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 2.9E
Analyzing the Effects of Transactions In T-Accounts
Granger Service Company, Inc., was organized by Ted Granger and five other investors. The following activities occurred during the year:
- a. Received $70,000 cash from the investors: each was issued 8,400 shares of common stock with a par value of $0.10 per share.
- b. Purchased equipment for use in the business at a cost of $18,000; one-fourth was paid in cash and the company signed a note for the balance (due in six months).
- c. Signed an agreement with a cleaning service to pay $120 per week for cleaning the corporate offices next year.
- d. Received an additional contribution from investors who provided $3,000 in cash and land valued at $15,000 in exchange for 1,000 shares of stock in the company.
- e. Lent $2,500 to one of the investors, w ho signed a note due in six months.
- f. Ted Granger borrowed $7,000 for personal use from a local bank, signing a one-year note.
Required:
- 1. Create T-accounts for the following accounts: Cash. Notes Receivable. Equipment. Land. Notes Payable. Common Stock, and Additional Paid-in Capital. Beginning balances are $0. For each of the transactions (a) through (f), record the effects of the transaction in the appropriate T-accounts. Include good referencing and totals for each T-account.
- 2. Using the balances in the T-accounts, fill in the following amounts for the
accounting equation: Assets $_____ = Liabilities $_________ + Stockholders’ Equity $__________
- 3. Explain your response to events (c) and (f).
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Following are the transactions of JonesSpa Corporation, for the month of January.
a Borrowed $30,000 from a local bank; the loan is due in 9 months.
b. Lent $10,000 to an affiliate; accepted a note due in one year.
c. Sold to investors 100 additional shares of stock with a par value of $0.10 per share and a market price of $5 per share; received
cash.
d. Purchased $15,000 of equipment, paying $5,000 cash and signing a note for the rest due in one year.
e. Declared $2,000 in cash dividends to stockholders, to be paid in February.
Prepare the journal entry to record each of the above transactions for the month of January,
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
View transaction list
Journal entry worksheet
Record the receipt of the bank loan of $30,000.
Note: Enter debits before credits
Transaction
5
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General Journal
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The following selected transactions occurred for Corner Corporation:
Feb. 1
Purchased 400 shares of the company’s own common stock at $20 cash per share; the stock is now held in treasury.
July 15
Issued 100 of the shares purchased on February 1 for $30 cash per share.
Sept. 1
Issued 60 more of the shares purchased on February 1 for $15 cash per share.
Required:
Show the effects of each transaction on the accounting equation.
Give the indicated journal entries for each of the transactions.
What impact does the purchase of treasury stock have on dividends paid?
What impact does the reissuance of treasury stock for an amount higher than the purchase price have on net income?
During the year the following selected transactions affecting stockholders' equity occurred for
Orlando Corporation:
a. April 1: Repurchased 240 shares of the company's common stock at $30 cash per share.
b. June 14: Sold 60 of the shares purchased on April 1 for $35 cash per share.
c. September 1: Sold 50 of the shares purchased on April 1 for $25 cash per share.
Required:
1. Prepare journal entries for each of the above transactions.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the
first account field.
View transaction list
Journal entry worksheet
1
2
3
Repurchased 240 shares of the company's common stock at $30 cash per
share.
Note: Enter debits before credits.
Date
April 01
General Journal
Debit
Credit
Record entry
Clear entry
View general journal
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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