Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
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Chapter 2, Problem 2.1PB
Determining Financial Statement Effects of Various Transactions
Swish Watch Corporation manufactures, sells, and services expensive watches. The company has been in business for three years. At the end of the previous year, the accounting records reported total assets of $2,255,000 and total liabilities of $1,780,000. During the current year, the following summarized events occurred:
- a. Issued additional shares of common stock, for $109,000 cash.
- b. Borrowed $186,000 cash from the bank and signed a 10-year note.
- c. A stockholder sold $5,000 of his stock in Swish Watch Corporation to another investor.
- d. d. Built an addition on the factory buildings for $200,000 and paid cash to the contractor.
- e. Purchased equipment for the new addition for $44,000, paying $12,000 in cash and signing a six-month note for the balance.
- f. Returned a $4,000 piece of equipment, from (e), because it proved to be defective: received a cash refund.
Required:
- 1. Complete the spreadsheet that follows, using plus ( + ) for increases and minus (−) for decreases for each account. The first transaction is used as an example.
- 2. Did you include event (c) in the spreadsheet? Why?
- 3. Based on beginning balances plus the completed spreadsheet, provide the following amounts (show computations):
- a. Total assets at the end of the year.
- b. Total liabilities at the end of the year.
Total stockholders’ equity at the end of the year.
- 4. At the end of the current year, has the financing for Swish Watch Corporation’s investment in assets primarily come from liabilities or stockholders’ equity?
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Use the horizontal model, or write the journal entry, for each of the following transactions and adjustments that occurred during the first year of operations at Kissick Co.
Issued 100,000 shares of $5-par-value common stock for $500,000 in cash.
Borrowed $250,000 from Oglesby National Bank and signed a 12% note due in three years.
Incurred and paid $190,000 in salaries for the year.
Purchased $320,000 of merchandise inventory on account during the year.
Sold inventory costing $290,000 for a total of $455,000, all on credit.
Paid rent of $55,000 on the sales facilities during the first 11 months of the year.
Purchased $75,000 of store equipment, paying $25,000 in cash and agreeing to pay the difference within 90 days.
Paid the entire $50,000 owed for store equipment and $310,000 of the amount due to suppliers for credit purchases previously recorded.
Incurred and paid utilities expense of $18,000 during the year.
Collected $412,000 in cash from customers during the year for credit…
Chapter 2 Solutions
Fundamentals of Financial Accounting
Ch. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Define a transaction anti give an example of each...Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the basic accounting equation?Ch. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - What is a journal entry? What is the typical...Ch. 2 - What is a T-account? What is its purpose?Ch. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Which of the following is not an asset account? a....Ch. 2 - Which of the following statements describe...Ch. 2 - Total assets on a balance sheet prepared on any...Ch. 2 - The duality of effects can best be described as...Ch. 2 - The T-account is used to summarize which of the...Ch. 2 - Prob. 6MCCh. 2 - A company was recently formed with 50,000 cash...Ch. 2 - Which of the following statements would be...Ch. 2 - Prob. 9MCCh. 2 - Prob. 10MCCh. 2 - Prob. 2.1MECh. 2 - Prob. 2.2MECh. 2 - Matching Terms with Definitions Match each term...Ch. 2 - Prob. 2.4MECh. 2 - Prob. 2.5MECh. 2 - Prob. 2.6MECh. 2 - Prob. 2.7MECh. 2 - Identifying Events as Accounting Transactions Half...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Preparing Journal Entries For each of the...Ch. 2 - Posting to T-Accounts For each of the transactions...Ch. 2 - Reporting a Classified Balance Sheet Given the...Ch. 2 - Prob. 2.13MECh. 2 - Prob. 2.14MECh. 2 - Identifying Transactions and Preparing Journal...Ch. 2 - Prob. 2.16MECh. 2 - Prob. 2.17MECh. 2 - Prob. 2.18MECh. 2 - Prob. 2.19MECh. 2 - Prob. 2.20MECh. 2 - Prob. 2.21MECh. 2 - Prob. 2.22MECh. 2 - Prob. 2.23MECh. 2 - Prob. 2.24MECh. 2 - Prob. 2.25MECh. 2 - Prob. 2.1ECh. 2 - Prob. 2.2ECh. 2 - Classifying Accounts and Their Usual Balances As...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 2.5ECh. 2 - Recording Journal Entries Refer to E2-4. Required:...Ch. 2 - Prob. 2.7ECh. 2 - Analyzing the Effects of Transactions in...Ch. 2 - Inferring Investing and Financing Transactions and...Ch. 2 - Analyzing Accounting Equation Effects, Recording...Ch. 2 - Recording Journal Entries and Preparing a...Ch. 2 - Analyzing the Effects of Transactions Using...Ch. 2 - Explaining the Effects of Transactions on Balance...Ch. 2 - Prob. 2.14ECh. 2 - Prob. 2.15ECh. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Prob. 2.2PBCh. 2 - Prob. 2.3PBCh. 2 - Prob. 2.1SDCCh. 2 - Prob. 2.2SDCCh. 2 - Prob. 2.4SDCCh. 2 - Prob. 2.5SDCCh. 2 - Accounting for the Establishment of a Business...
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