Accounting (Text Only)
26th Edition
ISBN: 9781285743615
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 1.3EX
a)
To determine
Business Entity Concept:
Business Entity Concept emphasizes that the transactions related to a business needs to be recorded separately. It denotes that each business is a separate, individual unit, and all the transactions relating to that particular business should be recorded separately.
To Identify: The given transactions and their associated entities.
b)
To determine
To Explain: The business transaction.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Business entity conceptBig Sky Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Big Sky Sports is owned and operated by Joe Flannery, a well-known sports enthusiast and hunter. Joe’s wife, Pam, owns and operates Glacier Boutique, a women's clothing store. Joe and Pam have established a trust fund to finance their children's college education. The trustfund is maintained by Kalispell State Bank in the name of the children, Trey and Brooke.
a. For each of the following transactions, identify which of the entities listed should record the transaction in its records:
Entities
G
Glacier Boutique
K
Kalispell State Bank
B
Big Sky Sports
X
None of the above
1. Pam deposited a $2,000 personal check in the trust fund at Kalispell State Bank.2. Pam purchased two dozen spring dresses from a Spokane designer for a special spring sale.3. Joe paid a breeder's fee for an English Springer Spaniel to be used as a hunting guide dog.4. Pam authorized…
Business entity assumption
Ozark Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Ozark is owned and operated by Eric Griffith, a well-known sports enthusiast and hunter. Eric's wife, Linda, owns and operates Lake Boutique, a women's clothing store. Eric and Linda have established a trust fund to finance their children's college eductation . The trust fund is maintained by Missouri Stale Bank in the name of the children, Mark and Steffy
A. For each of the following transactions, identity which of the entities listed should record the transction in its records:
Entities
L
Lake Botique
M
Missouri State Bank
O
Ozark Sports
X
None of the above
1.Lind authorized the trust fund to purchase mutual fund shares.
2.Linda purchased two dozen spring dresses from a St.Luis designer for a special spring sale.
3. Eric paid a breeder's fee for an English springer spaniel to be used as a hunting guide dog.
4.Linda deposited a $2000…
Big Sky Sports sells hunting and fishing equipment and provides guided hunting and fishingtrips. Big Sky Sports is owned and operated by Joe Flannery, a well-known sports enthusiastand hunter. Joe’s wife, Pam, owns and operates Glacier Boutique, a women’s clothing store.Joe and Pam have established a trust fund to finance their children’s college education. Thetrust fund is maintained by Kalispell State Bank in the name of the children, Trey and Brooke.a. For each of the following transactions, identify which of the entities listed shouldrecord the transaction in its records:
1. Pam deposited a $2,000 personal check in the trust fund at Kalispell State Bank.2. Pam purchased two dozen spring dresses from a Spokane designer for a specialspring sale.3. Joe paid a breeder’s fee for an English Springer Spaniel to be used as a huntingguide dog.4. Pam authorized the trust fund to purchase mutual fund shares.5. Joe paid a local doctor for his annual physical, which was required by the…
Chapter 1 Solutions
Accounting (Text Only)
Ch. 1 - Name some users of accounting information.Ch. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Josh Reilly is the owner of Dispatch Delivery...Ch. 1 - On July 12, Reliable Repair Service extended an...Ch. 1 - Prob. 6DQCh. 1 - Describe the difference between an account...Ch. 1 - A business had revenues of 679,000 and operating...Ch. 1 - A business had revenues of 640,000 and operating...Ch. 1 - The financial statements are interrelated. (a)...
Ch. 1 - Prob. 1.1APECh. 1 - Prob. 1.1BPECh. 1 - Accounting equation Brock Hahn is the owner and...Ch. 1 - Accounting equation Fritz Evans is the owner and...Ch. 1 - Transactions Arrowhead Delivery Service is owned...Ch. 1 - Transactions Interstate Delivery Service is owned...Ch. 1 - Income statement The revenues and expenses of...Ch. 1 - Prob. 1.4BPECh. 1 - Statement of owners equity Using the income...Ch. 1 - Prob. 1.5BPECh. 1 - Balance sheet Using the following data for Ousel...Ch. 1 - Prob. 1.6BPECh. 1 - Prob. 1.7APECh. 1 - Prob. 1.7BPECh. 1 - Ratio of liabilities to owners equity The...Ch. 1 - Prob. 1.8BPECh. 1 - Types of businesses The following is a list of...Ch. 1 - Prob. 1.2EXCh. 1 - Prob. 1.3EXCh. 1 - Prob. 1.4EXCh. 1 - Prob. 1.5EXCh. 1 - Prob. 1.6EXCh. 1 - Accounting equation Annie Rasmussen is the owner...Ch. 1 - Asset, liability, and owners equity items Indicate...Ch. 1 - Effect of transactions on accounting equation...Ch. 1 - Effect of transactions on accounting equation a.A...Ch. 1 - Effect of transactions on owner's equity Indicate...Ch. 1 - Transactions The following selected transactions...Ch. 1 - Nature of transactions Teri West operates her own...Ch. 1 - Net income and owner's withdrawals The income...Ch. 1 - Net income and owner's equity for four businesses...Ch. 1 - Balance sheet items From the following list of...Ch. 1 - Income statement items Based on the data presented...Ch. 1 - Prob. 1.18EXCh. 1 - Income statement Dairy Services was organized on...Ch. 1 - Missing amounts from balance sheet and income...Ch. 1 - Prob. 1.21EXCh. 1 - Financial statements Each of the following items...Ch. 1 - Statement of cash flows Indicate whether each of...Ch. 1 - Prob. 1.24EXCh. 1 - Financial statements We-Sell Realty, organized...Ch. 1 - Ratio of liabilities to stockholders equity The...Ch. 1 - Ratio of liabilities to stockholders equity Lowes...Ch. 1 - Transactions On April 1 of the current year,...Ch. 1 - Prob. 1.2APRCh. 1 - Financial statements Seth Feye established...Ch. 1 - Transactions; financial statements On July 1,...Ch. 1 - Transactions; financial statements DLite Dry...Ch. 1 - Prob. 1.6APRCh. 1 - Transactions Amy Austin established an insurance...Ch. 1 - Financial statements The amounts of the assets and...Ch. 1 - Financial statements Jose Loder established Bronco...Ch. 1 - Transactions; financial statements On April 1,...Ch. 1 - Transactions; financial statements Bevs Dry...Ch. 1 - Prob. 1.6BPRCh. 1 - Peyton Smith enjoys listening to all types of...Ch. 1 - Prob. 1.1CPCh. 1 - Prob. 1.2CPCh. 1 - Prob. 1.3CP
Knowledge Booster
Similar questions
- Trust Fund Worksheet Background An inter vivos trust was created by Isaac Posney. Isaac owned a large department store in Juggins, Utah. Adjacent to the store, Isaac also owned a tract of land that was used as an extra parking lot when the store was having a sale or during the Christmas season. Isaac expected the land to appreciate in value and eventually be sold for an office complex or additional stores. Isaac placed the land into a charitable lead trust, which would hold the land for ten years until Isaac's son would turn 21. At that time, title would be transferred to the son. The store will pay rent to use the land during the interim. The income generated each year from this usage will be given to a local church. The land was currently valued at $416,000. During the first year of this arrangement, the trustee recorded the following cash transactions: Cash inflow: Rental income $78,000 Cash outflows: Insurance $ 5,200 Property taxes 7,800…arrow_forwardRecording journal entries for nonprofits 6. Donor D advises a university that he has established an irrevocable charitable remainder trust, administered by his attorney, whereby his wife will receive income from the trust as long as she lives. At her death, the remaining trust assets will be distributed to the university as a permanent endowment. The university’s actuary estimates the fair value of the university’s beneficial interest to be $400,000 (answer question 6 - what should be the correct entry?)arrow_forwardI'm not understanding this. Can someone please help and explain? THANK YOU! An inter vivos trust was created by Isaac Posney. Isaac owned a large department store in Juggins, Utah. Adjacent to the store, Isaac also owned a tract of land that was used as an extra parking lot when the store was having a sale or during the Christmas season. Isaac expected the land to appreciate in value and eventually be sold for an office complex or additional stores. Isaac placed the land into a charitable lead trust, which would hold the land for ten years until Isaac's son would turn 21. At that time, title would be transferred to the son. The store will pay rent to use the land during the interim. The income generated each year from this usage will be given to a local church. The land was currently valued at $416,000. During the first year of this arrangement, the trustee recorded the following cash transactions: Cash inflow: Rental income $78,000 Cash outflows:…arrow_forward
- Skip to question While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat (GTE), specializes in custom-sculpted cakes for weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of 2023, and each contributed $140,000 in exchange for a 50 percent ownership interest. GTE also borrowed $560,000 from a local bank Both James and Paul had to personally guarantee the loan. Both owners provide significant services for the business. The following information pertains to GTE's 2023 activities: GTE uses the cash method of accounting (for both book and tax purposes) and reports income on a calendar-year basis. GTE received $900,000 of sales revenue and reported $420,000 of cost of goods sold (it did not have any ending inventory). GTE paid $75,000 compensation to James, $75,000 compensation to Paul, and $85,000 of compensation to…arrow_forward_______ During college, Elyssa Wood earned extra moneyby using her culinary skills to cater specialparties. After graduation, she decided to turn herpart-time job into a full-time business that sheplans to expand in the future. In the meantime,she wants to maintain complete control ofthe business. She will most likely organize thebusiness as aa. master limited partnership.b. corporation.c. general partnership.d. sole proprietorship.e. cooperative.arrow_forwardWAR (We Are Rich) has been in business since 1989. WAR is an accrual-method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAs has filed accurate tax returns for WAR's owner since WAR opened its doors. The managing partner of Hack & Hack (Jack) has gotten along very well with the owner of WAR—Mr. Someday Woods (single). However, in early 2022, Jack Hack and Someday Woods played a round of golf, and Jack, for the first time ever, beat Mr. Woods. Mr. Woods was so upset that he fired Hack & Hack and has hired you to compute his 2022 taxable income. Mr. Woods was able to provide you with the following information from prior tax returns. The taxable income numbers reflect the results from all of Mr. Woods's activities except for the items separately stated. You will need to consider how to handle the separately stated items for tax purposes. Also, note that the 2017–2021 numbers do not reflect capital loss…arrow_forward
- WAR (We Are Rich) has been in business since 1989. WAR is an accrual-method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAs has filed accurate tax returns for WAR's owner since WAR opened its doors. The managing partner of Hack & Hack (Jack) has gotten along very well with the owner of WAR—Mr. Someday Woods (single). However, in early 2022, Jack Hack and Someday Woods played a round of golf, and Jack, for the first time ever, beat Mr. Woods. Mr. Woods was so upset that he fired Hack & Hack and has hired you to compute his 2022 taxable income. Mr. Woods was able to provide you with the following information from prior tax returns. The taxable income numbers reflect the results from all of Mr. Woods's activities except for the items separately stated. You will need to consider how to handle the separately stated items for tax purposes. Also, note that the 2017–2021 numbers do not reflect capital loss…arrow_forward1. Dan owns and operates Schoepf’s Sales Solutions (3S), a sole proprietorship. 3S sponsors a profit-sharing plan. Dan had net income of $250,000 and paid self-employment taxes of $22,000 (assumed) during the year. Assuming Dan is over the age of 50, what is the maximum amount that Dan can contribute to the profit-sharing plan on his behalf for 2019? $47,800 $53,800 $56,000 $62,000 2. Colin owns and operates Colin’s Creative Coaching (3C), a sole proprietorship, 3C sponsors a 401(k)/profit-sharing plan. Colin had net income of $200,000 and paid self-employment taxes of $20,000 (assumed) during the year. Assuming Colin is over the age of 50, what is the maximum amount that Colin and his company can contribute on his behalf to the plan for 2019? $25,000 $56,000 $62,000 $63,000arrow_forwardThree good friends from a primary school in Taiping in 1970’s met during a school reunion held in Kula Lumpur. They are all now having good job except for Joe who has been retrenched due to the relocation of the employer’s plant from Malaysia to Cambodia. Sehar and Hock Seng decided to help Joe by forming a business partnership to operate a restaurant called Kita Punya Warong (KPW). On 1 June 2019, KPW started its operation with the following capital investment structure: Joe (RM) Sehar (RM) Hock Seng (RM) Cash - 30,000 50,000 Vehicle 10,000 15,000 - Equipment 20,000 15,000 20,000 Note Payable - 20,000 - Additional information: Interest on cash capital investment is 10% while any withdrawals made are charged at 5% per annum respectively. A cash loan by Sehar to KPW is given a 7% interest per annum until it is fully paid. Joe was given a salary of RM2,500 until end of 2019. Starting from January 2020, he received a salary of…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning