Financial Accounting 8th Edition
8th Edition
ISBN: 9781119210818
Author: Kimmel, Weygandt, Kieso
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 3, Problem 3.2E
To determine
Accounting equation represents the relationship between assets, liabilities and shareholders’ equity. It is the foundation of double entry system and it helps to analyze the business transaction. Accounting equation displays the total assets are equal to the total liabilities and shareholders’ equities. Thus, the accounting equation is,
To show: The effect of each transaction on the accounting equation and explanation for changes to
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Sheridan Company entered into these transactions during May 2017, its first month of operations.
1. Stockholders invested $35,000 in the business in exchange for common stock of the company
Purchased computers for office use for $32,900 from Ladd on account.
2.
3.
Paid $3,600 cash for May rent on storage space.
4. Performed computer services worth $18,100 on account.
Performed computer services for Wharton Construction Company for $5,900 cash.
Paid Western States Power Co. $7,100 cash for energy usage in May.
Paid Ladd for the computers purchased in (2).
Incurred advertising expense for May of $1,800 on account.
9. Received $11,900 cash from customers for contracts billed in (4).
5.
6.
7.
8.
The Moon Service Inc. engaged in the following transactions during the month of November 2015:• Nov. 01: Issued 20,000 shares of common stock at $20 per share• Nov. 03: Paid office rent for the month of November $500.• Nov. 06: Purchased office supplies $250.• Nov. 12: Purchased office equipment on account $4,500• Nov. 16: Purchased business car for $25,000. Paid $10,000 cash and issued a note for the balance.• Nov. 21: Billed clients $24,000 on account.• Nov. 25: Declared dividends $3,000. The amount of dividends will be distributed in December.• Nov. 28: Paid utility bills for the month of November $180.• Nov. 29: Received $20,000 cash from clients billed on November 21.• Nov. 30: Paid salary for the month of November $7,500Required: Record the above transactions in a general journal.
During 2017, its first year of operations as a delivery service, Bramble Corp. entered into the following transactions.
1.
Issued shares of common stock to investors in exchange for $119,000 in cash.
2.
Borrowed $38,000 by issuing bonds.
3.
Purchased delivery trucks for $64,000 cash.
4.
Received $15,000 from customers for services performed.
5.
Purchased supplies for $6,000 on account.
6.
Paid rent of $4,300.
7.
Performed services on account for $11,300.
8.
Paid salaries of $26,700.
9.
Paid a dividend of $10,800 to shareholders.
Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders’ Equity in the far right column.
Chapter 3 Solutions
Financial Accounting 8th Edition
Ch. 3 - Prob. 1QCh. 3 - Can a business enter into a transaction that...Ch. 3 - Are the followingevents recorded in the accounting...Ch. 3 - Prob. 4QCh. 3 - Prob. 5QCh. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Misty Reno, a beginning accounting student,...Ch. 3 - Prob. 9QCh. 3 - What is the normal balance for each of these...
Ch. 3 - Prob. 11QCh. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - Prob. 14QCh. 3 - Prob. 15QCh. 3 - (a) When entering a transaction in the journal,...Ch. 3 - (a) Should accounting transaction debits and...Ch. 3 - Journalize these accounting transactions. (a)...Ch. 3 - Prob. 19QCh. 3 - Prob. 20QCh. 3 - Prob. 21QCh. 3 - Prob. 22QCh. 3 - Prob. 3.1BECh. 3 - Prob. 3.2BECh. 3 - Prob. 3.3BECh. 3 - For each of the following accounts, indicate the...Ch. 3 - Prob. 3.5BECh. 3 - Prob. 3.6BECh. 3 - Prob. 3.7BECh. 3 - Tilton Corporation has the following transactions...Ch. 3 - Prob. 3.9BECh. 3 - Selected transactions for Montes Company are...Ch. 3 - Prob. 3.11BECh. 3 - Prob. 3.12BECh. 3 - Prob. 3.1DIECh. 3 - Prob. 3.2DIECh. 3 - Prob. 3.3DIECh. 3 - Prob. 3.4DIECh. 3 - Prob. 3.5DIECh. 3 - Prob. 3.1ECh. 3 - Prob. 3.2ECh. 3 - Prob. 3.3ECh. 3 - Prob. 3.4ECh. 3 - Prob. 3.5ECh. 3 - Prob. 3.6ECh. 3 - Prob. 3.7ECh. 3 - Prob. 3.8ECh. 3 - Prob. 3.9ECh. 3 - Prob. 3.10ECh. 3 - Prob. 3.11ECh. 3 - Prob. 3.12ECh. 3 - Prob. 3.13ECh. 3 - Prob. 3.14ECh. 3 - Prob. 3.15ECh. 3 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - Prob. 3.20ECh. 3 - Prob. 3.21ECh. 3 - Prob. 3.22ECh. 3 - Prob. 3.1APCh. 3 - Prob. 3.2APCh. 3 - Prob. 3.3APCh. 3 - Prob. 3.4APCh. 3 - Prob. 3.5APCh. 3 - Prob. 3.6APCh. 3 - Prob. 3.7APCh. 3 - Prob. 3.8APCh. 3 - Prob. 3.9APCh. 3 - Prob. 3.10APCh. 3 - Prob. 3.11APCh. 3 - Prob. 3.1EYCTCh. 3 - Prob. 3.2EYCTCh. 3 - Prob. 3.3EYCTCh. 3 - Prob. 3.4EYCTCh. 3 - Prob. 3.6EYCTCh. 3 - Prob. 3.7EYCTCh. 3 - Prob. 3.8EYCTCh. 3 - Prob. 3.9EYCTCh. 3 - Prob. 3.11EYCTCh. 3 - Prob. 3.1IFRS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The following transactions occurred during March 2016 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. [These are the same transactions analyzed in Exercise 2–1, when we determined their effect on elements of the accounting equation.] 1. Issued 30,000 shares of capital stock in exchange for $300,000 in cash. 2. Purchased equipment at a cost of $40,000. $10,000 cash was paid and a note payable was signed for the balance owed. 3. Purchased inventory on account at a cost of $90,000. The company uses the perpetual inventory system. 4. Credit sales for the month totaled $120,000. The cost of the goods sold was $70,000. 5. Paid $5,000 in rent on the warehouse building for the month of March. 6. Paid $6,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2016. 7. Paid $70,000 on account for the merchandise purchased in 3. 8. Collected $55,000 from customers on account. 9. Recorded depreciation expense of…arrow_forwardWINTER WHOLESALE COMPANY BEGAN OPERATIONSON AUGUST, 2021. THE FOLLOWING TRANSACTIONS TOOK PLACE DURING THE MONTH OF AUGUST A. OWNERS INVESTED P 50,000 CASH IN THE CORPORATION IN EXCHANGE FOR 5,000 SHARES OF EQUITY CAPITAL B. EQUIPMENT WAS PURCHASED FOR P 20,000 CASH C. ON THE FIRST DAY OF AUGUST, P 6,000 RENT ON A BUILDING WAS PAID FOR THE MONTHS OF AUGUST AND SEPTEMBER. D. MERCHANDISE COSTING P 38,000 WAS PURCHASED ON ACCOUNT. THE COMPANY USES PERPETUAL INVENTORY SYSTEM. E. P 30,000 WAS BORROWED FROM A LOCAL BANK, AND A NOTE PAYABLE WAS SIGNED F. CREDIT SALES FOR THE MONTH WERE P 40,000. THE COST OF MERCHANDISE SOLD WAS P 22,000. G. P 15,000 WAS COLLECTED ON ACCOUNT FROM CUSTOMERS H. P 20,000 WAS PAID ON ACCOUNT TO SUPLIERS OF MERCHANDISE I. SALARIES OF P7,000 WERE PAID TO EMPLOYEES FOR AUGUST J. A BILL FOR P 2,000 WAS RECEIVED FROM A LOCAL UTILITY COMPANY FOR THE MONTH OF AUGUST K. P 20,000 CASH WAS LOANED TO ANOTHER COMPANY, EVIDENCED BY A NOTE RECEIVABLE. L. THE CORPORATION PAID…arrow_forwardThe Moon Service Inc. engaged in the following transactions during the month of November 2015: 01: Issued 20,000 shares of common stockat $20 per share 03: Paid office rent for the month of November $500. 06: Purchased office supplies $250. 12: Purchased office equipment on account $4,500 16: Purchased business car for $25,000. Paid $10,000 cash and issued a note for the balance. 21: Billed clients $24,000 on account. 25: Declared dividends $3,000. The amount of dividends will be distributed in December. 28: Paid utility bills for the month of November $180. 29: Received $20,000 cash from clients billed on November 21. 30: Paid salary for the month of November $7,500 Required: Record the above transactions in a general journal.arrow_forward
- During 2018, its first year of operations as a delivery service, Carla Vista Corp. entered into the following transactions. The fiscal year end for Carla Vista is December 31. 1. Issued common shares to investors in exchange for $ 90,000 in cash. 2. Borrowed $ 46,000 cash from the bank, due 2020. 3. Purchased delivery vehicles for $ 61,000 cash. 4. Received $ 24,000 from customers for services provided. 5. Purchased supplies for $ 3,700 on account. 6. Paid rent of $ 5,500. 7. Performed services on account for $ 9,000. 8. Paid salaries of $ 28,000. 9. Declared and paid a dividend of $ 12,000 to shareholders. 10. Paid income taxes of $ 200 for the month. Prepare journal entries to record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Sr No Account Titles and…arrow_forwardDuring 2018, its first year of operations as a delivery service, Carla Vista Corp. entered into the following transactions. The fiscal year end for Carla Vista is December 31. 1. Issued common shares to investors in exchange for $ 90,000 in cash. 2. Borrowed $ 46,000 cash from the bank, due 2020. 3. Purchased delivery vehicles for $ 61,000 cash. 4. Received $ 24,000 from customers for services provided. 5. Purchased supplies for $ 3,700 on account. 6. Paid rent of $ 5,500. 7. Performed services on account for $ 9,000. 8. Paid salaries of $ 28,000. 9. Declared and paid a dividend of $ 12,000 to shareholders. 10. Paid income taxes of $ 200 for the month. Indicate the effect of each transaction on the accounting equation. Use the following format. (If an amount reduces the account balance then enter with a negative sign preceding the number e.g. -15,000 or in parenthesis e.g. (15,000).) Assets = Liabilities + Shareholders’ Equity…arrow_forwardThe following transactions pertain to the operations of Ewing Company for 2018: Acquired $24,900 cash from the issue of common stock. Provided $17,750 of services on account. Paid $17,800 cash on accounts payable. Performed services for $44,000 cash. Collected $5,200 cash from accounts receivable. Incurred $8,300 of operating expenses on account. Paid a $27,800 cash for one year’s rent in advance. Paid a $8,900 cash dividend to the stockholders. Paid $1,500 cash for supplies to be used in the future. Recognized $32,000 of accrued salary expense. given the events set up a statement of cash flows. There is no beginning balance to be recordedarrow_forward
- Maben Company was started on January 1, 2018, and experienced the following events during its first year of operation: 1. Acquired $30,000 cash from the issue of common stock. 2. Borrowed $40,000 cash from National Bank. 3. Earned cash revenues of $48,000 for performing services. 4. Paid cash expenses of $25,000. 5. Paid a $1,000 cash dividend to the stockholders. 6. Acquired an additional $20,000 cash from the issue of common stock. 7. Paid $10,000 cash to reduce the principal balance of the bank note. 8. Paid $53,000 cash to purchase land. 9. Determined that the market value of the land is $75,000. What is the balance in the Retained Earnings account immediately after Event 3 is recorded?arrow_forwardO. Tybalt invested $7,000 cash in the business during year 2017 (the December 31, 2016, credit balance of the O. Tybalt, Capital account was $122,100). Tybalt Construction is required to make a $9,000 payment on its long-term notes payable during 2018. Required:1a. Prepare the income statement for the calendar-year 2017.1b. Prepare the statement of owner's equity for the calendar-year 2017.1c. Prepare the classified balance sheet at December 31, 2017.2. Prepare the necessary closing entries at December 31, 2017.3. Use the information in the financial statements to compute the following ratios:arrow_forwardSanchez Company engaged in the following transactions during Year 1: 1) Started the business by issuing $45,200 of common stock for cash. 2) The company paid cash to purchase $28,000 of Inventory. 3) The company sold inventory that cost $17,600 for $34,600 cash. 4) Operating expenses incurred and paid during the year, $15,600. Sanchez Company engaged in the following transactions during Year 2: 1) The company paid cash to purchase $38,400 of inventory. 2) The company sold inventory that cost $34,400 for $61,000 cash. 3) Operating expenses incurred and paid during the year, $19,600. Note: Sanchez uses the perpetual inventory system. What is the amount of retained earnings that will be shown on the balance sheet at December 31, Year 2? Multiple Choice $7,000arrow_forward
- Carlos Ramirez and Camila Garza organized New World Book Store as a corporation; each contributed $80,000 cash to start the business and received 4,000 shares of common stock. The store completed its first year of operations on December 31, 2014. On that date, the following financial items for the year were determined: December 31, 2014, cash on hand and in the bank, $75,600; December 31, 2014, amounts due from customers from sales of books, $39,000; unused portion of store and office equipment, $73,000; December 31, 2014, amounts owed to publishers for books purchased, $12,000; one-year note payable to a local bank for $3,000. No dividends were declared or paid to the stockholders during the year. Complete the following balance sheet as of the end of 2014. 2. What was the amount of net income for the year? (Hint: Use the retained earnings equation [Beginning Retained Earnings + Net Income − Dividends = Ending Retained Earnings] to solve for net income.)arrow_forwardOn April 30, 2018, the balance sheet of China Collectibles showed total assets of $700,000, total liabilities of $400,000, and owners' equity of $300,000. The following transactions occurred in May of 2018: (1) Capital stock was issued in exchange for $165,000 cash. (2) The business purchased equipment for $360,000, paying $160,000 cash and issuing a note payable for $200,000. (3) The business paid $70,000 of its accounts payable. (4) The business collected $54,000 of its accounts receivable. Compute the following as of May 31, 2018: (A.) Total assets (B.) Total liabilities (C.) Owners' equityarrow_forwardSunshine Company began operations on January 1, 2020. In its first year, the following transactions occurred: 1. Issued common shares for $368,000 cash. 2. Borrowed $57,000 from the bank for a five-year term. 3. Purchased equipment for $206,000 cash. 4. Purchased supplies, on account, for $6,500. 5. Sales on account amounted to $101,000. 6. Collected $86,000 from customers for services provided. 7. Paid wages of $35,000 to employees. 8. Paid $24,500 for utilities (telephone, electricity, heat, & water). For Sunshine Company, the following adjustments are required prior to them being able to prepare financial statements for the year ended December 31, 2020. 1. The bank loan was taken out on January 1st and has an interest rate of 9%. Interest is due January 1st of the following year. 2. The equipment was purchased on January 1st and has an estimated useful life of 10 years and a residual value of $13,500. The company uses the straight-line depreciation…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
IAS 29 Financial Reporting in Hyperinflationary Economies: Summary 2021; Author: Silvia of CPDbox;https://www.youtube.com/watch?v=55luVuTYLY8;License: Standard Youtube License