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Chapter 1: Q28E (page 40)

Using the accounting equation to analyze business transactions The analysis of the first eight transactions of Advanced Accounting Service follows. Describe each transaction ASSETS EQUITY Common − Stock Contributed Capital Dividends + Retained Earnings − − Salaries Expense Service Revenue + + + + + + + + + + + + + + + + + + + + + + + + + + + 1 2 Bal. 3 Bal. 4 Bal. 5 Bal. 6 Bal. 7 Bal. 8 Bal. Accounts Receivable Cash +13,400 \(13,400 \)13,400 +410 \(13,810 \)13,810 \(13,810 \)13,810 +31,000 \(31,000 \)31,000 +190 \(31,190 –410 \)30,780 –8,000 \(22,780 +790 \)23,570 –1,500 \(22,070 +13,400 \)13,400 \(13,400 \)13,400 –8,000 \(5,400 \)5,400 \(5,400 +31,000 \)31,000 \(31,000 \)31,000 \(31,000 \)31,000 \(31,000 \)31,000 +3,800 \(3,800 \)3,800 –190 \(3,610 \)3,610 \(3,610 \)3,610 \(3,610 +3,800 \)3,800 \(3,800 \)3,800 \(3,800 \)3,800 +790 \(4,590 \)4,590 −1,500 $1,500 LIABILITIES Accounts Payable

Short Answer

Expert verified

(1) Stockholder contribution

(2)Earning of Service Revenue on Account

(3) Purchase of equipment on account

(4) Collection on Account (Accounts Receivable)

(5) Purchase of equipment for cash

(6) Payment on Account (Accounts Payable)

(7) Earning of Service Revenue for Cash

(8) Payment of Salaries Expenses with Cash

Step by step solution

01

Explanation on Transaction Analysis

Trasaction analysis is the process in wffwct of the transaction on various accounts is analyzed.

02

Explanation on Accounting Equation

As per the accounting equation, affect of financial transaction of the business should be equal in both sides of the equation.

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Most popular questions from this chapter

Amos Sharp recently opened his own accounting firm on October 1, which he operates as a corporation. The name of the new entity is Amos Sharp, CPA. Sharp experienced the following events during the organizing phase of the new business and its first month of operations in 2018. Oct. 5 Sharp deposited \(45,000 in a new business bank account titled Amos Sharp, CPA. The business issued common stock to Sharp. 6 Paid \)300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, \(6,500. 10 Consulted with tax client and received \)3,300 for services rendered. 11 Paid utilities, \(340. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, \)16,000. 18 Paid office rent, \(1,800. 25 Received amount due from client that was billed on October 12. 27 Paid full amount of Accounts Payable created on October 7. 31 Cash dividends of \)3,800 were paid to stockholders. Requirements 1. Analyze the effects of the events on the accounting equation of Amos Sharp, CPA. Use a format similar to Exhibit 1-6. 2. Prepare the following financial statements: a. Income statement. b. Statement of retained earnings. c. Balance sheet

What is the calculation for ROA? Explain what ROA measures

Preparing the balance sheet Requirements 1. Prepare the balance sheet for Wilson Towing Service as of June 30, 2018. 2. What does the balance sheet report?

Let’s examine a case using Greg’s Tunes and Sal’s Silly Songs. It is now the end of the first year of operations, and the stockholders want to know how well each business came out at the end of the year. Neither business kept complete accounting records, and no dividends were paid. The businesses throw together the data shown on the next page at year-end: \( 23,000 8,000 35,000 22,000 \) 10,000 6,000 44,000 9,000 Total Assets Common Stock Total Revenues Total Expenses Greg’s Tunes: Sal’s Silly Songs: Total Liabilities Common Stock Total Expenses Net Income To gain information for evaluating the businesses, the stockholders ask you several questions. For each answer, you must show your work to convince the stockholders that you know what you are talking about. Requirements 1. Which business has more assets?

Cosmo Thomas started a new business, Thomas Gymnastics, and completed the following transactions during December: Dec. 1 Received \(19,000 cash from Thomas in exchange for common stock. 2 Received \)3,800 cash from customers for services performed. 5 Paid \(300 cash for office supplies. 9 Performed services for a customer and billed the customer for services rendered, \)4,500. 10 Received \(150 invoice for utilities due in two weeks. 15 Paid for advertising in the local paper, \)350. 20 Paid utility invoice received on Dec. 10. 25 Collected cash in full from customer billed on Dec. 9. 28 Paid rent for the month, \(2,600. 28 Paid \)1,200 to assistant for wages. 30 Received \(1,600 cash from customers for services performed. 31 Cash dividends of \)3,000 were paid to stockholders. Analyze the effects of the transactions on the accounting equation of Thomas Gymnastics using a format similar to Exhibit 1-6.
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