Chart of accounts
Monet Paints Co. is a newly organized business with a list of accounts arranged in alphabetical order, as follows:
Accounts Payable
Accounts Receivable
Accumulated Depreciation—Office Equipment
Accumulated Depreciation—Store Equipment
Advertising Expense
Cash
Cost of Merchandise Sold
Delivery Expense
Depreciation Expense—Office Equipment
Depreciation Expense—Store Equipment
Income Summary
Insurance Expense
Interest Expense
Kailey Garner, Capital
Kailey Garner, Drawing
Land
Merchandise Inventory
Miscellaneous Administrative Expense
Miscellaneous Selling Expense
Notes Payable
Office Equipment
Office Salaries Expense
Office Supplies
Office Supplies Expense
Prepaid Insurance
Rent Expense
Salaries Payable
Sales
Sales Salaries Expense
Store Equipment
Store Supplies
Store Supplies Expense
Construct a chart of accounts, assigning account numbers and arranging the accounts in
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Accounting (Text Only)
- Analyzing the Accounts The controller for Summit Sales Inc. provides the following information on transactions that occurred during the year: a. Purchased supplies on credit, $18,600 b. Paid $14,800 cash toward the purchase in Transaction a c. Provided services to customers on credit1 $46,925 d. Collected $39,650 cash from accounts receivable e. Recorded depreciation expense, $8,175 f. Employee salaries accrued, $15,650 g. Paid $15,650 cash to employees for salaries earned h. Accrued interest expense on long-term debt, $1,950 i. Paid a total of $25,000 on long-term debt, which includes $1.950 interest from Transaction h j. Paid $2,220 cash for l years insurance coverage in advance k. Recognized insurance expense, $1,340, that was paid in a previous period l. Sold equipment with a book value of $7,500 for $7,500 cash m. Declared cash dividend, $12,000 n. Paid cash dividend declared in Transaction m o. Purchased new equipment for $28,300 cash. p. Issued common stock for $60,000 cash q. Used $10,700 of supplies to produce revenues Summit Sales uses the indirect method to prepare its statement of cash flows. Required: 1. Construct a table similar to the one shown at the top of the next page. Analyze each transaction and indicate its effect on the fundamental accounting equation. If the transaction increases a financial statement element, write the amount of the increase preceded by a plus sign (+) in the appropriate column. If the transaction decreases a financial statement element, write the amount of the decrease preceded by a minus sign (-) in the appropriate column. 2. Indicate whether each transaction results in a cash inflow or a cash outflow in the Effect on Cash Flows column. If the transaction has no effect on cash flow, then indicate this by placing none in the Effect on Cash Flows column. 3. For each transaction that affected cash flows, indicate whether the cash flow would be classified as a cash flow from operating activities, cash flow from investing activities, or cash flow from financing activities. If there is no effect on cash flows, indicate this as a non-cash activity.arrow_forwardAccounts Receivable Calculations The following amounts were reported for Cotton, Newton, and Miller Companies: Required: Next Level Compute the missing amounts.arrow_forwardData table Account Title Cash Accounts Receivable Merchandise Inventory Quality Service Systems Adjusted Trial Balance March 31, 2018 Office Supplies Equipment Accumulated Depreciation Equipment Accounts Payable Salaries Payable Notes Payable, long-term Miller, Capital Miller, Withdrawals Sales Revenue Cost of Goods Sold Selling Expense Administrative Expense Interest Expense Total S $ Debit Balance 2,600 12,800 31,200 6,800 42,400 45,500 Credit 13,600 9,500 500 8,500 22,050 239,000 107,550 27,700 14,100 2,500 293,150 $ 293,150 Xarrow_forward
- Determine the financial statement effects of Accounts Payable Transactions, when Hobson Company has the following items: Purchases $1,250 of inventory on credit. Sells inventory for $1,650 on credit. Records $1,260 cost of sales for transaction b. Receives $1,650 cash towards accounts receivable. Pays $1,260 cash to settle accounts payable.arrow_forwardSales and notes receivable transactionsThe following were selected from among the transactions completedduring the current year by Danix Co., an appliance wholesale company: Instructions Journalize the entries to record the transactions.arrow_forwardPresented below is information related to Wildhorse Company for its first month of operations. Credit Purchases Cash Paid Jan. 06 Gorst Company $9,800 Jan. 11 Gorst Company $5,600 Jan. 10 Tian Company 12,600 Jan. 16 Tian Company 12,600 Jan. 23 Maddox Company 12,300 Jan. 29 Maddox Company 6,500 Determine the balances that appear in the accounts payable subsidiary ledger. What Accounts Payable balance appears in the general ledger at the end of January? Subsidary Ledger General Ledger Gorst Company Tian Company Maddox Company Balance of Accounts Payable $ $ $ $arrow_forward
- Data table Account Title Cash Accounts Receivable Merchandise Inventory Office Supplies Equipment Accumulated Depreciation Equipment Accounts Payable Salaries Payable Notes Payable, long-term Moray, Capital Moray, Withdrawals Sales Revenue Cost of Goods Sold Selling Expense Administrative Expense Budget Office Systems Adjusted Trial Balance March 31, 2018 Interest Expense Total $ Debit Balance 4,300 13,400 31,400 7,000 42,800 40,000 SA 106,200 27,200 14,000 2,200 288,500 $ Credit 13,300 9,600 900 8,100 20,600 236,000 288,500 Xarrow_forwardTeal Mountain Company had the following normal account balances on selected accounts: Sales Revenue Sales Returns and Allowances Sales Discounts Cost of Goods Sold Freight-Out Advertising Expense Interest Expense Salaries and Wages Expense Utilities Expense Depreciation Expense Interest Revenue (a) $776,000 60,000 47,600 476,800 2,400 18,000 23,200 101,200 28,400 4,800 30,000 Use the above information to prepare a multiple-step income statement for the year ended December 31, 2027. (List Other Revenues before Other Expenses.)arrow_forwardRECORDING TRANSACTIONS IN THE PROPER JOURNAL Identify the journal (sales, cash receipts, purchases, cash payments, or general) in which each of the following transactions should be recorded: (a) Sold merchandise on account. (b) Purchased delivery truck on account for use in the business. (c) Received payment from customer on account. (d) Purchased merchandise on account. (e) Issued check in payment of electric bill. (f) Recorded depreciation on factory building.arrow_forward
- COMPUTING GROSS PROFIT The following data were taken from the accounts of Burnside Bedknobs, a retail business. Determine the gross profit.arrow_forwardThis problem challenges you to apply your cumulative accounting knowledge to move a step beyond the material in the chapter. Days cash is outstanding for merchandise: 54.04 days Combining the information provided by various ratios can enhance your understanding of the financial condition of a business. Review the information provided for Na Pali Coast Company in the Mastery Problem. Using this information, respond to the following questions: REQUIRED 1. Compute the average number of days required to sell inventory and collect cash from customers buying on account. 2. Note that Na Pali Coast Company also buys inventory on account. On average, how many days pass before Na Pali pays its creditors? 3. Using the information from your answers to parts (1) and (2), compute the number of days from the time Na Pali Coast pays for inventory until it receives cash from customers on account.arrow_forwardFINANCIAL RATIOS Use the work sheet and financial statements prepared in Problem 15-8A. All sales are credit sales. The Accounts Receivable balance on January 1,20--, was 3,800. REQUIRED Prepare the following financial ratios: (a) Working capital (b) Current ratio (c) Quick ratio (d) Return on owners equity (e) Accounts receivable turnover and average number of days required to collect receivables (f) Inventory turnover and average number of days required to sell inventoryarrow_forward
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