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 4.9E
Transaction Analysis: Journal
| Cash | $40,000 |
| 100,000 | |
| Equipment | 550,000 |
| Accounts Payable | 14,500 |
| Salaries Payable | 6,000 |
| Notes Payable | 108,000 |
| Common Stock | 235,000 |
| 326,500 |
The following transactions occurred during the current year
- a. On January 1, the owners invested a total of $150,000 (the par value of the stock) as an additional capital contribution. In exchange, the corporation issued the owners 50,000 shares of common stock.
- b. On March 23, the company paid cash to purchase office equipment for $108,000.
- c. On April 18, the company made a payment on the note due to a bank, $10,000.
- d. On May 5, collected the balance of accounts receivable due from the prior year.
- e. On May 31, salaries were accrued for time worked in May in the amount of $2,000 These salaries will be paid in June.
- f. On June 30, the company paid cash to employees for salaries accrued on May 31 as well as the balance due from the prior year.
- g. On July 8, the company paid cash for accounting fees in the amount of $6,000.
- h. On September 6, the company performed repair work on a fleet of vehicles at a total charge of $76,000. The customer paid cash for half of the transaction and put the other half on its credit account with G&S.
- i. On November 9, the customer who engaged G&S to do the repair work on September 6 paid off its account balance with cash.
- j. On December 15, the company made a $10,000 cash payment to purchase parts and supplies (record in Parts and Supplies Inventory).
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. - c. Post each journal entry to the t-accounts and determine the ending balances of each account at the end of the year.
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Students have asked these similar questions
Gojo Company had the following transactions involving current assets and current liabilities
during February 2021.
Feb 3 Collected accounts receivable of $15,000.
7 Purchased equipment for $23,000 cash.
14 Paid accounts payable of S12,000.
18 Declared cash dividends, $4,000. The dividend will be paid next month.
Additional information:
As of 1* February 2020, current assets were $120,000 and current liabilities were $40,000.
Required:
1) Compute the current ratio as of the beginning of the month.
2) Compute the current ratio after evaluating the effect of each transaction (Consider the
effect of each transaction continuously). Did Gojo Company's current ratio improve,
deteriorate, or hold steady after each transaction? Show detailed workings to support your
answer.
Indigo Company has been operating for several years, and on December 31, 2025, presented the following balance sheet.
Cash
Receivables
Inventory
Plant assets (net)
(a) Current ratio
(b)
(c)
(d)
INDIGO COMPANY
Balance Sheet
December 31, 2025
$40,800 Accounts payable
74,700 Mortgage payable
The net income for 2025 was $24,828. Assume that total assets are the same in 2024 and 2025.
Compute each of the following ratios. (Round answers to 2 decimal places, e.g. 1.59 or 45.87%.)
Acid-test ratio
88,900
209,400
$413,800
Debt to assets ratio
Common stock ($1 par)
Retained earnings
Return on assets
%
$70,000
126,555
164,500
52,745
%
$413,800
Skysong, Inc. had the following transactions involving current assets and current liabilities during February 2019.
Feb. 3
Collected accounts receivable of $18,900.
7
Purchased equipment for $36,800 cash.
11
Paid $3,500 for a 1-year insurance policy.
14
Paid accounts payable of $12,400.
18
Declared cash dividends, $8,500.
Additional information:As of February 1, 2019, current assets were $135,000 and current liabilities were $35,400.Compute the current ratio as of the beginning of the month and after each transaction. (Round all answers to 2 decimal places, e.g. 1.83 : 1.)
Current ratio as of February 1, 2019
enter current ratio
:1
Feb. 3
enter the current ratio as of February 3
:1
Feb. 7
enter the current ratio as of February 7
:1
Feb. 11
enter the current ratio as of February 11
:1
Feb. 14
enter the current ratio as of February 14
:1
Feb. 18
enter the current ratio as of February 18
:1
Chapter 4 Solutions
Intermediate Accounting
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