FUND.ACCT.PRIN.-CONNECT ACCESS
25th Edition
ISBN: 9781264217021
Author: Wild
Publisher: MCG
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Question
Chapter 1, Problem 13E
To determine
Introduction: The financial statements of a company include a
To identify: The transaction that best suits the explanation.
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Activity: Following are the accounting transactions relating to Mr. P’s business. Use the accounting equation to show their effect on his assets, liabilities and capital.
Purchased goods from A on credit 5,000
Sold goods for cash 10,000
Paid to A 2,000
Sold goods to B on credit 3,000
Paid into Bank 6,000
Paid to A by cheque 1,000
Received from B a cheque for 2,000
C. Comparative Financial data for the two companies are shown below:
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Other Assets (net)
Current Liabilities
Mortgage Payable
Owner's Equity
Sales (all on credit)
Gross Profit rate on Sales
Number of Business days, 360
TIKTAK CORP.
P67,832
a. Inventory Turnover
b. Average age of inventory
c. Accounts receivable turnover
84,480
71,280
12,000
353,388
126,694
50,000
412,286
844,800
32.5%
METATA CORP.
P 17,100
27,600
26,496
3,000
173,124
48,392
100,000
98,928
165,600
20%
Required:
1. Determine which of the two companies has the more liquid current assets by developing the
following ratios:
d. Average collection period
2. Determine which of the two companies has the more total liquid assets.
3. Determine which of the two companies is generally more stable.
The following table shows the effects of transactions through 5 on the assets, liabilities, and equity of Mulan's Boutique. Match each
transaction with its probable description.
1.
2.
3.
4.
5.
Cash
$ 28,000
4,700
0
0
1,070
2,250
$ 24,480
Transaction
1.
2₁
3.
4.
+
Assets
Accounts
Receivable
$ 0
0
0
2,250
0
2,250
$0
+
Supplies +
$ 3,700
+
+
0
1,070
0
0
0
$ 4,770
Description
Land
$ 22,500
4,700
0
0
0
0
$ 27,200
Liabilities
Accounts Payable +
$0
0
+
1,070
0
1,070
0
$0
Mulan,
Capital
Equity
CHE
$ 54,200
0
0
D
0
$ 54,200
Revenues
$0
0
0
2,250
0
0
$ 2,250
Chapter 1 Solutions
FUND.ACCT.PRIN.-CONNECT ACCESS
Ch. 1 - Prob. 1QSCh. 1 - Prob. 2QSCh. 1 - Prob. 3QSCh. 1 - Prob. 4QSCh. 1 - Prob. 5QSCh. 1 - Prob. 6QSCh. 1 - This icon highlights assignments that enhance...Ch. 1 - Prob. 8QSCh. 1 - Prob. 9QSCh. 1 - Prob. 10QS
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