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Unformatted text preview: st three months of the year. McGraw-Hill uses $754 worth of electricity and natural gas in its headquarters building for which it has not yet been billed. Arrow Shirt Company completes p p y p production of 500 men's shirts ordered by Bon-Ton's Department Store at a cost of $10 each and delivers the order. Answer from Arrow's standpoint. The campus bookstore receives 500 accounting texts at a cost of $43 each. The terms indicate that payment is due within 30 days of delivery. During the last week of Jan, the campus bookstore sold 450 accounting texts received in (e) at a sales price of $92.
Slide 43 of 74 e. f. Chapter Three Expense Recognition
g. h. i. Introduction To Financial Accounting HKUST j. k. l. Hyundai, Inc., pays its salespersons $3,200 in commissions related to Dec automobile sales. Answer from Hyundai's standpoint. A new grill is purchased and installed at a Wendy's restaurant at the end of the day on Jan 31; a $8,750 cash payment is made on that day. The University of Florida orders 60,000 season football tickets from its printer and pays $5,410 in advance for the custom printing. The first game will be played in Sept. Answer from the University's standpoint. Carousel Mall has janitorial supplies costing $4,000 in storage. An additional $2,600 worth of supplies was purchased during Jan. At the end of Jan, $410 worth of janitorial supplies remained in storage. Wang Co. paid $3,600 for a fire insurance policy on Jan 1. The policy covers 12 months beginning on Jan 1. Answer from Wang's standpoint. 1 Wang s standpoint Parillo's Taxi pays a $595 invoice from a consulting firm for services received and recorded in Dec. Chapter Three Slide 44 of 74 Expanded Transaction Analysis Model Introduction To Financial Accounting HKUST Let s Let's look at an expanded transaction analysis model that includes the recording of revenues and expenses. Chapter Three Slide 45 of 74 A Brief Review about Dr and Cr Introduction To Financial Accounting HKUST Accounts which increase by Dr. and decrease by Cr. (with Dr. balance): Assets Expenses (operating activities) Losses (investing activities) Accounts which increase by Cr. and decrease by Dr. (with Cr. Balance): Liabilities Contributed capital (financing activities) Revenue (operating activities) Gains (investing activities) Retained earnings (operating and/or financing activities) Chapter Three Slide 46 of 74 A Brief Review About Transaction Analysis Introduction To Financial Accounting HKUST 1. Identify the accounts affected (at least two accounts). 2. Determine which accounts are increased and which accounts are decreased. 3. The accounting equation must always be in balance (balance rule). 4. The total dollar value of the debits in the transaction should equal the total dollar value of the credits (debit/credit equality rule). Chapter Three Slide 47 of 74 A = L + SE
ASSETS Debit D bit Credit C dit for for Increase Decrease LIABILITIES Debit D bit Credit C dit for for Decrease Increase Introduction To Financial Accounting HKUST Next, let's see how Revenues and Expenses affect Retained Earnings.
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