Chapter 4

Chapter 4 - 122 Chapter 5 CHAPTER 4 THE MECHANICS OF...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 122 Chapter 5 CHAPTER 4 THE MECHANICS OF FINANCIAL ACCOUNTING BRIEF EXERCISES BE4–1 Transaction Assets = Liabilities + Stockholders’ Equity Paid $5,779 to purchase + 5,779 property, plant and equip.- 5,779 Issued common stock +1,046 = +1,046 for $1,046 Recorded depreciation-4,654 =-4,654 of $4,654 Net effect-3,608 = -3,608 b. The transaction to purchase property, plant and equipment does not appear to affect the accounting equation. This is because both sides of the transaction affect the asset side of the balance sheet. Intel pays cash for p,p,&e; this reduces cash and increases fixed assets. All of the other transactions affect both sides of the balance sheet. BE4–2 Transaction Assets = Liabilities + Stockholders’ Equity Repaid $7 ,- 7 =- 7 of long-term debt Paid cash dividends of $238- 238 =- 238 Repurchased common stock-193 =-193 for $193 Net effect-438 = - 7-431 b. Both transactions reduce assets and equity and can be viewed as alternate ways to return cash to shareholders, by either paying cash in the form of dividends or paying cash in return for shares. BE4–3 Transaction Assets = Liabilities + Stockholders’ Equity Recognized revenues +50 = +50 of $50, in exchange for accounts receivable. Paid $25 for sales and -25 =-25 marketing. Issued common stock for $318 +318 = +318 Purchased marketable -1,329 securities for $1,329 +1,329 = _____ Net effect +343 = +343 b. The first and second transactions would be reflected on the income statement. Yahoo would show $50 of revenue on the income statement. Yahoo would also show sales and marketing expense of $25. The last three transactions would be reflected on the statement of cash flows. The first transaction does not involve cash and therefore would not directly show on the cash flow statement. Paying cash for marketing expenses would be shown in the operating section; the third transaction would be in the financing section; and the fourth transaction would be in the operating section. EXERCISES E4–1 Assets = Liabilities + Stockholders' Equity (1) + 30,000 + 30,000 (2) – 20,000 + 20,000 (3) + 9,000 +9,000 (4) + 8,000 + 8,000 (5) – 5,500 – 5,500 (6) – 500 – 500 Total 41,000 9,000 32,000 Note: Transactions (4), (5), and (6) are initially recorded in temporary accounts and are closed into the Retained Earnings account, which is part of stockholders' equity. E4–2 Assets = Liabilities + Stockholders' Equity Accounts Notes Contributed Retained Cash + Receivable + Land = Payable + Capital + Earnings (1) + 30,000 +30,000 (2) – 20,000 +20,000 (3) + 9,000 +9,000 (4) +8,000 + 8,000 (5) – 5,500 – 5,500 (6) – 500 – 500 Total 13,000 8,000 20,000 9,000 30,000 2,000 Note: Transactions (4), (5), and (6) are initially recorded in temporary accounts and are closed into the Retained Earnings account, which is part of stockholders' equity....
View Full Document

This note was uploaded on 09/10/2008 for the course BUS 210 taught by Professor Sevier during the Spring '08 term at Emory.

Page1 / 54

Chapter 4 - 122 Chapter 5 CHAPTER 4 THE MECHANICS OF...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online