Connect Access Card For Fundamental Accounting Principles
Connect Access Card For Fundamental Accounting Principles
24th Edition
ISBN: 9781260158526
Author: John J Wild
Publisher: McGraw-Hill Education
Question
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Chapter 1, Problem 11E
To determine

Concept Introduction:

Accounting equation:

It reflects the concept of double entry accounting. The accounting equation displays that all assets are either financed through shareholders funds i.e. equity or by borrowing money i.e. liabilities. Thus, the accounting equation is:          Asset=Liabilities+Equity

To Identify:

The transactions with their corresponding equation effect on assets, liabilities and equity of Mulan's Boutique.

Expert Solution & Answer
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Explanation of Solution

                                   Assets  =Liabilities  + EquityCash        +  Accounts      +  office       +  Land        =    Accounts         +  Mulan     +Revenues                    Receivables     supplies                                    payable               Capital$21,000 +  $  0                 +$3,000      + $19,000  =         $   0                 +  $43,000 +   $   0-4,000                                                     +4,000 

Explanation f is the description of above equation effect: The company purchased land for $4,000 cash.

It shows that company has paid $4,000 in lieu of purchase of land and hence, the effect of this transaction is that the assets of the boutique are decreased by $4,000 in the form of cash and also assets in the form of land are increased by $4,000.

           Assets   =Liabilities  +  EquityCash        +  Accounts      +  office       +  Land        =    Accounts         +  Mulan     +Revenues                    Receivables     supplies                                   payable                 Capital$21,000 +  $  0                  +$3,000      + $19,000  =         $   0                 +  $43,000   +   $   0                                             +1,000                                    +$1,000 

Explanation a is the description of above equation effect: The company purchased $1,000 of office supplies on credit.

It shows that the company has purchased office supplies of $1,000 on credit and hence, the effect of this transaction is that the assets of boutique are increased by $1,000 in the form of office supplies and also liabilities in the form of accounts payable are increased by $1,000.

         Assets =Liabilities + EquityCash        +  Accounts      +  office       +  Land        =    Accounts         +  Mulan        +Revenues                    Receivables     supplies                                   payable               Capital$21,000 +  $  0                  +$3,000      + $19,000  =         $   0                 +  $43,000   +   $   0                 +1,900                                                                                                                 +$1,900 

Explanation g is the best description of above equation effect: The Company billed a client $1,900 for services provided.

It shows that the company has rendered services on credit and generated revenue of $1,900 and hence, the effect of this transaction is that the assets of boutique is increased by $1,900 in the form of accounts receivable (debtors) and also capital in the form of revenue has increased by $1,900.

    Assets  =Liabilities   +   EquityCash        +  Accounts      +  office       +  Land        =    Accounts         +  Mulan        +Revenues                    Receivables     supplies                                   payable               Capital$21,000 +  $  0                  +$3,000      + $19,000  =         $   0                 +  $43,000   +   $   0-1,000                                                                                  -$1,000 

Explanation h describes the equation effect of the above transaction. The company has paid $1,000 cash towards an account payable.

It shows that the company paid its liability of $1,000 in cash and hence, the effect of this transaction is that the assets of boutique are decreased by $1,000 in the form of cash and also liability in the form of accounts payable is decreased by $1,000.

    Assets  =Liabilities  +    EquityCash        +  Accounts      +  office       +  Land        =    Accounts         +  Mulan        +Revenues                    Receivables     supplies                                   payable               Capital$21,000 +  $  0                  +$3,000      + $19,000  =         $   0                 +  $43,000   +   $   0+1,900    -$1,900 

Explanation b best describes the equation effect of above transaction: The Company collected cash $1,900 from an account receivable.

It shows that the company has received an amount of $1,900 against accounts receivable and hence, the effect of this transaction is that the assets of boutique are decreased by $1,900 in the form of accounts receivable and also assets in the form of cash are increased by $1,900.

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Chapter 1 Solutions

Connect Access Card For Fundamental Accounting Principles

Ch. 1 - Prob. 11DQCh. 1 - Prob. 12DQCh. 1 - Prob. 13DQCh. 1 - A business reports its own office stationary on...Ch. 1 - Why is the revenue recognition principle needed?...Ch. 1 - Prob. 16DQCh. 1 - Prob. 17DQCh. 1 - What events or transactions change equity?Ch. 1 - Prob. 19DQCh. 1 - What do accountants mean by the term revenue?Ch. 1 - 21. Define net income and explain its...Ch. 1 - Identify the four basics financial statements of a...Ch. 1 - Prob. 23DQCh. 1 - 24. Give two examples of expenses a business might...Ch. 1 - Prob. 25DQCh. 1 - Prob. 26DQCh. 1 - Prob. 27DQCh. 1 - Prob. 28DQCh. 1 - Prob. 29DQCh. 1 - Prob. 30DQCh. 1 - B Explain why investing (assets) and financing...Ch. 1 - Prob. 32DQCh. 1 - Prob. 33DQCh. 1 - Prob. 1QSCh. 1 - Prob. 2QSCh. 1 - Prob. 3QSCh. 1 - Prob. 4QSCh. 1 - Prob. 5QSCh. 1 - Prob. 6QSCh. 1 - This icon highlights assignments that enhance...Ch. 1 - Prob. 8QSCh. 1 - Prob. 9QSCh. 1 - Prob. 10QSCh. 1 - Prob. 11QSCh. 1 - Identifying items with financial statements P2...Ch. 1 - P2 Classify each of the following items as...Ch. 1 - P2 Classify each of the following items as assets...Ch. 1 - Preparing an income statement P2...Ch. 1 - Prob. 16QSCh. 1 - Prob. 17QSCh. 1 - Prob. 1ECh. 1 - Exercise 1-2 Identifying accounting users and uses...Ch. 1 - Prob. 3ECh. 1 - Prob. 4ECh. 1 - Prob. 5ECh. 1 - Prob. 6ECh. 1 - Prob. 7ECh. 1 - Prob. 8ECh. 1 - Prob. 9ECh. 1 - Prob. 10ECh. 1 - Prob. 11ECh. 1 - Prob. 12ECh. 1 - Prob. 13ECh. 1 - Exercise 1-14 Analyzing return on assets A2 Swiss...Ch. 1 - Prob. 15ECh. 1 - Prob. 16ECh. 1 - Exercise 117 Preparing 117 P2 Use the information...Ch. 1 - Prob. 18ECh. 1 - Prob. 19ECh. 1 - Prob. 20ECh. 1 - Prob. 21ECh. 1 - Exercise 1-22 Preparing an income statement for a...Ch. 1 - Exercise 1-23 Using the accounting equation A1...Ch. 1 - Problem 1-1A Identifying effects of transactions...Ch. 1 - Prob. 2APSACh. 1 - Problem 1-3A Preparing an income statement P2 As...Ch. 1 - Problem 1-4A Preparing a statement of owner's...Ch. 1 - Problem 1-5A Preparing a balance sheet P2 Use the...Ch. 1 - Problem 1-6A Preparing a statement of cash flows...Ch. 1 - Prob. 7APSACh. 1 - Prob. 8APSACh. 1 - Prob. 9APSACh. 1 - Prob. 10APSACh. 1 - Prob. 11APSACh. 1 - Prob. 12APSACh. 1 - Prob. 13APSACh. 1 - Prob. 14APSACh. 1 - Problem 1-1B Identifying effects of transactions...Ch. 1 - Prob. 2BPSBCh. 1 - Prob. 3BPSBCh. 1 - Problem 1-4B Preparing a statement of owner's...Ch. 1 - Prob. 5BPSBCh. 1 - Prob. 6BPSBCh. 1 - Prob. 7BPSBCh. 1 - Prob. 8BPSBCh. 1 - Prob. 9BPSBCh. 1 - Prob. 10BPSBCh. 1 - Prob. 11BPSBCh. 1 - Problem 112BA Identifying risk and return A3 All...Ch. 1 - Prob. 13BPSBCh. 1 - Prob. 14BPSBCh. 1 - On October 1. 2019, Santana Rev launched a...Ch. 1 - Prob. 1AACh. 1 - Prob. 2AACh. 1 - Prob. 3AACh. 1 - Prob. 1BTNCh. 1 - Prob. 2BTNCh. 1 - Visit the EDGAR database at SEC.gov. Access the...Ch. 1 - Prob. 4BTNCh. 1 - Prob. 5BTNCh. 1 - Prob. 6BTN
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