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FM9e_SM02 - CHAPTER 2Solutions ANALYZING BUSINESS...

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Ch2 SE 1 to SE4 CHAPTER 2—Solutions ANALYZING BUSINESS TRANSACTIONS Chapter 2, SE 1. Jan. 10 Do not recognize because an order is not a complete transaction. There is no obligation on the part of either party at this point. Feb. 15 Recognize the purchase. Delivery has been made; there is an ob- ligation to pay. Mar. 1 Recognize the payment. Cash is paid, and the obligation no longer exists. Chapter 2, SE 2. The concept of recognition is applied by recording the transaction at the recog- nition point on June 1 when the transaction takes place. Supplies are purchased with cash, and the buyer takes title to the supplies. The concept of valuation is applied by recording the supplies at a cost of $1,000. The classification concept is applied by reducing the asset Cash and increasing the asset Supplies. Supplies are classified as an asset because they have not been used up and will benefit future operations. If they were used up immedi- ately, they could be classified as Supplies Expense. Chapter 2, SE 3. a. Liability e. Expense b. Asset f. Asset c. None (Stockholders' Equity) g. Liability d. Revenue h. Asset Chapter 2, SE 4. a. Credit e. Debit b. Debit f. Debit c. Debit g. Credit d. Credit h. Debit
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Ch2 SE5 to SE6 Chapter 2, SE 5. May 2 Debit Cash; credit Common Stock 5 Debit Office Equipment; credit Cash 7 Debit Supplies; credit Accounts Payable 19 Debit Cash; credit Programming Service Revenue 22 Debit Cash; credit Unearned Programming Service Revenue 25 Debit Rent Expense; credit Cash 31 Debit Accounts Receivable; credit Programming Service Revenue Chapter 2, SE 6. Unearned Programming Cash Service Revenue May 2 5,000 May 5 2,500 May 22 600 19 500 25 650 22 600 Common Stock 6,100 3,150 May 2 5,000 Bal. 2,950 Programming Service Accounts Receivable Revenue May 31 # 250 May 19 500 31 250 Supplies Bal. 750 May 7 300 Rent Expense Office Equipment May 25 650 May 5 # 2,500 Accounts Payable May 7 300
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Ch2 SE7 to SE9 Chapter 2, SE 7. Bear's Programming Service, Inc. Trial Balance May 31, 2010 Cash $2,950 Accounts Receivable 250 Supplies 300 Office Equipment 2,500 Accounts Payable $ 300 Unearned Programming Service Revenue 600 Common Stock 5,000 Programming Service Revenue 750 Rent Expense 650 ______ $6,650 $6,650 Chapter 2, SE 8. Cash 1/2 1,200 1/4 700 The transactions of Jan. 2 and 4 have an immediate impact on cash, whereas the transactions of Jan. 8 and 9 will not impact cash until later when the cash is received or paid. Chapter 2, SE 9. General Journal Page 4 Post. Date Description Ref. Debit Credit Sept. 6 Accounts Receivable 3,800 Service Revenue 3,800 To bill customer for services performed 16 Cash 1,800 Accounts Receivable 1,800 To record receipt of partial pay- ment on account billed Sept. 6
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Ch2 SE10 Chapter 2, SE 10. Cash Account No. 111 Post. Balance Date Item Ref. Debit Credit Debit Credit Sept. 16 J4 1,800 1,800 Accounts Receivable Account No. 113 Post. Balance Date Item Ref. Debit Credit Debit Credit Sept. 6 J4 3,800 3,800 16 J4 1,800 2,000 Service Revenue Account No. 411 Post.
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