1. Explanation Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit , all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. Journal entries of Company N are as follows: (a) Buildings and equipment purchased on account and in cash: Date Accounts title and explanation Ref. Debit ($) Credit ($) Buildings (+A) 172 Equipment (+A) 270 Cash (-A) 432 Notes payable (+L) 10 (To record purchase of buildings and equipment on account and in cash) Table (1) Building is an assets account and it increased the value of asset by $172. Hence, debit the building account for $172. Equipment is an assets account and it increased the value of asset by $270. Hence, debit the equipment account for $270. Cash is an assets account and it decreased the value of asset by $432. Hence, credit the cash account for $432. Notes payable is a liability account, and it increased the value of liabilities by $10. Hence, credit the notes payable for $10. (b) Issuance of common stock: Date Accounts title and explanation Ref. Debit ($) Credit ($) Cash (+A) 345 Common stock (+SE) (1) 200 Additional paid-in capital (+SE) (2) 145 (To record the issuance of common stock) Table (2) Cash is an assets account and it increased the value of asset by $345. Hence, debit the cash account for $345. Common stock is a component of stockholder’s equity and it increased the value of stockholder’s equity by $200, Hence, credit the common stock for $200. Additional paid-in capital is a component of stockholder’s equity and it increased the value of stockholder’s equity by $145, Hence, credit the additional paid-in capital for $145... 2. To determine Explain the response for event (e).

9th Edition

ISBN: 9781259222139

Author: Robert Libby, Patricia Libby, Frank Hodge Ch

Publisher: McGraw-Hill Education

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Chapter 2, Problem 2.7E

To determine

Record the journal entries of Company N.

To determine

Explain the response for event (e).

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Chapter 2, Problem 2.6E

Chapter 2, Problem 2.8E

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Chapter 2 Solutions

Financial Accounting

Ch. 2 - Prob. 1Q Ch. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Explain what the following accounting terms mean:...Ch. 2 - Why are accounting assumptions necessary?Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the fundamental accounting model?Ch. 2 - Prob. 7Q Ch. 2 - Explain what debit and credit mean.Ch. 2 - Prob. 9Q Ch. 2 - Prob. 10Q

Ch. 2 - Prob. 11Q Ch. 2 - Prob. 12Q Ch. 2 - How is the current ratio computed and interpreted?Ch. 2 - Prob. 14Q Ch. 2 - Prob. 1MCQ Ch. 2 - Which of the following is not an asset? a....Ch. 2 - Total liabilities on a balance sheet at the end of...Ch. 2 - The dual effects concept can best be described as...Ch. 2 - The T-account is a tool commonly used for...Ch. 2 - Prob. 6MCQ Ch. 2 - The Cash T-account has a beginning balance of...Ch. 2 - Prob. 8MCQ Ch. 2 - At the end of a recent year, The Gap, Inc.,...Ch. 2 - Prob. 10MCQ Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Events as Accounting Transactions...Ch. 2 - Classifying Accounts on a Balance Sheet The...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 2.6ME Ch. 2 - Prob. 2.7ME Ch. 2 - Prob. 2.8ME Ch. 2 - Prob. 2.9ME Ch. 2 - Prob. 2.10ME Ch. 2 - Prob. 2.11ME Ch. 2 - Computing and Interpreting the Current Ratio...Ch. 2 - Identifying Transactions as Investing or Financing...Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Account Titles The following are...Ch. 2 - Classifying Accounts and Their Usual Balances As...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Recording Investing and Financing Activities Refer...Ch. 2 - Prob. 2.7E Ch. 2 - Recording Investing and Financing Activities...Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Prob. 2.11E Ch. 2 - Inferring Investing and Financing Transactions and...Ch. 2 - Recording Journal Entries Nathanson Corporation...Ch. 2 - Prob. 2.14E Ch. 2 - Analyzing the Effects of Transactions Using...Ch. 2 - Prob. 2.16E Ch. 2 - Prob. 2.17E Ch. 2 - Prob. 2.18E Ch. 2 - Inferring Typical Investing and Financing...Ch. 2 - Prob. 2.20E Ch. 2 - Identifying the Investing and Financing Activities...Ch. 2 - Prob. 2.22E Ch. 2 - Identifying Accounts on a Classified Balance Sheet...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Prob. 2.3P Ch. 2 - Prob. 2.4P Ch. 2 - Prob. 2.5P Ch. 2 - Prob. 2.6P Ch. 2 - Prob. 2.1AP Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions in T-Accounts, Preparing...Ch. 2 - Prob. 2.4AP Ch. 2 - Accounting for the Establishment of a New Business...Ch. 2 - Prob. 2.1CP Ch. 2 - Prob. 2.2CP Ch. 2 - Prob. 2.3CP Ch. 2 - Prob. 2.4CP Ch. 2 - Prob. 2.5CP Ch. 2 - Prob. 2.6CP Ch. 2 - Prob. 2.7CP Ch. 2 - Prob. 2.8CP

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Record the journal entries of Company N.

Solution Summary: The author explains the rules for debiting and crediting different accounts while they occur in business transactions to abide by the double-entry system.

Record the journal entries of Company N.

Explain the response for event (e).

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Chapter 2 Solutions