Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 2, Problem 2.1PA
Determining Financial Statement Effects of Various Transactions
Mallard Incorporated (MI) is a small manufacturing company that makes model trains to sell to toy stores. It has a small service department that repairs customers’ trains for a fee. The company has been in business for five years. At the end of the previous year, the accounting records reflected total assets of $500,000 and total liabilities of $200,000. During the current year, the following summarized events occurred:
- a. Issued additional shares of common stock for $100,000 cash.
- b. Borrowed $120,000 cash from the bank and signed a 10-year note.
- c. Built an addition on the buildings for $200,000 and paid cash to the contractor.
- d. Purchased equipment for the new addition for $30,000, paying $3,000 in cash and signing a note due in six months for the balance.
- e. Returned a $3,000 piece of equipment, from (d), because it proved to be defective; received a reduction of the note payable.
- f. Purchased a delivery truck (equipment) for $10,000; paid $7,000 cash and signed a nine- month note for the remainder.
- g. A stockholder sold $5,000 of his stock in Mallard Incorporated to his neighbor.
Required:
- 1. Complete the spreadsheet that follows, using plus ( + ) for increases and minus (−) for decreases for each account, The first transaction is used as an example.
- 2. Did you include event (g) in the spreadsheet? Why or why not?
- 3. Based on beginning balances plus the completed spreadsheet, provide the following amounts (show computations);
- a. Total assets at the end of the year.
- b. Total liabilities at the end of the year.
- c. Total stockholders’ equity at the end of the year.
- 4. As of the current year-end, has the financing for MI’s investment in assets primarily come from liabilities or stockholders’ equity?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Income Statement
Goldfinger Corporation had account balances at the end of the current year as follows: sales revenue, $13,600; cost of goods sold, $8,300; operating expenses, $3,200; and income tax expense, $630. Assume
shareholders owned 500 shares of Goldfinger's common stock during the year.
Prepare Goldfinger's income statement for the current year.
GOLDFINGER CORPORATION
Income Statement
For the Year Ended December 31, Current Year
Sales revenue
Mallard Incorporated (MI) is a small manufacturing company that makes model trains to sell to toy stores. It has a small service
department that repairs customers' trains for a fee. The company has been in business for five years. At the end of the previous year,
the accounting records reflected total assets of $650,000 and total liabilities of $275,000. During the current year, the following
summarized events occurred:
a. Issued additional shares of common stock for $145,000 cash.
b. Borrowed $161,000 cash from the bank and signed a 10-year note.
c. Built an addition on the buildings for $270,000 and paid cash to the contractor.
d. Purchased equipment for the new addition for $44.500. paying $4,450 in cash and signing a note for the balance due in two years.
e. Returned a $4,450 piece of equipment, from (d), because it proved to be defective; received a reduction of the notes payable.
f. Purchased a delivery truck (equipment) for $32,250; paid $22,575 cash and signed a two-year note…
During the year the following selected transactions affecting stockholders' equity occurred for
Orlando Corporation:
a. April 1: Repurchased 240 shares of the company's common stock at $30 cash per share.
b. June 14: Sold 60 of the shares purchased on April 1 for $35 cash per share.
c. September 1: Sold 50 of the shares purchased on April 1 for $25 cash per share.
Required:
1. Prepare journal entries for each of the above transactions.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the
first account field.
View transaction list
Journal entry worksheet
1
2
3
Repurchased 240 shares of the company's common stock at $30 cash per
share.
Note: Enter debits before credits.
Date
April 01
General Journal
Debit
Credit
Record entry
Clear entry
View general journal
Chapter 2 Solutions
Fundamentals of Financial Accounting
Ch. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Define a transaction anti give an example of each...Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the basic accounting equation?Ch. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - What is a journal entry? What is the typical...Ch. 2 - What is a T-account? What is its purpose?Ch. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Which of the following is not an asset account? a....Ch. 2 - Which of the following statements describe...Ch. 2 - Total assets on a balance sheet prepared on any...Ch. 2 - The duality of effects can best be described as...Ch. 2 - The T-account is used to summarize which of the...Ch. 2 - Prob. 6MCCh. 2 - A company was recently formed with 50,000 cash...Ch. 2 - Which of the following statements would be...Ch. 2 - Prob. 9MCCh. 2 - Prob. 10MCCh. 2 - Prob. 2.1MECh. 2 - Prob. 2.2MECh. 2 - Matching Terms with Definitions Match each term...Ch. 2 - Prob. 2.4MECh. 2 - Prob. 2.5MECh. 2 - Prob. 2.6MECh. 2 - Prob. 2.7MECh. 2 - Identifying Events as Accounting Transactions Half...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Preparing Journal Entries For each of the...Ch. 2 - Posting to T-Accounts For each of the transactions...Ch. 2 - Reporting a Classified Balance Sheet Given the...Ch. 2 - Prob. 2.13MECh. 2 - Prob. 2.14MECh. 2 - Identifying Transactions and Preparing Journal...Ch. 2 - Prob. 2.16MECh. 2 - Prob. 2.17MECh. 2 - Prob. 2.18MECh. 2 - Prob. 2.19MECh. 2 - Prob. 2.20MECh. 2 - Prob. 2.21MECh. 2 - Prob. 2.22MECh. 2 - Prob. 2.23MECh. 2 - Prob. 2.24MECh. 2 - Prob. 2.25MECh. 2 - Prob. 2.1ECh. 2 - Prob. 2.2ECh. 2 - Classifying Accounts and Their Usual Balances As...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 2.5ECh. 2 - Recording Journal Entries Refer to E2-4. Required:...Ch. 2 - Prob. 2.7ECh. 2 - Analyzing the Effects of Transactions in...Ch. 2 - Inferring Investing and Financing Transactions and...Ch. 2 - Analyzing Accounting Equation Effects, Recording...Ch. 2 - Recording Journal Entries and Preparing a...Ch. 2 - Analyzing the Effects of Transactions Using...Ch. 2 - Explaining the Effects of Transactions on Balance...Ch. 2 - Prob. 2.14ECh. 2 - Prob. 2.15ECh. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Prob. 2.2PBCh. 2 - Prob. 2.3PBCh. 2 - Prob. 2.1SDCCh. 2 - Prob. 2.2SDCCh. 2 - Prob. 2.4SDCCh. 2 - Prob. 2.5SDCCh. 2 - Accounting for the Establishment of a Business...
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
- During the year the following selected transactions affecting stockholders' equity occurred for Orlando Corporation: a. April 1: Repurchased 390 shares of the company's common stock at $38 cash per share. b. June 14: Sold 70 of the shares purchased on April 1 for $43 cash per share. c. September 1: Sold 60 of the shares purchased on April 1 for $33 cash per share. Required: 1. Prepare journal entries for each of the above transactions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Answer is not complete. No 1 Date April 01 General Journal Debit Credit Treasury stock 14,820 Cash 14,820 2 June 14 Cash Treasury stock Additional paid-in capital 3,010 2,660 350 3 September 01 Cash 1,980 Additional paid-in capital Treasury stock 300X 1,680 xarrow_forwardStock transactions for corporate expansion On December 1 of the current year, the following accounts and their balances appear in the ledger of Latte Corp., a coffee processor: At the annual stockholders meeting on March 31, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approximately 11,000,000. The plan provided (a) that a building, valued at 3,375,000, and the land on which it is located, valued at 1,500,000, be acquired in accordance with preliminary negotiations by the issuance of 125,000 shares of common stock, (b) that 40,000 shares of the unissued preferred stock be issued through an underwriter, and (c) that the corporation borrow 4,000,000. The plan was approved by the stockholders and accomplished by the following transactions: Instructions Journalize the entries to record the May transactions.arrow_forwardLongmont Corporation earned net income of $90,000 this year. The company began the year with 600 shares of common stock and issued 500 more on April 1. They issued $5,000 in preferred dividends for the year. What is the numerator of the EPS calculation for Longmont?arrow_forward
- The following selected transactions occurred for Corner Corporation: Feb. 1 Purchased 400 shares of the company’s own common stock at $20 cash per share; the stock is now held in treasury. July 15 Issued 100 of the shares purchased on February 1 for $30 cash per share. Sept. 1 Issued 60 more of the shares purchased on February 1 for $15 cash per share. Required: Show the effects of each transaction on the accounting equation. Give the indicated journal entries for each of the transactions. What impact does the purchase of treasury stock have on dividends paid? What impact does the reissuance of treasury stock for an amount higher than the purchase price have on net income?arrow_forwardGoldfinger Corporation had account balances at the end of the current year as follows: sales revenue, $29,000; cost of goods sold, $12,000; operating expenses, $6,200; and income tax expense, $4,320. Assume shareholders owned 4,000 shares of Goldfinger's common stock during the year. Prepare Goldfinger's income statement for the current year.arrow_forwardPrepare journal entries to record the following transactions and events of Kodax Company. Year 1 Jan. 2 Purchased 30,000 shares of Grecco Co. common stock for $411,000 cash. Grecco has 90,000 shares of common stock outstanding, and its activities will be significantly influenced by Kodax. Sep. 1 Grecco declared and paid a cash dividend of $1.50 per share. Dec. 31 Grecco announced that net income for the year is $486,900. Year 2 June 1 Grecco declared and paid a cash dividend of $2.10 per share. Dec. 31 Grecco announced that net income for the year is $702,750. Dec. 31 Kodax sold 3,000 shares of Grecco for $71,000 cash.arrow_forward
- During the year, the following selected transactions affecting stockholders' equity occurred for Navajo Corporation: a. February 1: Repurchased 240 shares of the company's common stock at $22 cash per share. b. July 15: Sold 130 of the shares purchased on February 1 for $23 cash per share. c. September 1: Sold 100 of the shares purchased on February 1 for $21 cash per share. Required: 1. Prepare the journal entry required for each of the above transactions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 2 Repurchased 240 shares of the company's common stock at $22 cash per share. Date February 01 3 Note: Enter debits before credits. Record entry General Journal Clear entry Prev Debit 1 of 8 Credit View general journal ‒‒‒ ‒‒‒ ‒‒‒ Next > *********arrow_forwardTarrant Corporation was organized this year to operate a financial consulting business. The charter authorized the following stock: common stock, $18 par value, 12,700 shares authorized. During the year, the following selected transactions were completed: a. Sold 6,300 shares of common stock for cash at $36 per share. b. Sold 2,300 shares of common stock for cash at $41 per share. c. At year-end, the company reported net income of $7,200. No dividends were declared. E11-5 Part 2 2. Prepare the stockholders' equity section of the balance sheet at the end of the year. Note: Amounts to be deducted should be indicated by a minus sign. Stockholders' equity Contributed capital: TARRANT CORPORATION Balance Sheet (Partial) At December 31, This year Total contributed capital Total stockholders' equity $ 0 0arrow_forwardThe following selected transactions occurred for Corner Corporation:Feb. 1 Purchased 400 shares of the company’s own common stock at $20 cash per share;the stock is now held in treasury.July 15 Issued 100 of the shares purchased on February 1 for $30 cash per share.Sept. 1 Issued 60 more of the shares purchased on February 1 for $15 cash per share.Required:1. Show the effects of each transaction on the accounting equation.2. Give the indicated journal entries for each of the transactions.3. What impact does the purchase of treasury stock have on dividends paid?4. What impact does the reissuance of treasury stock for an amount higher than the purchaseprice have on net income?arrow_forward
- Prepare journal entries to record the following transactions involving both the short-term and long-term investments of Cancun Corp., all of which occurred during the current year. a. On February 15, paid $160,000 cash to purchase GMI’s 90-day short-term notes at par, which are dated February 15 and pay 10% interest (classified as held-to-maturity). b. On March 22, bought 700 shares of Fran Inc. common stock at $51 cash per share. Cancun’s stock investment results in it having an insignificant influence over Fran. c. On May 15, received a check from GMI in payment of the principal and 90 days’ interest on the notes purchased in part a. d. On July 30, paid $100,000 cash to purchase MP Inc.’s 8%, six-month notes at par, dated July 30 (classified as trading securities). e. On September 1, received a $1 per share cash dividend on the Fran Inc. common stock purchased in part b. f. On October 8, sold 30 shares of Fran Inc. common stock for $54 cash per share. g. On October 30, received a…arrow_forwardPrepare closing entries for the current year of Goldfinger Corporation: Goldfinger Corporation had account balances at the end of the current year as follows: sales revenue, $29,000; cost of goods sold, $12,000; operating expenses, $6,200; and income tax expense, $4,320. Assume shareholders owned 4,000 shares of Goldfinger's common stock during the year.arrow_forwardUse the horizontal model, or write the journal entry, for each of the following transactions and adjustments that occurred during the first year of operations at Kissick Co. Issued 100,000 shares of $5-par-value common stock for $500,000 in cash. Borrowed $250,000 from Oglesby National Bank and signed a 12% note due in three years. Incurred and paid $190,000 in salaries for the year. Purchased $320,000 of merchandise inventory on account during the year. Sold inventory costing $290,000 for a total of $455,000, all on credit. Paid rent of $55,000 on the sales facilities during the first 11 months of the year. Purchased $75,000 of store equipment, paying $25,000 in cash and agreeing to pay the difference within 90 days. Paid the entire $50,000 owed for store equipment and $310,000 of the amount due to suppliers for credit purchases previously recorded. Incurred and paid utilities expense of $18,000 during the year. Collected $412,000 in cash from customers during the year for credit…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY