Ch02 - Chapter 2 Investing and Financing Decisions and the...

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Chapter 2 Investing and Financing Decisions and the Balance Sheet EXERCISES E2–3 Account Balance Sheet Classification Debit or Credit Balance 1. NCA Debit 2. SE Credit 3. NCL Credit 4. CA Debit 5. NCA Debit 6. SE Credit 7. NCA Debit 8. CL Credit 9. CA Debit 10. CL Credit 11. CA Debit 12. NCA Debit 13. CA Debit 14. CA Debit 15. CA Debit 16. CL Credit E2–6 Assets = Liabilities + Shareholders’ Equity
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a. Property, plant Cash +216.3 –211.3 Note payable +5.0 b. Cash +21.1 Share capital +21.1 c. Cash –78.8 Dividends payable +21.2 Retained earnings –100.0 d. No effect e. Cash –3.2 Note payable –3.2 f. Cash Investments +1.4 –1.4 E2-8 Req. 1 a. ........................................ 216.3 Cash ( - A). ....................................................................... 211.3 Note payable (+L) . ......................................................... 5.0 b. Cash (+A). ............................................................................. 21.1 Share capital (+SE). ....................................................... 21.1 c. Retained earnings ( - SE). ..................................................... 100.0 Cash ( - A). ....................................................................... 78.8 Dividends payable (+L). .................................................. 21.2 d. No journal entry required. e. Note payable ( - L). ................................................................ 3.2 Cash ( - A). ....................................................................... 3.2 f. Cash (+A). ............................................................................. 1.4 Investments ( - A). ............................................................ 1.4 Req. 2 The separate-entity assumption states that transactions of the business are separate from transactions of the owners. Since transaction (d) occurs between the owners and others in the stock market, there is no effect on the business. E2–14 Req. 1 Assets $ 11,000 = Liabilities $ 8,700 + Shareholders’ Equity $ 2,300
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Req. 2 Cash Short-Term Investments Beg. 5,000 Beg. 2,000 Beg. 4,000 (b) 1,500 3,300 (a) 1,500 (b) 1,000 (d) (d) 1,000 2,100 (c) (e) 1,600 600 (f) End. 3,100 End. 500 End. 3,000 Short-Term Notes Payable Long-Term Notes Payable 2,100 Beg. 6,600 Beg. (c) 2,100 (a) 3,300 1,600 (e) 0 End. 4,900 End. Share Capital Retained Earnings 300 Beg. 2,000 Beg. (f) 600 300 End. 1,400 End. Req. 3 Assets $ 6,600 = Liabilities $ 4,900 + Shareholders’ Equity $ 1,700 Req. 4 Doane Company Balance Sheet As at December 31, 2008 Assets Liabilities Current Assets Long-term notes payable $4,900 Cash $3,100 Total Liabilities 4,900 Short-term investments 500 Shareholders’ Equity Total Current Assets 3,600 Share capital 300 Property and equipment 3,000 Retained earnings 1,400 Total Shareholders’ Equity 1,700 Total Assets $6,600 Total Liabilities & Shareholders’ Equity $6,600 Req. 5 Debt-to-Equity = Total Liabilities = $4,900
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This note was uploaded on 12/09/2009 for the course ACCO comm 217 taught by Professor Mroz during the Fall '09 term at Concordia Canada.

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Ch02 - Chapter 2 Investing and Financing Decisions and the...

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