Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 2, Problem 2.3ME
Identifying Events as Accounting Transactions
LO2-2 For each of the following events, which ones result in an exchange transaction for Dittman Company (Y for yes and N for no)?
______ (1) Six investors in Dittman Company sold their stock to another investor.
______ (2) The founding owner, Megan Dittman, purchased additional stock in another company.
______ (3) The company borrowed $2,500,000 from a local bank.
______ (4) Dittman Company purchased a machine that it paid for by signing a note payable.
______ (5) The company lent $300,000 to a supplier.
______ (6) Dittman Company ordered supplies from Staples to be delivered next week.
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[The following information applles to the questions displayed below.]
On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,580 in assets In
exchange for Its common stock to launch the business. On October 31, the company's records show the following Items
and amounts. Retalned earnings, October 1 as $0.
$ 9,390
16,020
3,83e
45,98e
18,55e
9,e6e
84,580
Cash dividends
Consulting revenue
Rent expense
Salaries expense
Telephone expense
Miscellaneous expenses
$ 2,650
16,e20
4,190
7,570
830
Cash
Accounts receivable
office supplies
Land
office equipment
Accounts payable
Common stock
650
Exercise 1-15 Preparing an income statement LO P2
Using the above Information prepare an October Income statement for the business.
ERNST CONSULTING
Income Statement
For Month Ended October 31
Revenues
Consulting revenue
Expenses
Rent expense
Salaries expense
Telephone expense
Miscellaneous expenses
Net income
EA16. Discuss how each of the following transactions for Watson, International, will affect assets, liabilities, and stockholders’ equity, and prove the company’s accounts will still be in balance.
A. An investor invests an additional $25,000 into a company receiving stock in exchange.B. Services are performed for customers for a total of $4,500. Sixty percent was paid in cash, and the remaining customers asked to be billed.C. An electric bill was received for $35. Payment is due in thirty days. D. Part-time workers earned $750 and were paid.E. The electric bill in “C” is paid.Your answer: (Answer B, C, D, and E by referring to the answer example for A)A. (as an example, the answer for A. is shown below)Cash will increase $25,000, so total assets will increase $25,000.Common stock will increase $25,000, increasing total stockholders’ equity $25,000.There is an equal increase on each side of the equation.There is an equal decrease on each side of the equation.
Chapter 2 Solutions
Financial Accounting
Ch. 2 - Prob. 1QCh. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Explain what the following accounting terms mean:...Ch. 2 - Why are accounting assumptions necessary?Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the fundamental accounting model?Ch. 2 - Prob. 7QCh. 2 - Explain what debit and credit mean.Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - How is the current ratio computed and interpreted?Ch. 2 - Prob. 14QCh. 2 - Prob. 1MCQCh. 2 - Which of the following is not an asset? a....Ch. 2 - Total liabilities on a balance sheet at the end of...Ch. 2 - The dual effects concept can best be described as...Ch. 2 - The T-account is a tool commonly used for...Ch. 2 - Prob. 6MCQCh. 2 - The Cash T-account has a beginning balance of...Ch. 2 - Prob. 8MCQCh. 2 - At the end of a recent year, The Gap, Inc.,...Ch. 2 - Prob. 10MCQCh. 2 - Matching Definitions with Terms Match each...Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Events as Accounting Transactions...Ch. 2 - Classifying Accounts on a Balance Sheet The...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 2.6MECh. 2 - Prob. 2.7MECh. 2 - Prob. 2.8MECh. 2 - Prob. 2.9MECh. 2 - Prob. 2.10MECh. 2 - Prob. 2.11MECh. 2 - Computing and Interpreting the Current Ratio...Ch. 2 - Identifying Transactions as Investing or Financing...Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Account Titles The following are...Ch. 2 - Classifying Accounts and Their Usual Balances As...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Recording Investing and Financing Activities Refer...Ch. 2 - Prob. 2.7ECh. 2 - Recording Investing and Financing Activities...Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Prob. 2.11ECh. 2 - Inferring Investing and Financing Transactions and...Ch. 2 - Recording Journal Entries Nathanson Corporation...Ch. 2 - Prob. 2.14ECh. 2 - Analyzing the Effects of Transactions Using...Ch. 2 - Prob. 2.16ECh. 2 - Prob. 2.17ECh. 2 - Prob. 2.18ECh. 2 - Inferring Typical Investing and Financing...Ch. 2 - Prob. 2.20ECh. 2 - Identifying the Investing and Financing Activities...Ch. 2 - Prob. 2.22ECh. 2 - Identifying Accounts on a Classified Balance Sheet...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Prob. 2.3PCh. 2 - Prob. 2.4PCh. 2 - Prob. 2.5PCh. 2 - Prob. 2.6PCh. 2 - Prob. 2.1APCh. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions in T-Accounts, Preparing...Ch. 2 - Prob. 2.4APCh. 2 - Accounting for the Establishment of a New Business...Ch. 2 - Prob. 2.1CPCh. 2 - Prob. 2.2CPCh. 2 - Prob. 2.3CPCh. 2 - Prob. 2.4CPCh. 2 - Prob. 2.5CPCh. 2 - Prob. 2.6CPCh. 2 - Prob. 2.7CPCh. 2 - Prob. 2.8CP
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- [The following information applies to the questions displayed below.] On October 1, Ebony Ernst organized Ernst Consulting: on October 3, the owner contributed $84,580 in assets in exchange for its common stock to launch the business. On October 31, the company's records show the following items and amounts. Retained eamings, October 1 as $0. $ 9,390 16,020 3,830 45,980 18,55e 9, 860 84,580 Cash dividends Cash Accounts receivable Office supplies Land Office equipment Accounts payable Common stock $ 2,650 Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses 16,020 4, 190 7,570 830 650 Exercise 1-15 Preparing an Income statement LO P2 Using the above information prepare an October income statement for the business. ERN ST CON SULTING Income Statementarrow_forward[The following information applies to the questions displayed below.] On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,580 in assets in exchange for its common stock to launch the business. On October 31, the company's records show the following items and amounts. Retained eamings, October 1 as $0. $ 9,390 16,020 3,830 45,980 18,550 9,060 84,580 Cash dividends Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses $ 2,650 16,820 4,190 7,570 830 650 Cash Accounts receivable Office supplies Land office equipment Accounts payable Common stock Exercise 1-17 Preparlng a balance sheet LO P2 Using the above information prepare an October 31 balance sheet for Ernst Consulting. ERNST CONSULTING Balance Sheet 2$arrow_forwardces Required information [The following information applies to the questions displayed below.] On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,780 in assets in exchange for its common stock to launch the business. On October 31, the company's records show the following items and amounts. Retained earnings, October 1 as $0. Cash Accounts receivable Office supplies Land Office equipment Accounts payable Common stock $ 8,990 16,540 3,930 45,980 18,660 9,170 84,780 Cash dividends Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses ERNST CONSULTING Statement of Retained Earnings Using the above information prepare an October statement of retained earnings for Ernst Consulting. $ 2,830 16,540 4,300 7,740 850 670 Sarrow_forward
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