Question

E1-5 Labelling and Classifying Business Transactions (LO2) The following items relate to business transactions involving Collectibles Canada. Identify an appropriate label (account name) for each item as it would be reported in the company's financial statements and classify each item as an asset (A), llability (L). shareholders equity (SE), revenue (R), or expense (E). Type Label Accounts payable Land A Coins and currency b. Amounts that Collectibles Canada owes to suppliers of coins and currency C Amounts that Collectibles Canada can collect from customers d. Amounts owed to bank for loan to buy building e. Property on which buildings will be built 1. Amounts distributed from profits to shareholders 9 Amounts earned by Collectibles Canada by selling coin-collecting supplies h Unused paper in Collectibles Canada head office i Cost of paper used up during month 1 Amounts contributed to Collectibles Canada by shareholders

Answer 1

	Collectibles Canada
	Assuming the business is to sale collectibles like
	coins and currencties
	Transaction	Label	Type
a	Coins & Currency	Inventory	A
b	Amounts that Collectibles Canada owes to suppliers of coins and currency	Accounts Payable	L
c	Amounts that Collectibles Canada can collect from customers	Accounts Receivable	A
d	Amount owed to Bank for loan to buy building	Long term Loan	L
e	Property on which building will be built	Land	A
f	Amount distributed from profit to shareholders	Dividend	SE
g	Amounts earned by Collectibles Canada by selling coin-collecting supplies	Sales Revenue	R
h	Unused paper in Collectibles Canada Head Office	Supplies	A
i	cost of paper used up during month	Supplies Expense	E
j	Amounts contributed to Collectibles Canada by shareholders	Common Share	SE