Ch_02_Exercise_Answers

Ch_02_Exercise_Answers - Exercises(1015min)E21 TO FROM...

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Exercises (10-15 min.) E 2-1 TO: Home Office FROM: Store Manager During the first week, I borrowed $320,000 on a note payable. I used the store’s beginning cash plus the borrowed money to purchase land, a building, copy equipment, and supplies. After all these transactions, the store’s balance sheet appears as follows: Kinko’s Oklahoma City Store Balance Sheet Date ASSETS LIABILITIES Cash $ 80,000* Note payable $320,000 Supplies 10,000 Copy equipment 60,000 STOCKHOLDERS’ EQUITY Land 90,000 Common stock 40,000 Building 120,000 Total liabilities and ________ Total assets $360,000 stockholders’ equity $360,000 _____ *$40,000 + $320,000 – $90,000 – $120,000 – $60,000 – $10,000 = $80,000 Chapter 2 Transaction Analysis 57
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(5-10 min.) E 2-2 a. Issuance of stock Revenue transaction b. Purchase of asset on account Borrow money c. Purchase of asset for cash Sale of asset for cash Collection of an account receivable d. Payment of dividends to owners Expense transaction e. Pay a liability (Answers may vary.) (10-15 min.) E 2-3 a. Increased assets (cash) b. No effect on total assets. Increase in land offsets the decrease in cash. c. Increased assets (cash) d. Decreased assets (cash) e. Increased assets (equipment) f. Increased assets (merchandise inventory) g. Decreased assets (cash) h. No effect on total assets. Increase in cash offsets the decrease in accounts receivable. i. No effect (a personal transaction) j. No effect on total assets. Increase in cash offsets the decrease in land. Chapter 2 Transaction Analysis 58
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(10-20 min.) E 2-4 Req. 1 Analysis of Transactions ASSETS = LIABILITIES + STOCKHOLDERS’ EQUITY Date Cash + Accounts Receivable + Medical Supplies + Land = Accounts Payable + Note Payable + Common Stock + Retained Earnings Type of Stockholders’ Equity Transaction Oct. 6 40,000 40,000 Issued stock 9 (30,000) 30,000 12 2,000 2,000 15 Not a transaction of the business. 15-31 4,000 4,000 8,000 Service revenue 15-31 (1,400) (1,400) Salary expense (1,000) (1,000) Rent expense (300) (300) Utilities expense 31 500 (500) 31 10,000 10,000 31 (1,500 ) (1,500 ) Bal. 20,300 4,000 1,500 30,000 500 10,000 40,000 5,300 55,800 55,800 Chapter 2 Transaction Analysis 59
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(continued) E 2-4 Req. 2 a. $55,800 b. $4,000 c. $10,500 ($500 + $10,000) d. $45,300 ($55,800 – $10,500, or $40,000 + $5,300) e. $5,300 (Revenue, $8,000 minus total expenses of $2,700, equals net income, $5,300.) Chapter 2 Transaction Analysis 60
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(10-15 min.) E 2-5 Journal DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT Oct. 6 Cash………………………………………. . 40,000 Common Stock………………………. 40,000 Issued stock to owner. 9 Land………………………………………. .. 30,000 Cash……………………………………. 30,000
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This note was uploaded on 10/12/2008 for the course MGMT 200 taught by Professor Greigg during the Spring '08 term at Purdue.

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Ch_02_Exercise_Answers - Exercises(1015min)E21 TO FROM...

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