 1.1E
To determine
Introduction:
To categorize: Business activities as operating (O), investing (I) and financing (F) activity.
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Classifying Business Transactions
Bob Jacobs opened an advertising agency. The following transactions occurred during January of the current year. Classify each transaction as an operating, an investing, or a financing activity.
a.
Invested cash in the business, $5,000.
b.
Purchased office equipment. Paid $2,500 cash and agreed to paythe balance of $2,000 in four monthly installments.
c.
Paid office rent, $400.
d.
Received cash for services rendered, $700.
e.
Paid phone bill, $95.
f.
Received cash for services rendered, $600.
g.
Made payment on loan in transaction (b), $500.
h.
Paid wages to part-time employee, $800.
i.
Paid electricity bill, $100.
j.
Withdrew cash for personal use, $500.
k.
Paid wages to part-time employee, $600.
Use the following information for the Exercises below. (Algo)
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[The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $85,050 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
$ 7,950
Cash dividends
$ 3,070
Accounts receivable
17,450
Consulting revenue
17,450
Office supplies
4,200
Rent expense
4,530
Office equipment
19,060
Salaries expense
8,090
Land
46,010
Telephone expense
880
Accounts payable
9,430
Miscellaneous expenses
690
Common stock
85,050
[The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $82,780 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
$ 15,760
Cash dividends
$ 640
Accounts receivable
12,590
Consulting revenue
12,590
Office supplies
1,960
Rent expense
2,270
Office equipment
16,580
Salaries expense
5,450
Land
46,030
Telephone expense
760
Accounts payable
7,250
Miscellaneous expenses
580
Common stock
82,780
Use the above information to prepare a December 31 balance sheet for Ernst Consulting.
Chapter 1 Solutions
Financial Accounting: The Impact on Decision Makers
Ch. 1 - Prob. 1.1KTQCh. 1 - Prob. 1.1ECh. 1 - Prob. 1.2ECh. 1 - The Accounting Equation For each of the following...Ch. 1 - The Accounting Equation Ginger Enterprises began...Ch. 1 - The Accounting Equation Using the accounting...Ch. 1 - Changes in Owners Equity The following amounts are...Ch. 1 - The Accounting Equation For each of the following...Ch. 1 - Classification of Financial Statement Items...Ch. 1 - Classification of Financial Statement Items Regal...
Ch. 1 - Net Income (or Loss) and Retained Earnings The...Ch. 1 - Statement of Retained Earnings Ace Corporation has...Ch. 1 - Accounting Principles and Assumptions The...Ch. 1 - Prob. 1.13ECh. 1 - Prob. 1.14ECh. 1 - Prob. 1.15MCECh. 1 - Prob. 1.16MCECh. 1 - Prob. 1.1PCh. 1 - Users of Accounting Information and Their Needs...Ch. 1 - Prob. 1.3PCh. 1 - Prob. 1.4PCh. 1 - Income Statement, Statement of Retained Earnings,...Ch. 1 - Income Statement and Balance Sheet Green Bay...Ch. 1 - Prob. 1.7PCh. 1 - Statement of Retained Earnings for The Coca-Cola...Ch. 1 - Prob. 1.9PCh. 1 - Prob. 1.10MCPCh. 1 - Prob. 1.1APCh. 1 - Users of Accounting Information and Their Needs...Ch. 1 - Prob. 1.3APCh. 1 - Prob. 1.4APCh. 1 - Income Statement, Statement of Retained Earnings,...Ch. 1 - Income Statement and Balance Sheet Fort Worth...Ch. 1 - Corrected Financial Statements Heidis Bakery Inc....Ch. 1 - Statement of Retained Earnings for Brunswick...Ch. 1 - Prob. 1.9APCh. 1 - Prob. 1.10AMCPCh. 1 - Prob. 1.1DCCh. 1 - Reading and Interpreting Chipotles Financial...Ch. 1 - Comparing Two Companies in the Same Industry:...Ch. 1 - Prob. 1.5DCCh. 1 - Prob. 1.6DCCh. 1 - Prob. 1.7DC
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During December of this year, G. Elden established Ginnys Gym. The following asset, liability, and owners equity accounts are included in the chart of accounts: During December, the following transactions occurred: a. Elden deposited 35,000 in a bank account in the name of the business. b. Bought exercise equipment for cash, 8,150, Ck. No. 1001. c. Bought advertising on account from Hazel Company, 105. d. Bought a display rack on account from Cyber Core, 790. e. Bought office equipment on account from Office Aids, 185. f. Elden invested her exercise equipment with a fair market value of 1,200 in the business. g. Made a payment to Cyber Core, 200, Ck. No. 1002. h. Sold services for the month of December for cash, 800. Required 1. Write the account classifications (Assets, Liabilities, Capital, Drawing, Revenue, Expense) in the fundamental accounting equation, as well as the plus and minus signs and Debit and Credit. 2. Write the account names on the T accounts under the classifications, place the plus and minus signs for each T account, and label the debit and credit sides of the T accounts 3. Record the amounts in the proper positions in the T accounts. Write the letter next to each entry to identify the transaction. 4. Foot and balance the accounts.
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Transaction Analysis and Financial Statements Expert Consulting Services Inc. was organized on March 1 by two former college roommates. The corporation provides computer consulting services to small businesses. The following transactions occurred during the first month of operations: March 2: Received contributions of $20,000 from each of the two principal owners of the new business in exchange for shares of stock. March 7: Signed a two-year promissory note at the bank and received cash of $15,000. Interest, along with the $15,000, will be repaid at the end of the two years. March 12: Purchased $700 in miscellaneous supplies on account. The company has 30 days to pay for the supplies. March 19: Billed a client $4,000 for services rendered by Expert in helping to install a new computer system. The client is to pay 25% of the bill upon its receipt and the remaining balance within 30 days. March 20: Paid $1,300 bill from the local newspaper for advertising for the month of March. March 22: Received 25% of the amount billed to the client on March 19. March 26: Received cash of $2,800 for services provided in assisting a client in selecting software for its computer. March 29: Purchased a computer system for $8,000 in cash. March 30: Paid $3,300 of salaries and wages for March. March 31: Received and paid $1,400 in gas, electric, and water bills. Required Prepare a table to summarize the preceding transactions as they affect the accounting equation. Use the format in Exhibit 3-1. Identify each transaction with the date. Prepare an income statement for the month of March. Prepare a classified balance sheet at March 31. From reading the balance sheet you prepared in part (3), what events would you expect to take place in April? Explain your answer.
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Journal Entries, Trial Balance, and Financial Statements Neveranerror Inc. was organized on June 2 by a group of accountants to provide accounting and tax services to small businesses. The following transactions occurred during the first month of business: June 2: Received contributions of $10,000 from each of the three owners of the business in exchange for shares of stock. June 5: Purchased a computer system for $12,000. The agreement with the vendor requires a down payment of $2,500 with the balance due in 60 days. June 8: Signed a two-year promissory note at the bank and received cash of $20,000. June 15: Billed $12,350 to clients for the first half of June. Clients are billed twice a month for services performed during the month, and the bills are payable within ten days. June 17: Paid a $900 bill from the local newspaper for advertising for the month of June. June 23: Received the amounts billed to clients for services performed during the first half of the month. June 28: Received and paid gas, electric, and water bills. The total amount is $2,700. June 29: Received the landlords bill for $2,200 for rent on the office space that Neveranerror leases. The bill is payable by the 10th of the following month. June 30: Paid salaries and wages for June. The total amount is $5,670. June 30: Billed $18,400 to clients for the second half of June. June 30: Declared and paid dividends in the amount of $6,000. Required Prepare journal entries on the books of Neveranerror Inc. to record the transactions entered into during the month. Ignore depreciation expense and interest expense. Prepare a trial balance at June 30. Prepare the following financial statements: Income statement for the month of June Statement of retained earnings for the month of June Classified balance sheet at June 30 Assume that you have just graduated from college and have been approached to join this company as an accountant. From your reading of the financial statements for the first month, would you consider joining the company? Explain your answer. Limit your answer to financial considerations only.
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On March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented below. Transactions completed during the month follow. a. Gervais deposited 25,000 in a bank account in the name of the business. b. Bought a truck from Kelly Motors for 26,329, paying 8,000 in cash and placing the balance on account, Ck. No. 500. c. Bought catering equipment on account from Luigis Equipment, 3,795. d. Paid the rent for the month, 1,255, Ck. No. 501. e. Bought insurance for the truck for one year, 400, Ck. No. 502. f. Sold catering services for cash for the first half of the month, 3,012. g. Bought supplies for cash, 185, Ck. No. 503. h. Sold catering services on account, 4,307. i. Received and paid the heating bill, 248, Ck. No. 504. j. Received a bill from GC Gas and Lube for gas and oil for the truck, 128. k. Sold catering services for cash for the remainder of the month, 2,649. l. Gervais withdrew cash for personal use, 1,550, Ck. No. 505. m. Paid the salary of the assistant, 1,150, Ck. No. 506. Required 1. Record the transactions and the balance after each transaction. 2. Total the left side of the accounting equation (left side of the equal sign), then total the right side of the accounting equation (right side of the equal sign). If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.
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[The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $82,780 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
$ 15,760
Cash dividends
$ 640
Accounts receivable
12,590
Consulting revenue
12,590
Office supplies
1,960
Rent expense
2,270
Office equipment
16,580
Salaries expense
5,450
Land
46,030
Telephone expense
760
Accounts payable
7,250
Miscellaneous expenses
580
Common stock
82,780
Using the above information prepare a December income statement for the business.
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[The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $82,780 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
$ 15,760
Cash dividends
$ 640
Accounts receivable
12,590
Consulting revenue
12,590
Office supplies
1,960
Rent expense
2,270
Office equipment
16,580
Salaries expense
5,450
Land
46,030
Telephone expense
760
Accounts payable
7,250
Miscellaneous expenses
580
Common stock
82,780
Using the above information prepare a December statement of retained earnings for Ernst Consulting. Hint: Retained Earnings on December 1 was $0.
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Use the following information for the Exercises below. (Algo)
Skip to question
[The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $85,360 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
$ 7,010
Cash dividends
$ 3,390
Accounts receivable
18,350
Consulting revenue
18,350
Office supplies
4,480
Rent expense
4,820
Office equipment
19,360
Salaries expense
8,370
Land
46,040
Telephone expense
910
Accounts payable
9,740
Miscellaneous expenses
720
Common stock
85,360
Exercise 1-18 (Algo) Preparing an income statement LO P2
Using the above information prepare a December income statement for the business.
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Use the following information for the Exercises below. (Algo)
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[The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $84,310 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
$ 10,200
Cash dividends
$ 2,340
Accounts receivable
15,200
Consulting revenue
15,200
Office supplies
3,550
Rent expense
3,910
Office equipment
18,310
Salaries expense
7,350
Land
45,990
Telephone expense
790
Accounts payable
8,740
Miscellaneous expenses
610
Common stock
84,310
Exercise 1-20 (Algo) Preparing a balance sheet LO P2
Use the above information to prepare a December 31 balance sheet for Ernst Consulting.
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Use the following information for the Exercises below. (Algo)
Skip to question
[The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $84,310 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
$ 10,200
Cash dividends
$ 2,340
Accounts receivable
15,200
Consulting revenue
15,200
Office supplies
3,550
Rent expense
3,910
Office equipment
18,310
Salaries expense
7,350
Land
45,990
Telephone expense
790
Accounts payable
8,740
Miscellaneous expenses
610
Common stock
84,310
Exercise 1-19 (Algo) Preparing a statement of retained earnings LO P2
Using the above information prepare a December statement of retained earnings for Ernst Consulting. Hint: Retained Earnings on December 1 was $0.
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(Prepare the following below) Ms. Smith established an enterprise to be known as New york Designs, on June of the 2021. During the month, she completed the following business transactions:
June 1 – Ms. Marikit deposited cash for the business, P500,000.
5 – Purchased supplies for cash, P25,000.
7 – Purchased equipment on account, P30,000.
9 – Purchased truck for P`150,000, paying P80,000 cash and issued a promissory note for the balance.
11 – Paid rent for the period of one month, P5,000.
13 – Received cash for job completed, P200,000.
14 – Purchased supplies on account, P40,000.
15 – Paid wages of workers, P60,000.
17 – Paid premium of property and casualty insurance, P2,000.
19 – Paid creditor for equipment purchased on June 7, P15,000.
20 – Recorded services to customers on account and sent invoices to customers, P250,000.
June 21 – Received cash for job completed, P90,000.
24 – Received an invoice…
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On September 1, 20X6, Michael Moe incorporated Moe's Mowing, Inc., a company that provides mowing and landscaping services. During the month of September, the business incurred the following transactions:
a. To begin operations, Michael deposited$10, 000 cash in the business'sbank account. The business received the cash and issued shares to Michael.b. The business purchased equipment for$3, 500 on account.c. The business purchased office supplies for$800 cash.d. The business provided$2, 600 of landscaping works to a customer onaccount.e. The business paid$500 cash toward the equipment previously purchasedon account in transaction b.f. The business received$2, 000 in cash for services provided to a newcustomer.g. The business paid $200 cash to repair equipment.h. The business paid$900 cash for September's salary expense.i. The business received a utilities bill amounting to$150; it has not paid this bill.j. The business received$2,100 cash from a customer on account.k. The business paid…
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Balance Sheet Income Statement
Assets Liabilities Owner's Equity Income Expenses
Cash AR Office Supplies Drawing Capital Commission Income Rent Expense Misc. Expense Supplies Exp Salaries Exp
Indicate the effect of each transaction on the elements of financial statement and its balances after each transaction:
Jean Howard established an insurance agency on July 1 of the current year and completed the following transactions during July:
a. Opened a business bank account with a deposit of P50,000 from personal funds.
b. Purchased supplies on account, P1,600.
c. Paid creditors on account, P500.
d. Received cash from fees earned on insurance commissions, P9,250.
e. Paid rent on office and equipment for the month, P2,500.
f. Paid automobile expenses for month, P900, and miscellaneous expenses, P300.
g. Paid office salaries, P1,900.
h. Determined that the cost of supplies on hand was P550; therefore, the cost of supplies used was P1,050.
i. Billed insurance companies for sales…
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