Financial Accounting (Connect NOT Included)
Financial Accounting (Connect NOT Included)
4th Edition
ISBN: 9781259930492
Author: SPICELAND
Publisher: MCG
Question
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Chapter 4, Problem 5PA

1.

To determine

Record the given transactions.

1.

Expert Solution
Check Mark

Explanation of Solution

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Record the given transactions.

DateAccount TitleDebitCredit
October 02Cash$8,500 
 Service Revenue $8,500
 (To record the membership dues collected)  
    
October 05Cash$12,000 
 Common Stock $12,000
 (To record the common stock issued)  
    
October 09Equipment$9,600 
 Cash $4,800
 Account Payable $4,800
 (To record the purchase of equipment)  
    
October 12Advertising Expense$1,500 
 Cash $1,500
 (To record the advertising expenses paid)  
    
October 19Dividends$4,400 
 Cash $4,400
 (To record the dividends issued)  
    
October 22Prepaid Insurance$6,900 
 Cash $6,900
 (To record the prepaid expenses)  
    
October 25Cash$5,600 
 Deferred Revenue $5,600
 (To record the membership dues collected in advance)  
    
October 30Utilities Expense$5,200 
 Utilities Payable $5,200
 (To record the utilities expenses)  
    
October 31Salaries Expense$7,300 
 Cash $7,300
 (To record the salaries paid)  

Table (1)

2.

To determine

Identify the transactions involving cash.

2.

Expert Solution
Check Mark

Answer to Problem 5PA

All the transactions are cash transactions except the Utilities which are purchased on account on October 30th.

Explanation of Solution

The transactions in which the cash is involved either as receipt or payment are alone recorded as cash transactions. The transactions in which no cash is involved include the purchase of utilities on account.

3.

To determine

Post the given cash transactions to Cash T-Account and compute the closing cash balance.

3.

Expert Solution
Check Mark

Answer to Problem 5PA

Cash Account
DateParticularsAmountDateParticularsAmount
October 01Opening cash balance$16,600October 09Equipment purchased$4,800
October 02Service Revenue$8,500October 12Advertising Expense$1,500
October 05Common Stock$12,000October 19Dividends$4,400
October 25Deferred Revenue$5,600October 22Prepaid Insurance$6,900
 October 31Salaries Expenses$7,300
$17,800$24,900

Explanation of Solution

T-account: T-account is the form of the ledger account, where the journal entries are posted to this account. It is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’. The components of the T-account are as follows:

a)      The title of the account

b)      The left or debit side

c)      The right or credit side

4.

To determine

Prepare statement of cash flows for the month of October for B Gym.

4.

Expert Solution
Check Mark

Answer to Problem 5PA

B Gym
Statement of Cash Flows
For the month ended October 31
ParticularsAmount ($)Amount ($)
Cash flows from Operating Activities  
Cash inflows:  
From Customers$14,100 
Cash outflows:  
Advertising expense($1,500) 
Prepaid insurance($6,900) 
Salaries expense($7,300) 
Net cash flow from Operating Activities ($1,600)
Cash flows from Investing Activities  
Purchase of boxing equipment($4,800) 
Net cash flow from Investing Activities ($4,800)
Cash flows from Financing Activities  
Issuance of Common Stock$12,000 
Payment of dividends($4,400) 
Net cash flow from Financing Activities $7,600
Net increase in cash $1,200
Cash at the beginning of the month $16,600
Cash at the end of the month $17,800

Table (2)

Explanation of Solution

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.

5.

To determine

Verify the net cash flows reported in the statement of cash flows equal the change in the cash balance for the month.

5.

Expert Solution
Check Mark

Answer to Problem 5PA

The net cash flows reported in the statement of cash flows for the month is $1,200.

Explanation of Solution

Calculate the net cash flows reported in the statement of cash flows equal the change in the cash balance for the month of October.

Net cash flow for the month = Closing Cash Balance  Opening Cash Balance =$17,800$16,600=$1,200

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Chapter 4 Solutions

Financial Accounting (Connect NOT Included)

Ch. 4 - Prob. 11SSQCh. 4 - Prob. 12SSQCh. 4 - Prob. 13SSQCh. 4 - Prob. 14SSQCh. 4 - Prob. 15SSQCh. 4 - Applying Excel #4-1 A company has the following...Ch. 4 - Applying Excel #4-2 A company has a beginning cash...Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQCh. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17RQCh. 4 - Prob. 18RQCh. 4 - Prob. 19RQCh. 4 - Prob. 20RQCh. 4 - Prob. 21RQCh. 4 - Prob. 22RQCh. 4 - Prob. 23RQCh. 4 - Prob. 24RQCh. 4 - Prob. 25RQCh. 4 - Prob. 26RQCh. 4 - Prob. 27RQCh. 4 - Prob. 28RQCh. 4 - Prob. 29RQCh. 4 - Prob. 30RQCh. 4 - Prob. 1BECh. 4 - Prob. 2BECh. 4 - Prob. 3BECh. 4 - Prob. 4BECh. 4 - Prob. 5BECh. 4 - Prob. 6BECh. 4 - Prob. 7BECh. 4 - Prob. 8BECh. 4 - Prob. 9BECh. 4 - Prob. 10BECh. 4 - Prob. 11BECh. 4 - Prob. 12BECh. 4 - Prob. 13BECh. 4 - Prob. 14BECh. 4 - Prob. 15BECh. 4 - Prob. 16BECh. 4 - Prob. 17BECh. 4 - Prob. 18BECh. 4 - Prob. 1ECh. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Prob. 4ECh. 4 - E4–5 Below are several amounts reported at the end...Ch. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - E4-15 Below are several transactions for Meyers...Ch. 4 - Prob. 16ECh. 4 - Prob. 17ECh. 4 - Prob. 18ECh. 4 - Prob. 19ECh. 4 - Prob. 20ECh. 4 - Prob. 1PACh. 4 - Prob. 2PACh. 4 - Prob. 3PACh. 4 - P4-4A Below is a summary of all transactions of...Ch. 4 - Prob. 5PACh. 4 - Prob. 1PBCh. 4 - Prob. 2PBCh. 4 - Prob. 3PBCh. 4 - Prob. 4PBCh. 4 - Prob. 5PBCh. 4 - Prob. 1APCh. 4 - Prob. 2APCh. 4 - Prob. 3APCh. 4 - Prob. 4APCh. 4 - Prob. 5APCh. 4 - Prob. 7AP
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