(1)
Transaction: The economic events which bring about any changes in the financial items of a business, and can be measured in the monetary units are referred to as transactions.
Accounting equation is expressed as shown below:
To analyze: The transactions of AS, using the accounting equation in the given format
(2) (a)
Income statement: The financial statement which reports revenues and expenses from business operations, and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
To prepare: Income statement of AS for the month ended February 29, 2016
(b)
Statement of
To prepare: Statement of retained earnings of AS for the month ended February 29, 2016
(c)
To prepare: Balance sheet of AS on February 29, 2016
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Horngren's Financial & Managerial Accounting, The Managerial Chapters (5th Edition)
- You are an accountant working for a company that has recently decided to incorporate. The company has incurred $4,300 for attorneys fees, promotion costs, and filing fees with the state of incorporation as a part of organizing the corporate entity. What is the journal entry to record these costs on March 13, assuming they are paid in cash?arrow_forwardBennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $71,600 cash to start the business and received 5,800 shares of common stock. The store completed its first year of operations on December 31, current year. On that date, the following financial items for the year were determined: December 31, current year, cash on hand and in the bank, $70,150; December 31, current year, amounts due from customers from sales of books, $41,000; unused portion of store and office equipment, $78,000; December 31, current year, amounts owed to publishers for books purchased, $13,800; one-year note payable to a local bank for $3,200. No dividends were declared or paid to the stockholders during the year. Required: 1. Complete the following balance sheet as of the end of the current year. Some information has been given below. 2. What was the amount of net income for the year? (Hint: Use the retained earnings equation [Beginning Retained Earnings + Net Income…arrow_forwardKen Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $55,000 cash to start the business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2017. On that date, the following financial items for the year were determined: cash on hand and in the bank, $50,500; amounts due from customers from sales of books, $28,500; equipment, $54,000; amounts owed to publishers for books purchased, $9,000; one-year notes payable to a local bank for $5,250. No dividends were declared or paid to the stockholders during the year.Assuming that Reader Direct generates net income of $6,000 and pays dividends of $3,600 in 2018, what would be the ending Retained Earnings balance at December 31, 2018?This is the problem I have been given, and I've gotten to this point. I am just very confused on the Ending RE and Beginning RE.So far I haveENDING RE = BEG RE + Net Income- Dividends________ = _______ + 6,000 - 3,600arrow_forward
- Dallas Parsons, CPA, began an accounting practice and completed these transactions during September 2015. Sept 1 Invested $15,000 of his personal savings into a bank account opened in the name of the accounting practice. Sept 2 Purchased office equipment for $12,500, paying $800 cash and agreeing to pay the balance in one year. Sept 3 Rented office space and paid cash for two months in advance, $11,200. Sept 4 Completed accounting work for a client and immediately collected $1,500 in cash for the work done. Sept 8 Purchased office supplies for cash, $150. Sept 15 Completed accounting services for a client on credit, $2,300. Sept 20 Received $2,300 from the above client for the work completed on September 15. Sept 30 Paid utilities expense for month of $1,300. Sept 30 Paid the office secretary's salary, $400. Sept 30 Paid $100 for repairs to the photocopier. Show the effects of the above transactions on the balance sheet items of Dallas Parsons, CA. Use the following…arrow_forwardKen Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $52,675 cash to start the business and received 4,300 shares. The store completed its first year of operations on December 31, 2020. On that date, the following financial items for the year were determined: cash on hand and in the bank, $49,150, amounts due from customers from sales of books, $28,850, property and equipment, $54,750, amounts owed to publishers for books purchased, $8,900; one-year note payable to a local bank for $4,200. No dividends were declared or paid to the shareholders during the year. Required: 1. Complete the balance sheet at December 31, 2020: Total assets Assets READER DIRECT Balance Sheet At December 31, 2020 $ Total liabilities Liabilities Shareholders' equity Total shareholders equity 0 Total llabilities & shareholders' equity $ 0 0arrow_forwardAnalyzing the Effects of Transactions in T-Accounts Lisa Frees and Amelia Ellinger had been operating a catering business for several years. In March 2014, the partners were planning to expand by opening a retail sales shop and decided to form the business as a corporation called Traveling Gourmet, Inc. The following transactions occurred in March 2014: Received $80,000 cash from each of the two shareholders to form the corporation. Gave the two owners each 500 shares of common stock with a par value of $1 per share. Purchased a vacant store for sale in a good location for $360,000, making a $72,000 cash down payment and signing a 10-year mortgage from a local bank for the rest. Borrowed $50,000 from the local bank on a 10 percent, one-year note. Purchased and used food and paper supplies costing $10,830 in March; paid cash. Catered four parties in March for $4,200; $1,600 was billed, and the rest was received in cash. Made and sold food at the retail store for $11,900 cash. Received…arrow_forward
- Analyzing the Effects of Transactions in T-Accounts Lisa Frees and Amelia Ellinger had been operating a catering business for several years. In March 2014, the partners were planning to expand by opening a retail sales shop and decided to form the business as a corporation called Traveling Gourmet, Inc. The following transactions occurred in March 2014: Received $80,000 cash from each of the two shareholders to form the corporation. Gave the two owners each 500 shares of common stock with a par value of $1 per share. Purchased a vacant store for sale in a good location for $360,000, making a $72,000 cash down payment and signing a 10-year mortgage from a local bank for the rest. Borrowed $50,000 from the local bank on a 10 percent, one-year note. Purchased and used food and paper supplies costing $10,830 in March; paid cash. Catered four parties in March for $4,200; $1,600 was billed, and the rest was received in cash. Made and sold food at the retail store for $11,900 cash. Received…arrow_forward1. A newly founded business performed in their first days of operations, the six transactions that you can find below. The business was founded on the 20th of July, by a young entrepreneur, Mr Grey, who wanted to provide typing, copying, and printing services to the university students in his home city: a) 20/07/2019: In exchange for his investment of $200,000 cash, the business issued to Mr Grey 1,000 shares of capital stock. b) 21/07/2019: Purchased a small building and land for $450,000, paying $165,000 cash and signing a note payable for the balance. The building $210,000 and the land was considered to be worth $240,000. c) 22/07/2019: Purchased office equipment for $30,000 from Office Furniture Co. Paid $17,000 cash and agreed to pay the balance within 60 days. d) 26/7/2019: Purchased from Auto Ltd. a motorcycle on credit for $3,400 to be used for making deliveries to customers. Mr Grey agreed to make payment to Auto Ltd. within 10 days. e) 27/7/2019 Signed a note payable due in…arrow_forwardRequired: post entries to the relevant accounts in the general ledger and balance the accounts: On 1/1/2023, Jassim started his commercial business with a capital of $3,735,000 distributed over the following assets: 1500,000 cash, 700,000 cars, 350,000 goods, 1,185,000 bank, If you know that the following operations took place during January 2023: 1. On 1/3 he bought a building for $950,000 by check, and the costs of registering it amounted to $5200 and the expenses of preparing it for use amounted to $43000, which I paid in cash. 2. On 9/1 he sold his goods on account to Mahmoud for $280,000. 3. On 1/10, he bought goods from Daoud for $324,000, he paid half of them in cash, and wrote the rest as a promissory note due after two months. He also paid the costs of transporting the purchased goods, amounting to $1,800. 4. On 1/12 he sold his goods to Al-Tafa'il stores for the amount of $198,000 in cash, of which $65,000 was deposited in the bank. 5. On 1/15, he sold the most valuable car…arrow_forward
- After researching the different forms of business organization, Natalie Koebel decides to operate “Cookie Creations” as a corporation. She then starts the process of getting the business running. In November 2022, the following activities take place. Nov. 8 Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account. 8 She opens a bank account under the name “Cookie Creations” and transfers $500 from her personal account to the new account in exchange for common stock. 11 Natalie pays $65 to have advertising brochures and posters printed. She plans to distribute these as opportunities arise. (Hint: Use Advertising Expense.) 13 She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash. 14 Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. She has an excellent top-of-the-line food processor and mixer…arrow_forwardAfter researching the different forms of business organization, Natalie Koebel decides to operate “Cookie Creations” as a corporation. She then starts the process of getting the business running. In November 2022, the following activities take place. Nov. 8 Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account. 8 She opens a bank account under the name “Cookie Creations” and transfers $500 from her personal account to the new account in exchange for common stock. 11 Natalie pays $65 to have advertising brochures and posters printed. She plans to distribute these as opportunities arise. (Hint: Use Advertising Expense.) 13 She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash. 14 Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. She has an excellent top-of-the-line food processor and mixer…arrow_forward"Marquis Smith started IT Consulting Services Incorporated on January 1, Year 1. The company experienced the following events during its first year of operation 1 On June 1 Year 1, the company borrowed $21.600 cash from the bank. The note had a one-year term and 6% annual interest rate 2. On December 31. Year 1, the company adjusted the accounting records to recognize accrued interest expense on the bank note Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA) Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Event Number Assets Cash 21 600 2 Total CNet change in cash 01 21.600 Notes Payable 21,600…arrow_forward
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