Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 4, Problem 4.3E
Transaction Analysis; Journal Entries. Master Mind Games, Inc is a new corporation started on January 1, 2018. The following transactions occurred during the first year of operations.
- a. On January 1, the owners invested a total of $50,000 (the par value of the stock) to start the company In exchange the corporation issued the owners 5.000 shares of common stock.
- b. On March 14, the company paid cash to purchase office equipment for $10,000.
- c. On April 6, the company obtained a note from the bank for $100,000.
- d. On May 31, salaries were accrued for time worked in May in the amount of $12,000. These salaries will be paid in June.
- e. On June 15, the company paid cash to employees for salaries accrued on May 31.
- f. On July 12, the company paid cash for legal fees associated with the startup of the company in the amount of $5,000.
- g. On September 6, the company sold $32,000 of merchandise to a large customer. The customer paid cash for half of the transaction and put the other half on her credit account with the vendor (ignore the inventory and cost of goods sold entry of this transaction)
- h. On November 1, the customer that purchased goods on September 6 paid off its credit account balance of $16,000 with cash.
- i. On December 14, the company made a $10,000 cash payment towards its outstanding bank note balance.
Required
- a. Show the effect of each transaction on assets, liabilities, and equity using the
accounting equation. - b. Prepare the
journal entry for each transaction. Omit explanations.
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Record in the general journal, including explanations for Flower Incorporation from the following
transactions:
December 1
Issued capital stock of 34000 shares at $11.50 per shares and received cash.
Purchased a proton car from Lee Company for $7000 on account, 2/10 term.
Provided service on account to Pearson Inc. and billed $71 450.
2
4
9
Paid to Lee Company as full settlement.
Obtain an overdraft facility of $30000 from AIA Bank.
20 Purchased a Plant from Dynasty's Warehouse for $25 000; paid $10,000 cash and
issued a note payable due in 10 days for the balance.
15
First National Bank buys and sells securities. The company's fiscal year ends on December 31. The following selected transactions
relating to First National's trading account occurred during the year.
December 20 Purchases 180,000 shares in Classic Computers common stock for $684,000 ($3.80 per share).
December 28 Receives cash dividends of $4,800 from the Classic Computers shares.
Required:
How will each of these transactions affect the financial statements?
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Complete this question by entering your answers in the tabs below.
December 20 December 28
Purchases 180,000 shares in Classic Computers common stock for $684,000 ($3.80 per share). How will this transaction affect the financial statements?
Note: Amounts to be deducted should be indicated by a minus sign.
Assets
Balance Sheet
Liabilities
Stockholders' Equity
Revenues &
Common Stock
Retained Earnings
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Chapter 4 Solutions
Intermediate Accounting
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