Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Chapter 1, Problem 31AP
Transaction analysis and the calculation of net income (Learning Objective 5) 20-25 min.
Shanna Peters worked as an accountant at a local accounting firm for five years after graduating from college. Recently, she opened her own accounting practice, which she operates as a corporation. The name of the new entity is Peters and Associates, Inc. Shanna experienced the following events during the first month of operations. Some of the events were personal and did not affect the accounting practice. Others were business transactions and should be accounted for by the business.
| Jun 3 | Received $70,000 cash proceeds from refinancing her house. |
| 5 | $95,000 of common stock in the business was sold to Shanna Peters. The cash proceeds were deposited in a new business bank account titled Peters and Associates, Inc. |
| 7 | Paid $450 cash for office supplies for the new accounting practice. |
| 9 | Purchased $4,700 of office furniture for the accounting practice and agreed to pay the vendor within three months. |
| 10 | Shanna sold 500 shares of Microsoft stock, which she had owned for several years, receiving $20,750 cash. The cash from the sale of stock was deposited in her personal bank account. |
| 14 | A representative of a large company telephoned Shanna and told her of the company’s intention to hire Peters and Associates. Inc., as its accountants. |
| 20 | Finished accounting work for a client and sent the client a bill for $3,800. The client is expected to pay within two weeks. |
| 27 | Paid office rent, $1,500. |
| 29 | Paid $2,000 on account from the June 9th transaction. |
| 30 | Paid $500 of dividends to shareholders of Peters and Associates, Inc. |
Requirements
- 1. Enter each transaction in the
expanded accounting equation of Peters and Associates, Inc., as needed, calculating new balances after each transaction. - 2. Determine the following items:
- a. Total assets
- b. Total liabilities
- c. Total stockholders’ equity
- d. Net income or net loss for June
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Chapter 1 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 1 - The text states that accounting is the "language...Ch. 1 - Would you describe accounting as primarily a...Ch. 1 - Prob. 3DQCh. 1 - What are some reasons why accounting has adopted...Ch. 1 - What are some of the uses of financial statements?Ch. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - How is the accounting equation affected by each of...Ch. 1 - In what order should the financial statements be...Ch. 1 - Which financial statement would be most useful to...
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