ACT3391HomeworkFall2009Solutions1&2

ACT3391HomeworkFall2009Solutions1&2 - Accounts...

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HOMEWORK - Fall 2009 – Solutions 1. (0.5 point each journal entry) Journalize the following events/transactions for Acme Company. a) Acme Borrowed $5,000,000 from Area Bank. Cash $5,000,000 Notes payable $5,000,000 b) Acme issued 100,000 shares of its common stock and received $1,000,000 (do not worry about stock issuance costs). Cash $1,000,000 Contributed capital $1,000,000 (Note that “contributed capital” is a combination of common stock and additional paid in capital.) c) Purchased $25,000 of office furniture on a cash basis. Fixed assets – office furniture $25,000 Cash $25,000 d) Acme purchased $100 of office supplies on an account basis. ( Debit an expense account .) Office supplies expense $100 Accounts payable $100 e) Acme paid one month of office rent. Monthly rent is $3,500. ( Debit an asset account .) Prepaid rent $3,500 Cash $3,500 f) Acme performed $35,000 of services for customers on a cash basis. Cash $35,000 Revenue $35,000 g) Acme performed $100,000 of services for customers on an account basis.
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Unformatted text preview: Accounts receivable $100,000 Revenue $100,000 h) Acme collected $25,000 of the $100,000 referred to in item g). Cash $25,000 Accounts receivable $25,000 i) Acme incurred and paid wage expenses of $10,000. Wage expenses $10,000 Cash $10,000 2. (0.5 point each item) For items a) through i) above, indicate the effect (increase, decrease, or no effect) the event/transaction has on total assets, total liabilities and total equity. (The first item has already been answered.) Item Total Assets Total Liabilities Total Equity (a) increase increase no effect (b) increase no effect increase (c) no effect no effect no effect (d) no effect increase decrease (e) no effect no effect no effect (f) increase no effect increase (g) increase no effect increase (h) no effect no effect no effect (i) decrease no effect decrease 1...
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