Concept explainers
Problem 2-32 Recording events in a horizontal statements model
The following events pertain to Super Cleaning Company:
1. Acquired $10,000 cash from the issue of common stock.
2. Provided $15,000 of services on account.
3. Provided services for $5,000 cash.
4. Received $2,800 cash in advance for services to be performed in the future.
5. Collected $12,200 cash from the account receivable created in Event 2.
6. Paid $1,900 for cash expenses.
7. Performed $1,400 of the services agreed to in Event 4.
8. Incurred $3,600 of expenses on account.
9. Paid $4,800 cash in advance for one-year contract to rent office space.
10. Paid $2,800 cash on the account payable created in Event 8.
11. Paid a $1,500 cash dividend to the stockholders.
12. Recognized rent expense for nine months’ use of office space acquired in Event 9.
Required
Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the
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Survey Of Accounting
- Exercise 2-39 Transaction Analysis OBJECTIVE e The following events occurred for Parker Company. Performed consulting services for a client in exchange for $3,200 cash. Performed consulting services for a client on amount. $1,700. Paid $30,000 cash for land. Purchased office supplies on accounts $900. Paid a $2,500 cash dividend to stockholders. Paid $550 on account for supplies purchased in Transaction d. Paid $800 cash for the current months rent. Collected $1,500 from client in Transaction b. Stockholders invested $20,000 cash in the business. Required: 1. Analyze the effect of each transaction on the accounting equation. For example, if salaries of $500 were paid. the answer would be Decrease in stockholders equity (expense) $500 and decrease in assets (cash) $500. 2. CONCEPTUAL CONNECTION For Event 6, what accounting principle did you use to determine the amount to be recorded for supplies?arrow_forwardCornerstone Exercise 2-22 Transaction Analysis The Mendholm Company entered into the following transactions: Performed services on account, 521,500. Collected $9,500 from client related to services performed in Item a. Find $500 dividend to stockholders. Paid salaries of $4,000 for the current month. (Continued) Required: Show the effect of each transaction using the following model:arrow_forwardBrief Exercise 3-28 Accrual- and Cash-Basis Accounting The following are several transactions for Halpin Advertising Company. Purchased $1,000 of supplies. 0Sold $5,000 of advertising services, on account, to customers. Used $250 of supplies. Collected $3,000 from customers in payment of their accounts. Purchased equipment for $10,000 cash. Recorded $500 depreciation on the equipment for the current period. Required: Identify the effect, if any, that each of the above transactions would have on net income under cash-basis accounting and accrual-basis accounting.arrow_forward
- Transactions Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery Service during May: 1. Received cash in exchange for common stock, 18,000. 2. Paid advertising expense, 4,850. 3. Purchased supplies on account, 2,100. 4. Billed customers for delivery services on account, 14,700. 5. Received cash from customers on account, 8,200. Indicate the effect of each transaction on the following accounting equation elements: Assets, Liabilities, Common Stock, Dividends, Revenue, and Expense. To illustrate, the answer to (1) follows: (1) Asset (Cash) increases by 18,000: Common Stock increases by 18,000.arrow_forwardExercise 2-42 Inferring Transactions from Balance Sheet Changes Each of the following balance sheet changes is associated with a particular transaction: Cash decreases by $32,000 and land increases by $22,000. Cash decreases by $9,000 and retained earnings decreases by $9,000. Cash increases by $100,000 and common stock increases by $100,000. Cash increases by $15,000 and notes payable increases by $15,000. Required: CONCEPTUAL CONNECTION Describe each transaction listed above.arrow_forwardTransactions Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery during May: 1. Received cash in exchange for common stock, 18,000. 2. Paid advertising expense, 4,850. 3. Purchased supplies on account, 2,100. 4. Billed customers for delivery services on account, 14,700. 5. Received cash from customers on account. 8,200. Indicate the effect of each transaction on the following accounting equation elements: Assets, Liabilities, Common Stock, Dividends, Revenue, and Expense. To illustrate, the answer to (1) follows: (1) Asset (Cash) increases by 18,000: Common Stock increases by 18,000.arrow_forward
- Transactions; financial statements On August 1, 2018, Brooke Kline established Western Realty. Brooke completed the following transactions during the month of August: A. Opened a business bank account with a deposit of 35,000 in exchange for common stock. B. Purchased supplies on account, 2,750. C. Paid creditor on account, 1,800. D. Earned sales commissions, receiving cash, 52,800. E. Paid rent on office and equipment for the month, 4,500. F. Paid dividends, 3,000. G. Paid automobile expenses for month, 1,100, and miscellaneous expenses, 1,200. H. Paid office salaries, 5,250. I. Determined that the cost of supplies on hand was 1,750; therefore, the cost of supplies used was 1,000. Instructions 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:arrow_forwardOBJECTIVE 9 Exercise 2-47 Debit and Credit Effects of Transactions Lincoln Corporation was involved in the following transactions during the current year: Lincoln borrowed cash from the local bank on a note payable. Lincoln purchased operating assets on credit. Lincoln paid dividends in cash. Lincoln purchased supplies inventory on credit. Lincoln used a portion of the supplies purchased in Transaction d. Lincoln provided services in exchange for cash from the customer. A customer received services from Lincoln on credit. The owners invested cash in the business in exchange for common stock. The payable from Transaction d was paid in full. The receivable from Transaction g was collected in full. Lincoln paid wages in cash. Required: Prepare a table like the one shown below and indicate the effect on assets, liabilities, and stock-holders, equity. Be sure to enter debits and credits in the appropriate columns for each of the transactions. Transaction a is entered as an example:arrow_forwardProblem 2-56A Analyzing Transactions Luis Madero, after working for several years with a large public accounting firm decided to open his own accounting service. The business is operated as a corporation under the name Madero Accounting Services. The following captions and amounts summarize Maderos balance sheet at July 31, 2019. The following events occurred during August 2019. Issued common stock to Ms. Garriz in exchange for $15,000 cash. Paid $850 for first months rent on office space. Purchased supplies of $2,250 on credit. Borrowed $8,000 from the bank. Paid $1,080 on account for supplies purchased earlier on credit. Paid secretarys salary for August of $2,150. Performed amounting services for clients who paid cash upon completion of the service in the total amount of $4,700. Used $3,180 of the supplies on hand. Perfumed accounting services for clients on credit in the total amount of $1,920. Purchased $500 in supplies for cash. Collected $1,290 cash from clients for whom services were performed on credit. Paid $1,000 dividend to stockholders. Required: Record the effects of the transactions listed above on the accounting equation. Use the format given in the problem, starting with the totals at July 31, 20l9. Prepare the trial balance at August 31, 2019.arrow_forward
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