1.
Assets = Liabilities + Shareholders Equity
Business transaction: Business transaction is a record of any economic activity, resulting in the change in the value of the assets, the liabilities, and the Shareholder’s equities, of a business. Business transaction is also referred to as financial transaction.
To Indicate: The effect of each given transaction of Company PSM on the accounting equation.
2.
To Prepare: The financial statements for Company PSM for the month ended June 30, 20Y5.
3.
To Prepare: The statement of
4.
To Prepare: Prepare the balance sheet of Company PSM at June 30, 20Y5.
Trending nowThis is a popular solution!
Chapter 1 Solutions
Corporate Financial Accounting
- Peyton Smith enjoys listening to all types of music and owns countless CDs. Over the years, Peyton has gained a local reputation for knowledge of music from classical to rap and the ability to put together sets of recordings that appeal to all ages. During the last several months, Peyton served as a guest disc jockey on a local radio station. In addition, Peyton has entertained at several friends’ parties as the host deejay. On June 1, 2019, Peyton established a proprietorship known as PS Music. Using anextensive collection of music MP3 files, Peyton will serve as a disc jockey on a fee basis for weddings, college parties, and other events. During June, Peyton entered into the following transactions:June 1. Deposited $4,000 in a checking account in the name of PS Music.2. Received $3,500 from a local radio station for serving as the guest disc jockey for June.2. Agreed to share office space with a local real estate agency, Pinnacle Realty. PS Music will pay one-fourth of the rent. In…arrow_forwardIf answered within 40mins, it would be appreciable!! Shannon Burns enjoys listening to all types of music and owns countless CDs and tapes. Over the years, Shannon has gained a local reputation for knowledge of music from classical to rap and the ability to put together sets of recordings that appeal to all ages.During the last several months, Shannon served as a guest disc jockey on a local radio station. In addition, Shannon has entertained at several friends’ parties as the host deejay.On April 1, 2006, Shannon established a proprietorship known as Dancin Music.Using an extensive collection of CDs and tapes, Shannon will serve as a disc jockey on a fee basis for weddings, college parties, and other events. During April, Shannon entered into the following transactions:April1. Deposited $7,000 in a checking account in the name of Dancin Music.2. Received $2,000 from a local radio station for serving as the guest disc jockey for April.2. Agreed to share office space with a local real…arrow_forwardElisa Diaz is a social entrepreneur from the South. She is into a lot of interesting causes. Her fine taste is preeminent such that she is considered an authority in planning weddings. Upon the advice and prodding of an esteemed colleague, Maria Concepcion Manalo, Diaz decided to organize her wedding consultancy and named the business Weddings “R” Us.DateMay 1 Elisa Diaz invested P250,000. Rented office space and paid two months’ rent in advance, P8,000. May 2 Elisa Diaz issued promissory note for a P210,000 loan from Metrobank. The note carries a 20% interest per annum. That arrangement with the bank is that both the interest and the principal are payable in full in one year. Hired an office assistant and an account executive each with a P7,800 monthly salary. Or, each is to receive P300 per day for the 26-day work month. May 4 Acquired service vehicle for P420,000. Paid Prudential Guarantee and Assurance, Inc. P14,400 for a one-year comprehensive…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_forwardProblem 5 Joe College graduated from a university that is located three hours from the city in which he now works. A loyal alumnus and an avid football fan, Joe always buys season tickets to the football games although his Alma Mater has posted loosing records in each of the last three years. Joe sends a check for $218 to the University by July 1 of every year to cover the cost of two tickets for each of the 7 home games plus $50 for a parking permit. Joe has difficulty finding friends to accompany him to the games. However, he is adamant that he must go to the games because he has paid for the tickets. Friends insist that the cost of the tickets is a sunk cost and that the decision should be based on future costs that would be different between alternatives – going to the game and not going to the game. Friends have calculated the fuel for the 6 hour round trip costs $15 and two meals while away from home for the game can easily cost $30 or more. Write a memo to Joe outlining the…arrow_forwardKate’s business continues to flourish. It hardly seems that just eleven months ago, in September of last year, Kate started the business. She is especially pleased that she was able to successfully defend herself against what turned out to be a mistaken attempt to sue her for copyright infringement. She was able to clearly demonstrate that her card designs were unique and significantly different from the designs sold by Mega Cards. Kate has decided to take on an investor. Taylor Kasey believes that Kate’s Cards represents a good investment and wishes to invest money to help Kate expand the business. Kate, however, is somewhat unsure how to structure Taylor’s investment. Taylor wishes to be an equity investor rather than simply providing a loan to Kate. Kate wants to know whether she should issue Taylor common stock or preferred stock for her investment. 1. Discuss the difference between the two classes of stock and suggest which type is more ap- propriate for Kate to issue. 2. Kate has…arrow_forward
- Ray of Light (ROL) is a not-for-profit organization formed 7 years ago by Ella, a retired professional singer. The choir won several major singing competitions across North America and is in the process of producing their own music available on itunes and on CD available next month. The choir intends to record an annual CD of its Christmas concert music, which will also be available by download on itunes. Ella is in charge of ROL's daily operations. All major financial and operating decisions are approved by the Board of Directors. Initial financing for ROL came from private donations. This year a fundraising committee was formed to raise funds for special projects. Your CPA firm has a policy of supporting its staff in volunteering their time to not-for-profit activities. You recently joined ROL's board of directors and volunteered to assist with all accounting issues. Details on ROL's accounting policies and other related information are provided below in Exhibit A. Required: Use…arrow_forwardThroughout this book, we will present a continuing narrative about Harry and Belinda Johnson. Following is a brief description of the lives of this couple.Harry is 28 years old and graduated five years ago with a bachelor's degree in interior design from a large Midwestern university near his hometown in Indiana. Since graduation Harry has been working in small interior design firm in Kansas City earning a salary of about $45,000.Belinda is 27, has a degree in business administration from a university on the West Coast, and has been employed in a medium-size manufacturing firm in California for about five years. Harry and Belinda both worked on their schools' student newspapers and met at a conference during their junior year in college.After all these years they met again socially in January in Kansas City, Missouri where Belinda was visiting relatives and by chance she and Harry were at the same museum. After getting reacquainted they started dating and in only a matter of months…arrow_forwardJocelyn runs her own photography business and has done for the past 10 years. Her business income has remained relatively stable over the last 5 years, at around $1m. On 20 May 2021 Jocelyn purchased a new digital camera for $4,400. Assume that the camera as having an effective life of 5 years according to the Commissioner's ruling. On 1 September 2021, Jocelyn decided to upgrade her camera in order to produce the highest quality brochures, photos and documents for her clients. She paid $12,000 for the latest high-end digital camera. She traded in her old camera for $2,400 when she purchased her new camera. Assume the effective life of the new camera is 5 years. While the cameras are for Jocelyn's use in her business, she has sometimes used them to take family photos and photos of her hiking trips due to the superior quality of the cameras. Jocelyn’s personal use of the cameras amounts to 10%. Jocelyn is registered for GST (so you must account for this). Step through the criteria,…arrow_forward
- Twice a year Rowdy (40% shareholder) and Q (40& shaeholder) travel to various locations across the United States to host ticketed lice recording of Who Up To What? The corporation has a acoountable plan in place to reimbuse them for their travel expenses In 2022 Rowdy and Q were reimbused a combined total of the following amount $3000 Transportation $239 Meals purchased from restaurants $200 Meals not purchased from restaurants How much of this reimbursement is taxable compensation to Rowdy and Q? a $439 b 0 c $3439 d $3220arrow_forwardJ. Kamas and G. Charrier have been operating a catering business for several years. In March, the partners plan to expand by opening a retail sales shop. They have decided to form the business as a corporation called Traveling Gourmet, Incorporated. The following transactions occurred in March: Received $96,000 cash from each of the two shareholders to form the corporation, in addition to $3,600 in accounts receivable, $8,500 in equipment, a van (equipment) appraised at a fair value of $16,200, and $2,000 in supplies. Gave the two owners each 820 shares of common stock with a par value of $1 per share. Purchased a vacant store for sale in a good location for $520,000, making a $104,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest. Borrowed $66,000 from the local bank on a 10 percent, one-year note. Purchased food and paper supplies costing $13,400 in March; paid cash. Catered four parties in March for $5,800; $1,920 was billed and the rest was…arrow_forwardLO.8 Since his college days, Charles has developed an entrepreneurial streak. After working in his familys grocery business, he starts several ventures on his own. Even though Charles is independently wealthy, he is looking forward to working in each of the ventures. He plans to drop in on the businesses from time to time between personal trips to Europe and the Caribbean. As of the end of the year, he has established computer software stores in Dayton (Ohio), Austin, and Seattle; bagel bakeries in Albany, Athens (Georgia), and Tallahassee; and mountain bike and ski rental shops in small towns in Vermont, West Virginia, Colorado, and California. Identify the tax issues facing Charles.arrow_forward
- Corporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCorporate Financial AccountingAccountingISBN:9781337398169Author:Carl Warren, Jeff JonesPublisher:Cengage Learning
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT