Question

The following are independent situations. a. A company orders and receives 10 personal computers for office use for which it signs a note promising to pay $12,500 within three months. b. A company purchases for $16,000 cash a new delivery truck that has a list ("sticker") price of $18,500. CAwomen's clothing retailer orders 20 new display stands for $110 each for future delivery. d. A new company is formed and issues 200 shares for $10 per share to investors. e. A company purchases a piece of land for $31.000 cash. An appraiser for the buyer valued the land at $32,600. { The owner of a local company buys a $6,000 car for personal use. Answer from the company's point of view. g. A company borrows $1,100 from a local bank and signs a six-month note for the loan. h. A company pays $1,020 owed on its note payable. (ignore interest.) Required: 1. Indicate titles of the appropriate accounts, if any, affected in each of the preceding events. Consider what the company gives and receives. Given Received owo = 2-a. At what amount would you record the delivery truck in b? Amount

Answer 1

Requirement 1:

	Given	Received
a	Notes payable	Computers
b	Cash	Delivery Truck
c	No affect	No affect
d	Common stock	Cash
e	Cash	Land
f	No effect	No effect
g	Notes payable	Cash
h	Cash	Notes payable

Note:

i.No entry on Event c because no transaction. It's just an order placed. No cash paid and no goods received. &

ii. No entry on Event f because it's a personal transaction.

Requirement 2a,2b&2c:

2a	$16,000
2b	$31,000
2c	These are application of the cost principle

Requirement 3a

Answer:

The agreement in c. involves no exchange or receipt of cash , goods, or service and thus is not a transaction.

Requirement 3b:

Answer:

Because transaction f. occurs between the owner and others, the separate entity assumption implies this transaction does not affect the business