Concept explainers
Asset
Asset may be regarded as a resource for the person or entity which holds it with a specific economic value and the benefits derived from such asset are generally divided over the lifespan of such asset .Also, they are held to reap some future benefits on account of pooling the funds at present. An asset may be in tangible or intangible form depending upon the nature of asset.
Equity
An ownership interest in any kind of security or it may also be regarded as the difference value of the assets held and liabilities against the said assets. Also, in the financial statement of the company the funds contributed by the owners and any of the retained or ploughed back earnings (or losses) are regarded as shareholder's equity.
Liability
A liability may be regarded as the burden or it depicts the obligatory aspect related to a transaction and that it is to be fulfilled in the near future. They mainly form part of the financial statements so that the end users may analyze the current standing of the entity in terms of its liabilities against the possession of its assets.
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FINANCIAL ACCT.FUND.(LOOSELEAF)
- Analyzing the Accounts The controller for Summit Sales Inc. provides the following information on transactions that occurred during the year: a. Purchased supplies on credit, $18,600 b. Paid $14,800 cash toward the purchase in Transaction a c. Provided services to customers on credit1 $46,925 d. Collected $39,650 cash from accounts receivable e. Recorded depreciation expense, $8,175 f. Employee salaries accrued, $15,650 g. Paid $15,650 cash to employees for salaries earned h. Accrued interest expense on long-term debt, $1,950 i. Paid a total of $25,000 on long-term debt, which includes $1.950 interest from Transaction h j. Paid $2,220 cash for l years insurance coverage in advance k. Recognized insurance expense, $1,340, that was paid in a previous period l. Sold equipment with a book value of $7,500 for $7,500 cash m. Declared cash dividend, $12,000 n. Paid cash dividend declared in Transaction m o. Purchased new equipment for $28,300 cash. p. Issued common stock for $60,000 cash q. Used $10,700 of supplies to produce revenues Summit Sales uses the indirect method to prepare its statement of cash flows. Required: 1. Construct a table similar to the one shown at the top of the next page. Analyze each transaction and indicate its effect on the fundamental accounting equation. If the transaction increases a financial statement element, write the amount of the increase preceded by a plus sign (+) in the appropriate column. If the transaction decreases a financial statement element, write the amount of the decrease preceded by a minus sign (-) in the appropriate column. 2. Indicate whether each transaction results in a cash inflow or a cash outflow in the Effect on Cash Flows column. If the transaction has no effect on cash flow, then indicate this by placing none in the Effect on Cash Flows column. 3. For each transaction that affected cash flows, indicate whether the cash flow would be classified as a cash flow from operating activities, cash flow from investing activities, or cash flow from financing activities. If there is no effect on cash flows, indicate this as a non-cash activity.arrow_forwardInner Resources Company started its business on April 1, 2019. The following transactions occurred during the month of April. Prepare the journal entries in the journal on Page 1. A. The owners invested $8,500 from their personal account to the business account. B. Paid rent $650 with check #101. C. Initiated a petty cash fund $550 check #102. D. Received $750 cash for services rendered. E. Purchased office supplies for $180 with check #103. F. Purchased computer equipment $8,500, paid $1,600 with check #104 and will pay the remainder in 30 days. G. Received $1,200 cash for services rendered. H. Paid wages $560, check #105. I. Petty cash reimbursement office supplies $200, Maintenance Expense $140, Miscellaneous Expense $65. Cash on Hand $93. Check #106. J. Increased Petty Cash by $100, check #107.arrow_forwardLavender Company started its business on April 1, 2019. The following are the transactions that happened during the month of April. Prepare the journal entries in the journal on Page 1. A. The owners invested $7,500 from their personal account to the business account. B. Paid rent $600 with check #101. C. Initiated a petty cash fund $250 check #102. D. Received $350 cash for services rendered. E. Purchased office supplies for $125 with check #103. F. Purchased computer equipment $1,500, paid $500 with check #104, and will pay the remainder in 30 days. G. Received $750 cash for services rendered. H. Paid wages $375, check #105. I. Petty cash reimbursement Office Supplies $50, Maintenance Expense $80, Miscellaneous Expense $60. Cash on hand $8. Check #106. J. Increased Petty Cash by $70, check #107.arrow_forward
- Directions: Record the transactions directly into the T-accounts. The transactions are independent of one another. Use the following account titles: CashOwner’s WithdrawalsAccounts ReceivableProfessional FeesOffice EquipmentSalaries ExpenseOffice FurnitureRent ExpenseAccounts PayableUtility ExpenseOwner’s CapitalMiscellaneous Expense a. The owner deposited P280,000 in the name of his business.b. He purchased 4-in-1 equipment from Limay Equipment for P4,950, paying P1,000 in cash and the balance on the account.c. He bought chairs and tables for the office for P12,300 cash.d. He purchased furniture from Orion Company for P2,750 in cash.e. He received and paid the telephone bill from Ph Telecom amounting to P1,080.f. He billed his customers P12,940 for services on account.g. He paid P1,850 for the electric bill from BEBECO.h. He paid P3,500 for the membership fee.i. He received P17,650 in cash for services rendered.j. He paid P1,000 to partially settle accounts with Orion Company.k. He…arrow_forwardInstructions: Prepare a Statement of Financial Position of Happy Selling Co. using the following accounts (one in report form and one in account form): Cash – 5,000 Loans Payable – 77,500 Accounts Receivable – 2,600 Supplies – 2,300 Equipment – 17,000 Owner’s equity – 40,000 Accounts Payable – 22,400 Building – 113,000 Instruction: Answer the following situation and apply what you’ve learned regarding the preparation of Balance Sheet or Statement of Financial Position. You were hired by Ms. Annalyn Chua to prepare her General Merchandise Statement of Financial Position. In order to prepare the statement, you identified the following assets and liabilities of Ms. Chua. You may choice any of the format. Cash deposited in a bank account amounting to P50,000 Store had a lot of uncollected sales from customers amounting to P75,000 The total amount of merchandise left inside the store is P30,000 She already paid one year’s rent in advance amounting to P12,000 The value of all the…arrow_forwardRead through the transactions impacting JumpStart Co. and answer the question below: On November 10, JumpStart Co. provides $2,900 in services to clients. At the time of service, the clients paid $600 in cash and put the balance on account. On November 20, JumpStart Co. clients paid an additional $900 on their accounts due. Document the journal entries that reflect the November 10 and 20th transactions. Edit View Insert Format Tools Table 12pt v Paragraph v BIUAY O wordsarrow_forward
- An entity purchases office equipment for 525,000 on account. Select the appropriate journal entry to record this transaction. A. Office expense= 525,000 Accounts payable= 525,000 B. Office equipment= 525,000 Accounts payable= 525,000 C. Accounts Payable = 525,000 Office expense= 525,000 D. Accounts payable= 525,000 Office equipment = 525,000arrow_forwardJournalize the following: 1. On the books & records of Company A: On May 2nd, Company A received $100 of interest income from the bank earned in April. If the books are on an accrual basis, record the entry in April and in May when cash was received April May 2. On the books & records of Company A: In January, Company A purchased Investment in XYZ for $100. Payment was made in cash. In March, Company A sold Investment in XYZ for $150. Payment was received in cash. 3. On the books & records of Company A: On April 1st, Company A paid $1,200 for insurance expense that covers the year 4/1/17-3/31/18. Record 4/1/17 entry for payment of $1,200 Record 4/30/17 journal entry 4. There are 2 parallel funds, Fund A and Fund B. Together, the funds will make an investment of $100k, with a 65/35 split. The investment will be paid in cash, however, Fund B does not currently have any cash so Fund…arrow_forwardRequired information Use the following information for the Exercises below. (Algo) Skip to question [The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $82,890 in assets to launch the business. On December 31, the company’s records show the following items and amounts. Cash $ 15,140 Cash withdrawals by owner $ 830 Accounts receivable 12,720 Consulting revenue 12,720 Office supplies 2,110 Rent expense 2,380 Land 46,010 Salaries expense 5,620 Office equipment 16,780 Telephone expense 780 Accounts payable 7,360 Miscellaneous expenses 600 Owner investments 82,890 Exercise 1-20 (Algo) Preparing a balance sheet LO P2 Use the above information to prepare a December 31 balance sheet for Ernst Consulting. ***Can you please help me with what I am missing any why?arrow_forward
- Required information Use the following information for the Exercises below. (Algo) Skip to question [The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $82,890 in assets to launch the business. On December 31, the company’s records show the following items and amounts. Cash $ 15,140 Cash withdrawals by owner $ 830 Accounts receivable 12,720 Consulting revenue 12,720 Office supplies 2,110 Rent expense 2,380 Land 46,010 Salaries expense 5,620 Office equipment 16,780 Telephone expense 780 Accounts payable 7,360 Miscellaneous expenses 600 Owner investments 82,890 Exercise 1-21 (Algo) Preparing a statement of cash flows LO P2 Also assume the following: The owner’s initial investment consists of $36,880 cash and $46,010 in land. The company’s $16,780 equipment purchase is paid in cash. Cash paid to employees is $370. The accounts payable balance of…arrow_forwardGRADED: Recording transactions in t-accountsTHE SMITH COMPANYUsing the business transactions below, complete T-accounts for the Smith Company. I have provideda blank sheet of t-accounts as an attachment to this assignment. The company started business onJune 1, 2019.a. John Smith, owner, invested $120,000 cash in the company.b. The company purchased $10,000 of office equipment on credit.c. The company billed a customer $2,000 as fees for services provided.d. The company paid $1,000 cash for the monthly rent.e. The company purchased office supplies for $500 cash.f. The company paid $300 for the utilities for the month.g. The company received $15,000 cash as fees for services provided to a customer.h. The company paid the secretary’s salary for the month, $3,000.i. John Smith withdrew $6,000 cash from the company for personal use.As you work this problem, be sure to label entries with the appropriate “letter” associated with thetransaction. Also, be sure to compute the T-account balances…arrow_forwardInstructions.1. Prepare the general journal entriesDATE TRANSACTIONS1/2/16 Invested PHP500,000 to his business. The trade name of the business was “MR.LABANDERO”1/3/16 Hired Allan and Allie who will manage his business1/4/16 Collections from various customers for the day - PHP3,0001/5/16 Purchase store supplies from Labada Store - PHP10,0001/7/16 Collections from various customers for the day - PHP8,0001/8/16 MR. LABANDERO entered into an exclusive contract with Sikat Hotel where the business willdo all the laundry of the hotel.1/9/16 Sikat Hotel availed the services of MR. LABANDERO amounting to PHP15,000. Payment willbe made on January 20, 2016.1/10/16 Collections from various customers for the day - PHP12,0001/12/16 Purchase a washing machine amounting to PHP50,0001/15/16 Collections from various customers for the day - PHP20,0001/19/16 Paid electricity bill for the month amounting to PHP18,0001/20/16 Received payment from Sikat Hotel amounting to PHP15,0001/21/16 Paid salaries of…arrow_forward
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