Homework Answers
Ans:
a.
| Event | Activity Classification |
| 1 | Asset Source |
| 2 | Asset Use |
| 3 | Asset Use |
| 4 | Asset Source |
| 5 | Asset Source |
| 6 | Asset Exchange |
| 7 | NA |
b.
| The Candle Shop | ||||||||||||||||
| Horizontal Statements Model for Year 1 | ||||||||||||||||
| Event No. | Balance Sheet | Income Statement | Statement of Cash Flow | |||||||||||||
| Assets | = | Liabilities | + | Stockholder's Equity | Revenue | - | Expense | = | Net Income | Effect on Cash | Type of Activity | |||||
| Cash | + | Land | = | Note Payables | + | Common Stock | + | Retained Earnings | ||||||||
| 1 | I | + | NA | = | NA | + | I | + | NA | NA | - | NA | = | NA | I | FA |
| 2 | D | + | NA | = | NA | + | NA | + | D | NA | - | NA | = | NA | D | FA |
| 3 | D | + | NA | = | NA | + | NA | + | D | NA | - | I | = | D | D | OA |
| 4 | I | + | NA | = | I | + | NA | + | NA | NA | - | NA | = | NA | I | FA |
| 5 | I | + | NA | = | NA | + | NA | + | I | I | - | NA | = | I | I | OA |
| 6 | D | + | I | = | NA | + | NA | + | NA | NA | - | NA | = | NA | D | IA |
| 7 | NA | + | NA | = | NA | + | NA | + | NA | NA | - | NA | = | NA | NA | NA |
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The Candle Shop experienced the following events during its first year of operations. Yeart 1. Acquired...
The Candle Shop experienced the following events during its first year of operations, Year1 1. Acquired...
The Candle Shop experienced the following events during its first year of operations, Year1 1. Acquired cash by issuing common stock 2. Paid a cash dividend to the stockholders. 3. Paid cash for operating expenses. 4. Borrowed cash from a bank. 5. Provided services and collected cash. 6. Purchased land with cash. 7. Determined that the market value of the land is higher than the historical cost. Required a. Indicate whether each event is an asset source, use, or exchange...
Maben Company was started on January 1, Year 1, and experienced the following events during its...
Maben Company was started on January 1, Year 1, and experienced
the following events during its first year of operation:
Acquired $31,000 cash from the issue of common stock.
Borrowed $39,000 cash from National Bank.
Earned cash revenues of $49,000 for performing services.
Paid cash expenses of $45,500.
Paid a $1,100 cash dividend to the stockholders.
Acquired an additional $21,000 cash from the issue of common
stock.
Paid $10,000 cash to reduce the principal balance of the bank
note.
Paid...
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Bill Darby started Darby Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $1,700 of cash revenue. 2. Borrowed $2,600 cash from the bank. 3. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on September 1, Year 1, had a one-year term and an 7 percent annual interest rate. Required a. What is the amount of interest payable at December 31,...
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Hart, Attorney at Law, experienced the following transactions in Year 1, the first year of operations:...
Hart, Attorney at Law,
experienced the following transactions in Year 1, the first year of
operations:
Accepted $36,000 on April 1, Year 1, as a retainer for services
to be performed evenly over the next 12 months.
Performed legal services for cash of $54,000.
Purchased $2,800 of office supplies on account.
Paid $2,400 of the amount due on accounts payable.
Paid a cash dividend to the stockholders of $5,000.
Paid cash for operating expenses of $31,000.
Determined that at the...
The Candle Shop experienced the following events during its first year of operations, Year1 1. Acquired cash by issuing common stock 2. Paid a cash dividend to the stockholders. 3. Paid cash for operating expenses. 4. Borrowed cash from a bank. 5. Provided services and collected cash. 6. Purchased land with cash. 7. Determined that the market value of the land is higher than the historical cost. Required a. Indicate whether each event is an asset source, use, or exchange...
Maben Company was started on January 1, Year 1, and experienced
the following events during its first year of operation:
Acquired $31,000 cash from the issue of common stock.
Borrowed $39,000 cash from National Bank.
Earned cash revenues of $49,000 for performing services.
Paid cash expenses of $45,500.
Paid a $1,100 cash dividend to the stockholders.
Acquired an additional $21,000 cash from the issue of common
stock.
Paid $10,000 cash to reduce the principal balance of the bank
note.
Paid...
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The Containers Inc, experienced the following events during its first year of operations, Year 1: 1. Acquired $42.000 cash by issuing common stock. 2. Earned $25,000 revenue on account. 3. Paid $18,000 cash for operating expenses. 4. Borrowed $10,000 cash from a bank. 5. Collected $22,000 of the balance in accounts receivable. 6. Paid a $1,000 cash dividend. Required Show the effects of the events on the financial statements using a horizontal financial statements model like...
Milo Clothing experienced the following events during Year 1, its first year of operation: 1. Acquired $17,500 cash from the issue of common stock. 2. Purchased inventory for $5,200 cash. 3. Sold inventory costing $3,120 for $5,304 cash. 4. Paid $800 for advertising expense. Required Record the events in a horizontal financial statements model. (In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash....
Bill Darby started Darby Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $16,200 of cash revenue. 2. Borrowed $12,000 cash from the bank 3. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on September 1, Year 1, had a one-year term and art 8 percent annual interest rate. Required a. What is the amount of interest payable at December 31,...
Bill Darby started Darby Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $1,700 of cash revenue. 2. Borrowed $2,600 cash from the bank. 3. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on September 1, Year 1, had a one-year term and an 7 percent annual interest rate. Required a. What is the amount of interest payable at December 31,...
Ben Bradley started Bradley Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $2,400 of cash revenue for performing services, 2. Borrowed $3,900 cash from the bank. 3. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on August 1, Year 1, had a one-year term and a 8 percent annual interest rate. Required a. What is the amount of interest expense...
Exercise 2-2B Tpes of transactions and the horizontal financial statements model Pet Partners experienced the following events during its first year of operations, Year 1: 1. Acquired cash by issuing common stock LO 2-1 2. Borrowed cash from a bank. 3 Signed a contract to provide services in the future. Purchased land with cash. 4. Paid cash for operating expenses 6. Paid a cash dividend to the stockholders 7. Determined that the market value of the land is higher than...
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Hart, Attorney at Law,
experienced the following transactions in Year 1, the first year of
operations:
Accepted $36,000 on April 1, Year 1, as a retainer for services
to be performed evenly over the next 12 months.
Performed legal services for cash of $54,000.
Purchased $2,800 of office supplies on account.
Paid $2,400 of the amount due on accounts payable.
Paid a cash dividend to the stockholders of $5,000.
Paid cash for operating expenses of $31,000.
Determined that at the...
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