Question

k Ch2 due 1/30/2019 The f g are in dent situations a A company orders and receives 10 personal computers for office use for which it signs a note promising to pay $20,000 within three months. b. A company purchases for $41,000 cash a new delivery truck that has a list ('sticker) price of $44,000 c A women's clothing retailer orders 30 new display stands for $500 each for future delivery d A new is formed and issues 100 shares of stock for $10 per share to investors purchases a piece of land for $49,000 cash. An appraiser for the buyer valued the land at $56,300 y uses a personal check to buy a $20,000 car for personal use. Answer from the f The owner of a local c s point of $12,000 from a local bank and signs a six-month note for the loan. h A c Required 1. Indicate titles of the appropriate accounts, if any, affected in each of the preceding events. 2-a. At what amount would you record the delivery truck in (b? 2-b. At what amount would you record the piece of land in (e 2-c. What measurement principle are you applying? 3-0. What reasoning did you apply in (c 3-b. For (1). what accounting concept did you apply? Prey 2 of 3E Next>

Answer 1

Solution 1:

Event	Given	Received
a	Note Payable	Computer
b	Cash	Truck
c	NA	NA
d	Common stock	Cash
e	Cash	Land
f	NA	NA
g	Note Payable	Cash
h	Cash	Reduction in note payable

solution 2a:

Delivery truck should be recorded at $41,000.

solution 2b:

Land will be recorded at $49,000

Solution 2c:

These are applications of the cost principal.

Solution 3a:

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

Solution 3b:

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