Financial Accounting: The Impact on Decision Makers
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN: 9781305654174
Author: Gary A. Porter, Curtis L. Norton
Publisher: Cengage Learning
Question
Chapter 1, Problem 1.1E
To determine

Introduction: Cash flow statement shows the in flow and out flow of cash. It categorizes each cash transaction into three types of activities i.e., operating, investing and financing activities.

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) 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 $85,050 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

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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.
    [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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