Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 2, Problem 2.20AE
(Learning Objective 2: Show the impact of business transactions on the
| Dec | 6 | Samoa invested $150,000 in the business, which in turn issued its common stock to her. |
| 9 | The business paid cash for land costing $64.000. Samoa plans to build an office building on the land. | |
| 12 | The business purchased medical supplies for $2,400 on account. | |
| 15 | Dr. Helen Samoa, P.C., officially opened for business. | |
| 15-31 | During the rest of the month, Samoa treated patients and earned service revenue of $9,800, receiving cash for half the revenue earned. | |
| 15-31 | The business paid cash expenses: employee salaries, $3,600; office rent, $900; utilities, $400. | |
| 31 | The business sold medical supplies to another physician for cost of $1,000 and received cash. | |
| 31 | The business borrowed $34,000, signing a note payable to the bank. | |
| 31 | The business paid $1,300 on account. |
Requirements
- 1. Analyze the effects of these events on the accounting equation of the medical practice of Dr. Helen Samoa, P.C.
- 2. After completing the analysis answer these questions about the business.
- a. How much are total assets?
- b. How much does the business expect to collect from patients?
- c. How much does the business owe in total?
- d. How much of the business’s assets docs Samoa really own?
- e. How much net income or net loss did the business experience during its first month of operations?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
[The following information applies to the questions displayed below.]
While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees:
Year 1 Assets
Purchase Date
Basis
Computers (5-year)
October 30, Year 1
$ 16,400
Office equipment (7-year)
October 30, Year 1
10,000
Furniture (7-year)
October 30, Year 1
5,800
Start-up costs
October 30, Year 1
19,520
In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $12,520, and the sale was completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation.…
While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a
technology support company called eSys Answers. During year 1, they bought the following assets and incurred the
following start-up fees:
Purchase Date
October 30, Year 1
October 30, Year 1
October 30, Year 1
October 30, Year 1
Basis
$16,200
10,000
5,400
19,160
Year 1 Asseta
Computers (5-year)
office equipment (7-year)
Furniture (7-year)
Start-up costa
In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started
by fellow Information systems students preparing to graduate. The customer list cost $12,160, and the sale was completed
on April 30. During their summer break, Dailin and Michael passed on internship opportunities in an attempt to really grow
their business into something they could do full time after graduation. In the summer, they purchased a small van (for
transportation, not considered a luxury…
While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees:
Year 1 Assets
Purchase Date
Basis
Computers (5-year)
October 30, Year 1
$ 15,100
Office equipment (7-year)
October 30, Year 1
10,000
Furniture (7-year)
October 30, Year 1
3,200
Start-up costs
October 30, Year 1
17,180
In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $10,180, and the sale was completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation. In the summer, they purchased a small van (for transportation, not…
Chapter 2 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 2 - All of the following events at a sandwich shop are...Ch. 2 - Identify the asset from the following list of...Ch. 2 - Amounts owed to a company by its customers would...Ch. 2 - Thorpe Corporation purchases a new delivery truck...Ch. 2 - Adam Corporation issues stock to Cara Riley in...Ch. 2 - Blake Company completed a consulting job and...Ch. 2 - Prob. 7QCCh. 2 - Accounts Payable had a normal beginning balance of...Ch. 2 - Which of the following debit and credit rules is...Ch. 2 - A companys beginning Cash balance was 8,000. At...
Ch. 2 - Prob. 11QCCh. 2 - Prob. 12QCCh. 2 - Prob. 13QCCh. 2 - In a double-entry accounting system, a. a debit...Ch. 2 - Prob. 15QCCh. 2 - Prob. 16QCCh. 2 - Prob. 2.1ECCh. 2 - LO 1 (Learning Objective 1: Identify transactions)...Ch. 2 - (Learning Objective 1: Differentiate between...Ch. 2 - (Learning Objective 1: Differentiate between...Ch. 2 - (Learning Objective 2: Show the impact of...Ch. 2 - (Learning Objective 2: Show the impact of...Ch. 2 - LO 3 (Learning Objective 3: Analyze the impact of...Ch. 2 - (Learning Objective 3: Analyze the impact of...Ch. 2 - (Learning Objective 3: Analyze the impact of...Ch. 2 - (Learning Objective 4: Journalize transactions)...Ch. 2 - (Learning Objective 4: Journalize and post...Ch. 2 - (Learning Objective 4: Journalize and post...Ch. 2 - (Learning Objective 4: Journalize transactions)...Ch. 2 - Prob. 2.13SCh. 2 - (Learning Objective 5: Use a trial balance)...Ch. 2 - Prob. 2.15SCh. 2 - (Learning Objectives 1, 2, 3, 4, 5: Define...Ch. 2 - Group A LO 1, 2, 4 (Learning Objectives 1, 2, 4:...Ch. 2 - LO 3 (Learning Objective 3: Analyze the impact of...Ch. 2 - (Learning Objective 3: Analyze the impact of...Ch. 2 - (Learning Objective 2: Show the impact of business...Ch. 2 - (Learning Objective 4: Journalize transactions in...Ch. 2 - (Learning Objectives 4, 5: Post journal entries...Ch. 2 - Prob. 2.23AECh. 2 - (Learning Objective 5: Construct and use a trial...Ch. 2 - (Learning Objective 5: Construct and use a trial...Ch. 2 - (Learning Objective 5: Solve for cash and...Ch. 2 - (Learning Objectives 1, 2, 4: Identify...Ch. 2 - (Learning Objective 3: Analyze the impact of...Ch. 2 - (Learning Objective 3: Analyze the impact of...Ch. 2 - (Learning Objective 2: Show the impact of business...Ch. 2 - LO 4 (Learning Objective 4: Journalize...Ch. 2 - Prob. 2.32BECh. 2 - (Learning Objective 4: Journalize entries and...Ch. 2 - (Learning Objective 5: Construct and use a trial...Ch. 2 - Prob. 2.35BECh. 2 - LO 5 (Learning Objective 5: Solve for cash and...Ch. 2 - (Learning Objectives 4, 5; Journalize and poet...Ch. 2 - Which of the following is an asset? a. Common...Ch. 2 - Prob. 2.39QCh. 2 - The journal entry to record the acquisition of...Ch. 2 - The journal entry to record the purchase of...Ch. 2 - If the credit to record the purchase of supplies...Ch. 2 - The journal entry to record a payment on account...Ch. 2 - If the credit to record the payment of an account...Ch. 2 - Which statement is false? a. A trial balance lists...Ch. 2 - If a corporation purchases a delivery van for...Ch. 2 - Prob. 2.47QCh. 2 - Prob. 2.48QCh. 2 - Prob. 2.49QCh. 2 - Prob. 2.50QCh. 2 - Receiving cash from a customer on account will a....Ch. 2 - Prob. 2.52QCh. 2 - Purchasing a building for 115,000 by paying cash...Ch. 2 - Prob. 2.54QCh. 2 - Prob. 2.55QCh. 2 - Prob. 2.56QCh. 2 - Prob. 2.57QCh. 2 - (Learning Objective 5: Construct and use a trial...Ch. 2 - LO 2,3 (Learning Objectives 2, 3: Analyze the...Ch. 2 - (Learning Objective 4: Journalize transactions and...Ch. 2 - LO 4,5 (Learning Objectives 4, 5: Journalize and...Ch. 2 - Prob. 2.62APCh. 2 - Prob. 2.63BPCh. 2 - Prob. 2.64BPCh. 2 - Prob. 2.65BPCh. 2 - (Learning Objectives 4, 5: Journalize and post...Ch. 2 - (Learning Objectives 3, 5: Analyze the impact of...Ch. 2 - (Learning Objective 5: Analyzing accounts) The...Ch. 2 - Prob. 2.69CEPCh. 2 - Prob. 2.70CEPCh. 2 - (Learning Objectives 2, 3, 4: Analyze the impact...Ch. 2 - Prob. 2.72SCCh. 2 - Prob. 2.73DCCh. 2 - Prob. 2.74DCCh. 2 - Prob. 2.75EICCh. 2 - Prob. 2.76EICCh. 2 - Prob. 1FFCh. 2 - Prob. 1FA
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
- 1. A newly founded business performed in their first days of operations, the six transactions that you can find below. The business was founded on the 20th of July, by a young entrepreneur, Mr Grey, who wanted to provide typing, copying, and printing services to the university students in his home city: a) 20/07/2019: In exchange for his investment of $200,000 cash, the business issued to Mr Grey 1,000 shares of capital stock. b) 21/07/2019: Purchased a small building and land for $450,000, paying $165,000 cash and signing a note payable for the balance. The building $210,000 and the land was considered to be worth $240,000. c) 22/07/2019: Purchased office equipment for $30,000 from Office Furniture Co. Paid $17,000 cash and agreed to pay the balance within 60 days. d) 26/7/2019: Purchased from Auto Ltd. a motorcycle on credit for $3,400 to be used for making deliveries to customers. Mr Grey agreed to make payment to Auto Ltd. within 10 days. e) 27/7/2019 Signed a note payable due in…arrow_forwardThe Sir Arthur Lewis Community College has recently invited all accounting students in from the Principles of cost and management accounting (ACC115) class to participate in a business degree scholarship with an emphasis in accounting. The award for the highest score is a full scholarship for a degree in Business Administration. The following information for Good Times Inc. has been provided to assess the proficiency of all participants in accounting: Estimates for the period January to June 2021 Purchases ($) Operating expenses ($) 35,000 20,000 Month Sales ($) January February March 350,000 200,000 100,000 250,000 300,000 360,000 210,000 120,000 60,000 150,000 180,000 10,000 25,000 30,000 36,000 April May June 216,000 Relevant data for the Good Times Inc. operations: a. Payment for purchases is made as follows 80% in the month of purchase and the balance in the following the following month. Payments made in the month of purchase are entitled to a 10% discount. b. Sales are made on…arrow_forwardKathy Wintz formed a lawn service business as a summer job. To start the corporation on May 1, 2018, she deposited $1,000 in a new bank account in the name of the business. The $1,000 consisted of a $600 loan from Bank One to her company, Wintz Lawn Service, and $400 of her own money. The company issued $400 of common stock to Wintz. Wintz rented lawn equipment, purchased supplies, and hired other students to mow and trim customers’ lawns. At the end of each month, Wintz mailed bills to the customers. On August 31, she was ready to dissolve the corporation and return to college. Because she was so busy, she kept few records other than the checkbook and a list of receivables from customers. At August 31, the business’s checkbook shows a balance of $2,000, and customers still owe $750. During the summer, the business collected $5,500 from customers. The business checkbook lists payments for supplies totaling $400 and it still has gasoline, weed trimmer cord, and other supplies that cost…arrow_forward
- Your uncle, Mr. Mensah is a sole proprietor dealing in building materials in Accra. His friend, Kofi Manu has convinced him to convert his sole proprietorship business into a limited liability company. Just last week your Uncle wanted a loan facility from a bank and the bank asked him to submit three years financial statements in addition to other documents. Having learnt the definition of financial accounting and financial statements, your Uncle wants you to help him understand certain issues in accounting. Required: a) Explain four disadvantages of converting the business to a private limited liability company. b) Referring to the definition of financial accounting explain the process that financial transactions have to go through in the preparation of financial statements. c) Apart from the bank that is asking your Uncle to submit financial statements, identify four other users of financial statements and explain their information needarrow_forward(The following information applies to the questions displayed below.] While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees: Year 1 Assets Purchase Date Basis Computers (5-year) Office equipment (7-year) Furniture (7-year) Start-up costs October 30, Year 1 October 30, Year 1 $ 15,000 10,000 October 30, Year 1 October 30, Year 1 3,000 17,000 In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $10,000, and the sale was completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation. In the summer,…arrow_forwardT Account entries for Simple Construction:Bob Simple graduated from the BCIT Construction Management Program and decided to start his own construction company. We will record various entries that might be made in a T account sheet in order to account for his second year of operations. At the end of the first year, his income statement and balance sheet havethe following values:Balance Sheet Entries for Last Year:Cash: 365,000Accounts Receivable: $17,000Materials Inventory: $2000Equipment: $15,000Accumulated Amortization: $500Accounts Payable: $22,000Bank Loan –Long Term: $10,000Dividend Payable: $35,000Interest Payable: $500Wages Payable: $5,000Common Stock: $250,000Retained Earnings: $76,000Income statement Final Entries for Last Year:Revenue: $145,000Materials Expense: $20,000Wages Expense: $10,000Amortization Expense: $500Rental Expense: $2,500Interest Expense: $1000Net Income: $111,000 Question 1a.Enter the relevant amounts in the T sheet to start the current year, and designate…arrow_forward
- Pita purchased a small roadside inn in April with inheritance money he received from his wealthy aunt. Help him prepare his T accounts for his first month of operations using the information provided. a. Pita invested P5,000,000 cash in the inn.Cash Owners’ Equityb. Pita purchased a P50,000 point of sale (POS) system with P5,000 cash and P45,000 notes payable.Cash POS system Notes Payablec. Pita generated P75,000 in revenues with P52,000 cash and P23,000 accounts receivable.Cash Accounts Receivable Revenuesd. Pita paid utilities of P750 in cash.Cash Utilities Expensearrow_forwardNatalie opened Natalie Washing co. on July 1, 2022. During July, the following transactions were completed. July 1 Owner invests $12,000 cash to start the business. July 3 Purchased used truck for $8,000, paying $2,000 cash and signing a 1-year, 10% note for the remainder. July 5 Purchased clening supplies for $900 on account. July10 Paid $1800 cash on a 1-year insurnace policy effective July 1 July 12 Billed customers $3700 fore cleaning services performed. July 15 Paid $500 on amount owed on cleaning supplies. July 16 Received $2500 for serviced to be performed evenly from July 16 through September 15. July 22 Paid $2000 for employee salaries. July 29 July 30 July 31 Collected $1600 cash from customers billed on July 12. Paid $290 for maintenance of the truck during month. Owner withdrew $600 from the business for personal expenses. Requirements: 1) Make a tabular analysis of the transactions on accounting equation. Use the following column headings: cash, Supplies, accounts…arrow_forwardOn January 1, 2025, Norma Smith and Grant Wood formed a computer sales and service company in Soapsville, Arkansas, by investing $91,772 cash. The new company, Blossom Sales and Service, has the following transactions during January. 1. 2. 3. 4. 5. Pays $9,000 in advance for 3 months' rent of office, showroom, and repair space. Purchases 43 personal computers at a cost of $1,688 each, 9 graphics computers at a cost of $2,688 each, and 28 printers at a cost of $488 each, paying cash upon delivery. Sales, repair, and office employees earn $14,372 in salaries and wages during January, of which $4,772 was still payable at the end of January. Sells 33 personal computers at $2,738 each, 7 graphics computers for $3,788 each, and 18 printers for $688 each; $76,772 is received in cash in January, and $52,482 is sold on a deferred payment basis. Other operating expenses of $10,172 are incurred and paid for during January; $3,772 of incurred expenses are payable at January 31.arrow_forward
- Suppose you are the only owner of a chain of coffee shops near universities. Your current cafés are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance: Financial update as of June 15 • Your existing business generates $111,000 in EBIT. • The corporate tax rate applicable to your business is 25%. • The depreciation expense reported in the financial statements is $21,143. • You don’t need to spend any money for new equipment in your existing cafés; however, you do need $16,650 of additional cash. • You also need to purchase $8,880 in additional supplies—such as tableclothes and napkins, and more formal tableware—on credit. • It is also estimated that your accruals, including taxes and wages payable, will increase by $5,550. Based on your evaluation you have…arrow_forwardSuppose you are the only owner of a chain of coffee shops near universities. Your current cafés are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance: Financial update as of June 15 • Your existing business generates $123,000 in EBIT. • The corporate tax rate applicable to your business is 25%. • The depreciation expense reported in the financial statements is $23,429. • You don’t need to spend any money for new equipment in your existing cafés; however, you do need $18,450 of additional cash. • You also need to purchase $9,840 in additional supplies—such as tableclothes and napkins, and more formal tableware—on credit. • It is also estimated that your accruals, including taxes and wages…arrow_forwardSimon Sayze formed a single-person window cleaning business in Prince George B.C., as a summer job. To start, on May 1, 2020 he deposited $3,000 in a new bank account called “Sayze cleaning” for this proprietorship to start purchasing needed items. The $3,000 consisted of a $1,500 loan from his father and $1,500 of his own money. Simon rented scaffolding equipment, purchased supplies, and hired high school students to assist with customer’s windows. At the end of each month, Simon emailed bills to customers owing for services provided. On August 31, he was ready to return to university for the fall semester and closes up shop for summer #1. Simon has been so busy, he had forgot the importance of keeping records of payment! Using online bank statements, expense receipts, and a list of amounts owed/paid by customers, he had some serious accounting to do for the filing his 2020 income tax return. At August 31, the bank account shows a positive balance, so he’s not worried about…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
The ACCOUNTING EQUATION For BEGINNERS; Author: Accounting Stuff;https://www.youtube.com/watch?v=56xscQ4viWE;License: Standard Youtube License