Transaction analysis
• LO2–1
The following transactions occurred during March 2018 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.
1. Issued 30,000 shares of common stock in exchange for $300,000 in cash.
2. Purchased equipment at a cost of $40,000. $10,000 cash was paid and a note payable was signed for the balance owed.
3. Purchased inventory on account at a cost of $90,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $120,000. The cost of the goods sold was $70,000.
5. Paid $5,000 in rent on the warehouse building for the month of March.
6. Paid $6,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2018.
7. Paid $70,000 on account for the merchandise purchased in 3.
8. Collected $55,000 from customers on account.
9. Recorded
Required:
Analyze each transaction and show the effect of each on the
Example:
1. Assets + 300,000(cash) = Liabilities + Paid-In Capital +
Trending nowThis is a popular solution!
Chapter 2 Solutions
Intermediate Accounting
- A2 1 a Use the following information for Delta Corporation to answer question 1: Year 20X1 20X2 Net sales $1,500,000 $1,656,598 Cost of goods sold 675,000 745,469 Depreciation 270,000 298,188 Interest paid 43,600 44,000 Cash 127,500 140,811 Accounts receivable 450,000 496,980 Inventory 525,000 579,809 Net fixed assets 1,800,000 1,987,918 Accounts payable 375,000 414,150 Notes payable 45,000 50,000 Long-term debt 500,000 500,000 Common stock 1,000,000 1,000,000 Retained earnings 982,500 1,241,368 Tax rate 35% 35% Dividend payout 30% 30% Delta has 600,000 common shares outstanding. The firm is projecting a 20% increase in net sales for the coming year (20X3). Delta uses the percentage of sales approach to plan for its financing needs. In using this approach, the firm assumes that cost of goods sold, all assets (current and fixed), and accounts payable will…arrow_forwardA2 1 g Use the following information for Delta Corporation to answer question 1: Year 20X1 20X2 Net sales $1,500,000 $1,656,598 Cost of goods sold 675,000 745,469 Depreciation 270,000 298,188 Interest paid 43,600 44,000 Cash 127,500 140,811 Accounts receivable 450,000 496,980 Inventory 525,000 579,809 Net fixed assets 1,800,000 1,987,918 Accounts payable 375,000 414,150 Notes payable 45,000 50,000 Long-term debt 500,000 500,000 Common stock 1,000,000 1,000,000 Retained earnings 982,500 1,241,368 Tax rate 35% 35% Dividend payout 30% 30% Delta has 600,000 common shares outstanding. The firm is projecting a 20% increase in net sales for the coming year (20X3). Delta uses the percentage of sales approach to plan for its financing needs. In using this approach, the firm assumes that cost of goods sold, all assets (current and fixed), and accounts payable will…arrow_forwardhd.10. Question 1 Loftus et al (2023) Exercise 13.5 Amended The following information was extracted from records of Nawa Ltd for the year ended 30 June 2024. NAWA LTD Statement of financial position (extract) as at 30 June 2024 Assets Accounts receivable $ 50 000 Allowance for doubtful debts (5 000 ) $ 45 000 Motor vehicles 250 000 Accumulated depreciation — motor vehicles (50 000 ) 200 000 Liabilities Interest payable 5 000 Additional information • The accumulated tax depreciation for motor vehicles at 30 June 2024 was $100 000. • As at 30 June 2023, the balance in the deferred tax asset was $2,000 and the balance in the deferred tax liability was $8,000. • The income tax rate is 30%. Required: Prepare a deferred tax worksheet for Nawa Ltd and the end of year deferred tax journal entry required to bring the deferred tax accounts to their ending balances as at 30 June 2024.arrow_forward
- A2 1 d Use the following information for Delta Corporation to answer question 1: Year 20X1 20X2 Net sales $1,500,000 $1,656,598 Cost of goods sold 675,000 745,469 Depreciation 270,000 298,188 Interest paid 43,600 44,000 Cash 127,500 140,811 Accounts receivable 450,000 496,980 Inventory 525,000 579,809 Net fixed assets 1,800,000 1,987,918 Accounts payable 375,000 414,150 Notes payable 45,000 50,000 Long-term debt 500,000 500,000 Common stock 1,000,000 1,000,000 Retained earnings 982,500 1,241,368 Tax rate 35% 35% Dividend payout 30% 30% Delta has 600,000 common shares outstanding. The firm is projecting a 20% increase in net sales for the coming year (20X3). Delta uses the percentage of sales approach to plan for its financing needs. In using this approach, the firm assumes that cost of goods sold, all assets (current and fixed), and accounts payable will…arrow_forwardChapter 7 p. 514 Problem Set A PA3 The following transactions occurred for Donaldson Inc. during the month of July. Jul. 1 Sold 50 items to Palm Springs Inc. and offered terms of 2/10, n/30, $4,000 on July 1, and issued invoice #12 on account number #312Jul. 5 Sold 20 thing-a-jigs to Miami Inc. for $2,150 cash on July 5, and issued invoice #13Jul. 8 Sold 30 what-is to Smith Mfg. for $5,000 and offered terms of 2/10, n/30; issued invoice #14 on account number #178Jul. 9 Received payment from Palm Springs Inc.Jul. 22 Received payment from Smith Mfg. after expiration of the discount period Record the transactions for Donaldson Inc. in the proper special journal and subsidiary ledger. SALES JOURNAL Page 22 Date Account Invoice No. Ref. DR Accts. Receivable CR Sales DR COGS CR Merchandise Inventory 2019 Jul. 1 Palm Springs Inc. (312) 12 ???? 2,000.00 Jul. 8 Smith Mfg (178) 14 ???? 2,500.00 Date…arrow_forwardChapter 7 p. 514 Problem Set A PA3 The following transactions occurred for Donaldson Inc. during the month of July. Jul. 1 Sold 50 items to Palm Springs Inc. and offered terms of 2/10, n/30, $4,000 on July 1, and issued invoice #12 on account number #312Jul. 5 Sold 20 thing-a-jigs to Miami Inc. for $2,150 cash on July 5, and issued invoice #13Jul. 8 Sold 30 what-is to Smith Mfg. for $5,000 and offered terms of 2/10, n/30; issued invoice #14 on account number #178Jul. 9 Received payment from Palm Springs Inc.Jul. 22 Received payment from Smith Mfg. after expiration of the discount period A. Record the transactions for Donaldson Inc. in the proper special journal and subsidiary ledger. SALES JOURNAL Page 22 Date Account Invoice No. Ref. DR Accts. Receivable CR Sales DR COGS CR Merchandise Inventory 2019 Jul. 1 Palm Springs Inc. (312) 12 2,000.00 Jul. 8 Smith Mfg (178) 14 2,500.00 ASH RECEIPTS…arrow_forward
- A2 1 e Use the following information for Delta Corporation to answer question 1: Year 20X1 20X2 Net sales $1,500,000 $1,656,598 Cost of goods sold 675,000 745,469 Depreciation 270,000 298,188 Interest paid 43,600 44,000 Cash 127,500 140,811 Accounts receivable 450,000 496,980 Inventory 525,000 579,809 Net fixed assets 1,800,000 1,987,918 Accounts payable 375,000 414,150 Notes payable 45,000 50,000 Long-term debt 500,000 500,000 Common stock 1,000,000 1,000,000 Retained earnings 982,500 1,241,368 Tax rate 35% 35% Dividend payout 30% 30% Delta has 600,000 common shares outstanding. The firm is projecting a 20% increase in net sales for the coming year (20X3). Delta uses the percentage of sales approach to plan for its financing needs. In using this approach, the firm assumes that cost of goods sold, all assets (current and fixed), and accounts payable will…arrow_forwardA2 1 c Use the following information for Delta Corporation to answer question 1: Year 20X1 20X2 Net sales $1,500,000 $1,656,598 Cost of goods sold 675,000 745,469 Depreciation 270,000 298,188 Interest paid 43,600 44,000 Cash 127,500 140,811 Accounts receivable 450,000 496,980 Inventory 525,000 579,809 Net fixed assets 1,800,000 1,987,918 Accounts payable 375,000 414,150 Notes payable 45,000 50,000 Long-term debt 500,000 500,000 Common stock 1,000,000 1,000,000 Retained earnings 982,500 1,241,368 Tax rate 35% 35% Dividend payout 30% 30% Delta has 600,000 common shares outstanding. The firm is projecting a 20% increase in net sales for the coming year (20X3). Delta uses the percentage of sales approach to plan for its financing needs. In using this approach, the firm assumes that cost of goods sold, all assets (current and fixed), and accounts payable will…arrow_forwardEx5.22The following transactions of Larson Services Inc. occurred during August 2019, its first month ofoperations.Aug. 1 Issued common stock for $3,000 cash1 Borrowed $10,000 cash from the bank1 Paid $8,000 cash for a used truck4 Paid $600 for a one–year truck insurance policy effective August 1 (record as an asset)5 Collected $2,000 fees from a client for work to be performed at a later date7 Billed a client $5,000 for services performed today9 Paid $250 for supplies purchased and used today12 Purchased $500 of supplies on credit (record as an asset)15 Collected $1,000 of the amount billed August 716 Paid $200 for advertising in The News during the first two weeks of August20 Paid $250 of the amount owing for supplies purchased on August 1225 Paid the following expenses: rent for August, $350; salaries,$2,150; telephone, $50; truck operating, $25028 Called clients about payment of the balances owing from August 729 Billed a client $6,000 for services performed today, including $1,500…arrow_forward
- Q#6 The comparative balance sheet of Paton Corporation at Dec 31, 2004 and 2003 is as follows: Assets 2004 2003 Cash 60,900 52,800 Trade receivable 86,100 70,000 Inventory 126,600 136,700 prepaid expense 4,400 3,100 Land 65,000 65,000 Building 381,500 291,500 Accumulated Depreciation- Building (154,600) (143,400) Machinery 300,500 300,500 Accumulated Dep.-machinery (101,200) (71,500) Patents 30,800 38,500 800,000 743,200 Liabilities and stockholder's Equity Account payable 58,800 88,800 Dividends payable 9,400 8,250 Salaries payable 5,000 5,450 Mortgage payable 55,000 ---- Bonds payable ---- 110,000 Common stock 450,000 350,000 Paid-in capital in excess of par 80,000 70,000 Retained earnings…arrow_forwardPA3. LO 8.5Domingo Company started its business on January 1, 2019. The following transactions occurred during the month of May. Prepare the journal entries in the journal on Page 1.The owners invested $10,000 from their personal account to the business account.Paid rent $500 with check #101.Initiated a petty cash fund $500 with check #102.Received $1,000 cash for services rendered.Purchased office supplies for $158 with check #103.Purchased computer equipment $2,500, paid $1,350 with check #104, and will pay the remainder in 30 days.Received $800 cash for services rendered.Paid wages $600, check #105.Petty cash reimbursement: office supplies $256, maintenance expense $108, postage expense $77, miscellaneous expense $55. Cash on hand $11. Check #106.Increased petty cash by $30, check #107.arrow_forwardSerial Problem Business Solutions LO P1, A1 Selected ledger account balances for Business Solutions follow. For Three MonthsEnded December 31, 2019 For Three MonthsEnded March 31, 2020 Office equipment $ 8,100 $ 8,100 Accumulated depreciation—Office equipment 405 810 Computer equipment 20,000 20,000 Accumulated depreciation—Computer equipment 1,250 2,500 Total revenue 31,334 44,900 Total assets 83,360 121,668 Required:1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2020. Compute amounts for the year ended December 31, 2020, for Depreciation expense—Office equipment and for Depreciation expense—Computer equipment (assume use of the straight-line method).2. Given the assumptions in part 1, what is the book value of both the office equipment and the computer equipment as of December 31, 2020?3. Compute the three-month total asset turnover for Business…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Corporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning