Question: The expanded accounting equation consists of assets, liabilities, common stock, dividends, revenues, and expenses. It can be used to reveal insights into changes in a company’s financial position.
1. Form learning teams of six (or more) members. Each team member must select one of the six components, and each team must have at least one expert on each component: (a) assets, (b) liabilities, (c) common stock, (d) dividends, (e) revenues, and ( f ) expenses.
2. Form expert teams of individuals who selected the same component in part 1. Expert teams are to draft a report that each expert will present to his or her learning team addressing the following:
c. Using the transaction and amounts in (b), verify the equality of the accounting equation and then explain any effects on the income statement and statement of cash flows.
3. Each expert should return to his/her learning team. In rotation, each member presents his/her expert team’s report to the learning team. Team discussion is encouraged.
Total assets have been increased by $19,000, liabilities by $4,000, Equity by $10,000 and Revenue by $5,000.
The accounting equation is the horizontal form of expressing the double-entry system. Under this equation, all the assets are shown on the left side of the equation, and the liabilities and assets are shown on the right side of the equation. The sum of all assets equals the sum of all liabilities and capital.
|Assets = Liabilities + Equity|
Business transactions completed by Hannah Venedict during the month of September are as follows.
a. Venedict invested $60,000 cash along with office equipment valued at $25,000 in exchange for common stock of a new company named HV Consulting.
b. The company purchased land valued at $40,000 and a building valued at $160,000. The purchase is paid with $30,000 cash and a long-term note payable for $170,000.
c. The company purchased $2,000 of office supplies on credit.
d. Venedict invested her personal automobile in the company in exchange for more common stock. The automobile has a value of $16,500 and is to be used exclusively in the business.
e. The company purchased $5,600 of additional office equipment on credit.
f. The company paid $1,800 cash salary to an assistant.
g. The company provided services to a client and collected $8,000 cash.
h. The company paid $635 cash for this month’s utilities.
i. The company paid $2,000 cash to settle the account payable created in transaction c.
j. The company purchased $20,300 of new office equipment by paying $20,300 cash.
k. The company completed $6,250 of services for a client, who must pay within 30 days.
l. The company paid $1,800 cash salary to an assistant.
m. The company received $4,000 cash in partial payment on the receivable created in transaction k.
n. The company paid $2,800 cash in dividends.
1. Prepare general journal entries to record these transactions (use account titles listed in part 2).
Question: Denzel Brooks opened a web consulting business called Venture Consultants and completed the following transactions in March.
March 1 Brooks invested $150,000 cash along with $22,000 in office equipment in the company in exchange for common stock.
2 The company prepaid $6,000 cash for six months’ rent for an office. (Hint: Debit Prepaid Rent for $6,000.)
3 The company made credit purchases of office equipment for $3,000 and office supplies for $1,200. Payment is due within 10 days.
6 The company completed services for a client and immediately received $4,000 cash.
9 The company completed a $7,500 project for a client, who must pay within 30 days.
12 The company paid $4,200 cash to settle the account payable created on March 3.
19 The company paid $5,000 cash for the premium on a 12-month insurance policy. (Hint: Debit Prepaid Insurance for $5,000.)
22 The company received $3,500 cash as partial payment for the work completed on March 9.
25 The company completed work for another client for $3,820 on credit.
29 The company paid $5,100 cash in dividends.
30 The company purchased $600 of additional office supplies on credit.
31 The company paid $500 cash for this month’s utility bill.
2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column
format): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128);
Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Common Stock (307);
Dividends (319); Services Revenue (403); and Utilities Expense (690). Post the journal entries from
part 1 to the ledger accounts and enter the balance after each posting.
Question: Prepare general journal entries for the following transactions of a new company called Pose-for-Pics. Use the following (partial) chart of accounts: Cash; Office Supplies; Prepaid Insurance; Photography Equipment; Common Stock; Photography Fees Earned; and Utilities Expense.
Aug. 1 Madison Harris, the owner, invested $6,500 cash and $33,500 of
photography equipment in the company in exchange for common stock.
2 The company paid $2,100 cash for an insurance policy covering the
next 24 months.
5 The company purchased office supplies for $880 cash.
20 The company received $3,331 cash in photography fees earned.
31 The company paid $675 cash for August utilities.
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