Concept explainers
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.
To analyze: The transactions using the accounting equation in the given format
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Horngren's Financial & Managerial Accounting, The Financial Chapters Plus MyAccountingLab with Pearson eText -- Access Card Package (5th Edition)
- On October 1, 2018, Jay Crowley established Affordable Realty, which completed the following transactions during the month: Oct. 1 Jay Crowley transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $40,000. 2 Paid rent on office and equipment for the month, $4,800. 3 Purchased supplies on account, $2,150. 4 Paid creditor on account, $1,100. 5 Earned sales commissions, receiving cash, $18,750. 6 Paid automobile expenses (including rental charge) for month, $1,580, and miscellaneous expenses, $800. 7 Paid office salaries, $3,500. 8 Determined that the cost of supplies used was $1,300. 9 Paid dividends, $1,500. 1. Journalize entries for transactions Oct. 1 through 9. Refer to the Chart of Accounts for exact wording of account titles. 2. Post the journal entries to the T accounts, selecting the appropriate date to the left of each amount to identify the transactions. Determine…arrow_forwardOn October 1, 2015, Leo Chavez established Mighty Realty Services, which completed the following transactions during the month: 1. On October 1, Leo Chavez transferred cash from a personal bank account to an account to be used for the business, P175,000. 2. On October 2, purchased supplies on account, P10,000. 3. On October 5, earned sales commissions, receiving cash, P122,500. 4. On October 10, paid rent on office and equipment for the month, P38,000. 5. On October 15, paid creditor on account, P6,000. 6. On October 20, withdrew cash for personal use, P30,000. 7. On October 25, paid automobile expenses for month, P15,000, and miscellaneous expenses, P4,000. 8. On October 28, paid office salaries, P31,000. Instructions A. Journalize entries for transactions (a) through (h), using the following account titles, omit the explanation: 11 - Cash 12 - Supplies 21 - Accounts Payable 31 - Leo Chavez, Capital 32 - Leo Chavez, Drawing 41 - Sales Commissions 51 - Rent Expense 52 - Office Salaries…arrow_forwardOn November 1, 2018, Kris Lehman established an interior decorating business, Modern Designs.During the month, Kris completed the following transactions related to the business:Nov. 1. Kris transferred cash from a personal bank account to an account to be used for the business in exchangefor common stock, $36,000.1. Paid rent for period of November 1 to end of month, $4,000.6. Purchased office equipment on account, $16,000.8. Purchased a truck for $43,000 paying $4,300 cash and giving a note payable for the remainder.10. Purchased supplies for cash, $1,860.12. Received cash for job completed, $8,000.15. Paid annual premiums on property and casualty insurance, $2,400.23. Recorded jobs completed on account and sent invoices to customers, $15,500.24. Received an invoice for truck expenses, to be paid in November, $1,250.Enter the following transactions on Page 2 of the two-column journal:29. Paid utilities expense, $3,660.29. Paid miscellaneous expenses, $1,700.30. Received cash from…arrow_forward
- Marilyn Crane opened a public relations firm called Shining Stars on August 1, 2016. The following amounts summarize her business on August 31, 2016: During September 2016, the business completed the following transactions: 1 (Click the icon to view the transactions.) (Click the icon to view the amounts.) Analyze the effects of the transactions on the accounting equation of Shining Stars Analyze the events chronologically, one transaction at a time. Beginning with transaction a., calculate the balance in each account after analyzing the effect of the transaction on the accounting equation. (Complete only the necessary answer boxes for your transaction lines. [Do not enter any zeros for your transaction lines.] Carry down all balances to the "Bal." line, including zero balance accounts, entering a "0" for any zero balances. Enter a decrease in an account with a minus sign or parentheses. Abbreviations used: A/P = Accounts Payable; A/R = Accounts Receivable; Adv. = Advertising; Cap. =…arrow_forwardOn August 1, 2016, Bill Hudson established Heritage Realty, which completed the fol- lowing transactions during the month: a. Bill Hudson transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $30,000. b. Paid rent on office and equipment for the month, $3,250. c. Purchased supplies on account, $2,150. d. Paid creditor on account, $875. e. Earned sales commissions, receiving cash, $14,440. f. Paid automobile expenses (including rental charge) for month, $1,580, and miscel- laneous expenses, $650. g. Paid office salaries, $3,000. h. Determined that the cost of supplies used was $1,300. i. Paid dividends, $2,500. Instructions : Q. 1 Journalize the transactions shown above. Q. 2 Post to the ledger and display the balance in each account after all the transactions have been posted. Q. 3 Prepare unadjusted trial balance, for the month of August 31, 2016. Q. 4 Determine the following: a. Amount of total revenue recorded in the…arrow_forwardThe transactions completed by AM Express Company during March 2016, the first month of the fiscal year, were as follows: Instructions 1. Enter the following account balances in the general ledger as of March 1: 2. Journalize the transactions for March 2016, using the following journals similar to those illustrated in this chapter: single-column revenue journal (p. 35), cash receipts journal (p. 31), purchases journal (p. 37, with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts), cash payments journal (p. 34), and two-column general journal (p. 1). Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made. 3. Post the appropriate individual entries to the general ledger. 4. Total each of the columns of the special journals, and post the appropriate totals to the general ledger; insert the account balances. 5. Prepare a trial balance.arrow_forward
- 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_forwardAfter several years with a large accounting firm, Virgie Dal decided to establish her own accounting practice. The following transactions of Virgie Dal, CPA were completed during 2012: May 2 – Transferred of ₱92,500 cash from a personal savings account to a checking account, Virgie Dal ,CPA.3- Acquired office equipment on account from Gicain Furnitire, ₱36,800.4- Acquired office supplies on account from Lorenzo Office Supply Company ₱17,100.6- Performed accounting services for Cayao Computer Company and submitted bill of ₱29,200 for those services.7- Paid for accounting and tax books for use in the practice, ₱19,500.8- Paid Lorenzo Office Supply Company, ₱ 4,100 on account.10- Acquired a condominium unit for the accounting practice, 265,000. A down payment of ₱38,000 was made andissued a note payable for the remaining ₱227,000.12-Paid salaries, ₱14,20013- Received ₱9,750 from Cayao Computer Company, billed on May 6.16- Paid telephone expense, ₱650.19- Received cash in the amount of…arrow_forwardTransactions; Financial Statements On April 1, 2016, Maria Adams established Custom Realty. Maria completed the following transactions during the month of April: Opened a business bank account with a deposit of $24,000 from personal funds. Paid rent on office and equipment for the month, $3,600. Paid automobile expenses (including rental charge) for month, $1,350, and miscellaneous expenses, $600. Purchased office supplies on account, $1,200. Earned sales commissions, receiving cash, $19,800. Paid creditor on account, $750. Paid office salaries, $2,500. Withdrew cash for personal use, $3,500. Determined that the cost of supplies on hand was $300; therefore, the cost of supplies used was $900. 1. Prepare a statement of owner's equity for April. If an amount is zero, enter "0".arrow_forward
- Transactions; Financial Statements On April 1, 2016, Maria Adams established Custom Realty. Maria completed the following transactions during the month of April: Opened a business bank account with a deposit of $24,000 from personal funds. Paid rent on office and equipment for the month, $3,600. Paid automobile expenses (including rental charge) for month, $1,350, and miscellaneous expenses, $600. Purchased office supplies on account, $1,200. Earned sales commissions, receiving cash, $19,800. Paid creditor on account, $750. Paid office salaries, $2,500. Withdrew cash for personal use, $3,500. Determined that the cost of supplies on hand was $300; therefore, the cost of supplies used was $900. Required: 1. Indicate the effect of each transaction and the balances after each transaction. For those boxes in which no entry is required, leave the box blank. If required, enter negative values as negative numbers. Assets = Liabilities + Owner's Equity Cash + Supplies =…arrow_forwardDeb Kelley opens a web consulting business called Smart Deals andcompletes the following transactions in its first month of operations.Prepare journal entries for each transaction and identify the financialstatement impact of each entry. The financial statements are automatically generated based on thejournal entries recorded.Apr. 1 Kelley invested $110,000 cash along with officeequipment valued at $31,000 in the company.Apr. 2 The company prepaid $15,000 cash for 12 months' rent foroffice space. The company's policy is record prepaidexpenses in balance sheet accounts.Apr. 3 The company made credit purchases for $9,000 in officeequipment and $4,600 in office supplies. Payment is duewithin 10 days.Apr. 6 The company completed services for a client andimmediately received $7,000 cash.Apr. 9 The company completed a $11,000 project for a client,who must pay within 30 days.Apr. 13 The company paid $13,600 cash to settle the accountpayable created on April 3.Apr. 19 The company paid $4,800…arrow_forwardOn 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. With this information being used, I need to make an accounting equation grid?arrow_forward
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