LO 7 7 1700 600 900 200 4 1200 1200 6 1500 2000 3500 5 250 250 Share Capital

Lo 7 7 1700 600 900 200 4 1200 1200 6 1500 2000 3500

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LO 7 7. -1,700 -600 -900 -200 4. +1,200 +1,200 6. +1,500 +2,000 +3,500 5. +250 -250 Share Capital Illustration 1-10
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1-27 8. -250 -250 9. +600 -600 10. -1,300 -1,300 Trans- action Cash Accounts Receivable Supplies Equipment Accounts Payable Retained Earnings Rev. Exp. Div. Assets = Liabilities + Equity + + + + + = 1. +15,000 +15,000 2. -7,000 +7,000 3. +1,600 +1,600 $8,050 $1,400 $1,600 $7,000 $1,600 $15,000 $4,700 $1,950 $1,300 + + + + + = - - TRANSACTION 9. RECEIPT OF CASH ON ACCOUNT Softbyte SA receives €600 in cash from customers who had been billed for services (in Transaction 6). Illustration 1-10 LO 7 7. -1,700 -600 -900 -200 4. +1,200 +1,200 6. +1,500 +2,000 +3,500 5. +250 -250 Share Capital
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1-28 8. -250 -250 9. +600 -600 10. -1,300 -1,300 Trans- action Cash Accounts Receivable Supplies Equipment Accounts Payable Share Capital Retained Earnings Rev. Exp. Div. Assets = Liabilities + Equity + + + + + = 1. +15,000 +15,000 2. -7,000 +7,000 3. +1,600 +1,600 €8,050 €1,400 €1,600 €7,000 €1,600 €15,000 €4,700 €1,950 €1,300 + + + + + = - - TRANSACTION 10. DIVIDENDS The corporation pays a dividend of €1,300 in cash to Ray and Barbara Neal, the shareholders of Softbyte SA. €18,050 €18,050 Illustration 1-10 LO 7 7. -1,700 -600 -900 -200 4. +1,200 +1,200 6. +1,500 +2,000 +3,500 5. +250 -250
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1-29 1. Each transaction must be analyzed in terms of its effect on: a. The three components of the basic accounting equation. b. Specific types (kinds) of items within each component. 2. The two sides of the equation must always be equal. 3. The Share Capital—Ordinary and Retained Earnings columns indicate the causes of each change in the shareholders’ claim on assets. Summary of Transactions LO 7
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1-30 Transactions made by Virmari & Co. SA, a public accounting firm, for the month of August are shown below. Prepare a tabular analysis which shows the effects of these transactions on the expanded accounting equation, similar to that shown in Illustration 1-10. 1. The company issued ordinary shares for €25,000 cash. 2. The company purchased €7,000 of office equipment on credit. 3. The company received €8,000 cash in exchange for services performed. 4. The company paid €850 for this month’s rent. 5. The company paid a dividend of €1,000 in cash to shareholders. LO 7 > DO IT!
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1-31 1. +25,000 +25,000 Trans- action Cash Equipment Accounts Payable Share Capital Retained Earnings Rev. Exp. Div. Assets = Liabilities + Equity + + + = 1. The company issued ordinary shares for €25,000 cash. 2. +7,000 +7,000 3. +8,000 +8,000 4. -850 -850 5. -1,000 -1,000 $31,150 $7,000 $7,000 $25,000 $8,000 $850 $1,000 + + + = - - $18,050 $18,050 LO 7 > DO IT!
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1-32 1. +25,000 +25,000 Trans- action Cash Equipment Accounts Payable Retained Earnings Rev. Exp. Div. Assets = Liabilities + Equity + + + = 2. The company purchased €7,000 of office equipment on credit. 2. +7,000 +7,000 3. +8,000 +8,000 4. -850 -850 5. -1,000 -1,000 $31,150 $7,000 $7,000 $25,000 $8,000 $850 $1,000 + + + = - - $18,050 $18,050 LO 7 > DO IT! Share Capital
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1-33 1. +25,000 +25,000 Trans- action Cash Equipment Accounts Payable Retained Earnings Rev. Exp. Div. Assets = Liabilities + Equity + + + = 3. The company received €8,000 cash in exchange for services performed. 2. +7,000 +7,000 3. +8,000 +8,000 4. -850 -850 5. -1,000 -1,000 $31,150 $7,000 $7,000 $25,000 $8,000 $850 $1,000 + + + = - - $18,050 $18,050 LO 7 > DO IT! Share Capital
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1-34 1. +25,000 +25,000 Trans- action Cash Equipment Accounts Payable Retained Earnings Rev. Exp. Div. Assets = Liabilities + Equity + + + = 4. The company paid €850 for this month’s rent.
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  • Fall '18
  • Mike Leu

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