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Exercise 2-41 Transaction Analysis and Business Activities The accountant for Compton Inc. has collected the following information: Compton purchased a tract of land from Jacobsen Real Estate for $875,000 cash. Compton issued 2,000 shares of its common stock to George Micros in exchange for $125,000 cash. Compton purchased a John Deere tractor for $86,000 on credit. Michael Romano paid Compton $10,400 cash for services performed. The services had been performed by Compton several month ago for a [ma] price of $12,000 of which Rotunno had previously paid $1,600. Compton paid its monthly payroll by issuing checks totaling $36,250. Compton declared and paid its annual dividend of $5,000 cash Required: 1. Prepare an analysis of the effects of these transactions on the accounting equation of the business. Use the format below. 2. Indicate whether the transaction is a financing, investing, or operating activity.

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 2, Problem 41E
Textbook Problem

Exercise 2-41 Transaction Analysis and Business Activities

The accountant for Compton Inc. has collected the following information:

  1. Compton purchased a tract of land from Jacobsen Real Estate for $875,000 cash.
  2. Compton issued 2,000 shares of its common stock to George Micros in exchange for $125,000 cash.
  3. Compton purchased a John Deere tractor for $86,000 on credit.
  4. Michael Romano paid Compton $10,400 cash for services performed. The services had been performed by Compton several month ago for a [ma] price of $12,000 of which Rotunno had previously paid $1,600.
  5. Compton paid its monthly payroll by issuing checks totaling $36,250.
  6. Compton declared and paid its annual dividend of $5,000 cash

Required:

1. Prepare an analysis of the effects of these transactions on the accounting equation of the business. Use the format below.

Chapter 2, Problem 41E, Exercise 2-41 Transaction Analysis and Business Activities The accountant for Compton Inc. has

2. Indicate whether the transaction is a financing, investing, or operating activity.

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Chapter 2 Solutions

Cornerstones of Financial Accounting
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Ch. 2 - What is the basic process used in transaction...Ch. 2 - In analyzing a transaction, can a transaction only...Ch. 2 - How do revenues and expenses affect the accounting...Ch. 2 - What is a T-account? Describe the basic components...Ch. 2 - Do you agree with the statement that debits mean...Ch. 2 - The words debit and credit are used in two ways in...Ch. 2 - All accounts have normal balances. What is the...Ch. 2 - When a journal entry is made, what must be equal?...Ch. 2 - Can accounting transactions be direction recorded...Ch. 2 - Why is the term double-entry an appropriate...Ch. 2 - What are the initial steps in the accounting cycle...Ch. 2 - What kinds of errors will a trial balance detect?...Ch. 2 - Which of the following is not a benefit derived...Ch. 2 - Which of the following is not a characteristic of...Ch. 2 - Information that provides feedback about prior...Ch. 2 - Relevant information possesses this quality:...Ch. 2 - Which of the following is not an assumption that...Ch. 2 - Which principle requires that expenses be recorded...Ch. 2 - Taylor Company recently purchased a piece of...Ch. 2 - The effects of purchasing inventory on credit are...Ch. 2 - The effects of paying salaries for the current...Ch. 2 - Which of the following statements is false? The...Ch. 2 - Which of the following statements are true? Debits...Ch. 2 - Debits will: increase assets. expenses, and...Ch. 2 - Which of the following statements are true? A...Ch. 2 - Posting: involves transferring the information in...Ch. 2 - A trial balance: lists only revenue and expense...Ch. 2 - CORNERSTONE 2.1 Cornerstone Exercise 2-16...Ch. 2 - Cornerstone Exercise 2-17 Qualitative...Ch. 2 - CORNERSTONE 2.1 Four statements are given below....Ch. 2 - Cornerstone Exercise 2-1 9 Accounting Principles...Ch. 2 - Cornerstone Exercise 2-20 Transaction Analysis...Ch. 2 - Cornerstone Exercise 2-21 Transaction Analysis...Ch. 2 - Cornerstone Exercise 2-22 Transaction Analysis The...Ch. 2 - Cornerstone Exercise 2-23 Debit and Credit...Ch. 2 - Cornerstone Exercise 2-24 Journalize Transactions...Ch. 2 - Cornerstone Exercise 2-25 Journalize Transactions...Ch. 2 - Cornerstone Exercise 2-26 Preparing a Trial...Ch. 2 - Brief Exercise 2-2? Qualitative Characteristics...Ch. 2 - Brief Exercise 2-28 Assumptions and Principles...Ch. 2 - Brief Exercise 2-2? Events and Transactions...Ch. 2 - Brief Exercise 2-30 Transaction Analysis Galle...Ch. 2 - Brief Exercise 2-31 Debit and Credit Procedures...Ch. 2 - Brief Exercise 2-32 Journalize Transactions Galle...Ch. 2 - Brief Exercise 2-33 Posting Journal Entries Listed...Ch. 2 - Brief Exercise 2-34 Preparing a Trial Balance The...Ch. 2 - Exercise 2-35 Qualitative Characteristics Listed...Ch. 2 - Exercise 2-36 Assumptions and Principles Presented...Ch. 2 - Exercise 2-37 Events and Transactions Several...Ch. 2 - Exercise 2-38 Events and Transactions The...Ch. 2 - Exercise 2-39 Transaction Analysis OBJECTIVE e The...Ch. 2 - Exercise 2-40 Transaction Analysis Amanda Webb...Ch. 2 - Exercise 2-41 Transaction Analysis and Business...Ch. 2 - Exercise 2-42 Inferring Transactions from Balance...Ch. 2 - Exercise 2-43 Transaction Analysis Goal Systems, a...Ch. 2 - Exercise 2-44 Transaction Analysis OBJECTIVE 9...Ch. 2 - Exercise 2-45 Inferring Transactions from Balance...Ch. 2 - Exercise 2-46 Normal Balances and Financial...Ch. 2 - OBJECTIVE 9 Exercise 2-47 Debit and Credit Effects...Ch. 2 - Exercise 2-48 Debit and Credit Effect on...Ch. 2 - Exercise 2-49 Journalizing Transactions Kauai...Ch. 2 - Exercise 2-50 Journalizing Transactions Remington...Ch. 2 - Exercise 2-51 Transaction Analysis and Journal...Ch. 2 - Exercise 2-52 Accounting Cycle Rosenthal...Ch. 2 - Exercise 2-53 Preparing a Trial Balance...Ch. 2 - Exercise 2-54 Effect of Errors on a Trial Balance...Ch. 2 - Problem 2-55A Events and Transactions The...Ch. 2 - Problem 2-56A Analyzing Transactions Luis Madero,...Ch. 2 - Problem 2-57A Inferring Transactions from...Ch. 2 - Problem 2-58A Debit and Credit Procedures A list...Ch. 2 - Problem 2-59A Journalizing Transactions Monroe...Ch. 2 - Problem 2-60A Journalizing and Posting...Ch. 2 - Problem 2-61A The Accounting Cycle Karleens...Ch. 2 - Problem 2-62B Comprehensive Problem Mulberry...Ch. 2 - Problem 2-55B Events and Transactions The...Ch. 2 - Problem 2-563 Analyzing Transactions Several years...Ch. 2 - Problem 2-573 Inferring Transactions from Accounts...Ch. 2 - Problem 2-58B Debit and Credit Procedures A list...Ch. 2 - Problem 2-593 Journalizing Transactions Monilast...Ch. 2 - Problem 2-603 Journalizing and Posting...Ch. 2 - Problem 2-6B The Accounting Cycle Sweetwater...Ch. 2 - Problem 2-62B Comprehensive Problem Mulberry...Ch. 2 - Case 2-63 Analysis of the Accounting Cycle Susan...Ch. 2 - Case 2-63 Analysis of the Accounting Cycle Susan...Ch. 2 - Case 2-63 Analysis of the Accounting Cycle Susan...Ch. 2 - Case 2-64 Analysis of the Effects of Current Asset...Ch. 2 - Case 2-64 Analysis of the Effects of Current Asset...Ch. 2 - Case 2-64 Analysis of the Effects of Current Asset...Ch. 2 - Case 2-64 Analysis of the Effects of Current Asset...Ch. 2 - Case 2-65 Ethical Issues Kathryn Goldsmith is the...Ch. 2 - Case 2-65 Ethical Issues Kathryn Goldsmith is the...Ch. 2 - Case 2-66 Research and Analysis Using the Annual...Ch. 2 - Case 2-66 Research and Analysis Using the Annual...Ch. 2 - Case 2-66 Research and Analysis Using the Annual...Ch. 2 - Case 2-67 Comparative Analysis: Under Armour,...Ch. 2 - Case 2-67 Comparative Analysis: Under Armour,...Ch. 2 - Case 2-67 Comparative Analysis: Under Armour,...Ch. 2 - Case 2-68 Accounting for Partially Completed...Ch. 2 - Case 2-68 Accounting for Partially Completed...Ch. 2 - Case 2-69 CONTINUING PROBLEM: FRONT ROW...Ch. 2 - Case 2-69 CONTINUING PROBLEM: FRONT ROW...Ch. 2 - Case 2-69 CONTINUING PROBLEM: FRONT ROW...

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