Chapter1_HW_Key[1]

Chapter1_HW_Key[1] - Chapter 1 Introduction to Managerial...

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1 Chapter 1 Introduction to Managerial Accounting Homework Solutions 1. For the following transactions state the values received and the values given. (1 point) (a) Fifteen thousand dollars in cash is invested to start a company. (b) The company borrowed $5,000. (c) Furniture is purchased in the amount of $2,000, paying $1,000 in cash and $1,000 on credit. (d) The company pays back $3,000 of the money it borrowed. (e) The owner transfers to his company $6,000 worth of equipment that was used by another organization owned by the owner. Values Received Values Given (a) $15,000 in cash Ownership rights worth $15,000 (b) $5,000 in cash Promise to pay $5,000 in the future $2,000 worth of furniture $1,000 in cash and a promise to pay (c) $1,000 in the future A $3,000 reduction of its previous promise $3,000 in cash (d) to pay $5,000 (e) $6,000 worth of equipment Ownership rights worth $6,000
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2 2. Based on your answers to Question 1 indicate the effect of the given transactions on the accounting equation and express the values received and values given in terms of debits and credits. The first transaction is presented below as an example. What general statement can you make concerning the procedure for recording values received and values given ?(1 point) (a) The $15,000 in cash received by the company represents an increase in assets. Increases in assets are recorded as debits. The $15,000 worth of ownership rights given represents an increase in owners’ equity. Increases in owners’ equity are recorded as credits. (b) The $5,000 in cash received by the company represents an increase in assets. Increases in assets are recorded as debits. The $5,000 worth of loan given represents an increase in current liability.
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This note was uploaded on 10/08/2011 for the course HTM 458 taught by Professor Bu during the Spring '09 term at S.F. State.

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Chapter1_HW_Key[1] - Chapter 1 Introduction to Managerial...

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