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college accounting
College Accounting A Contemporary Approach 6th International Edition M. David Haddock, John Price, Michael Farina - Solutions
18. The accounts and transactions of Zachary Morrow, Counselor and Attorney at Law, are reflected below.INSTRUCTIONS Analyze the transactions. Record each transaction on the appropriate side of the T accounts. Identify each entry in the T accounts by writing the letter of the transaction next to
17. The following transactions took place at Thomas Capital Investments.INSTRUCTIONS Analyze each of the transactions. For each transaction, decide what accounts are affected and set up T accounts. Record the effects of the transaction in the T accounts.TRANSACTIONS 1. Paid $7,200 for the current
16. The following transactions took place at Transport Truck Maintenance Company.INSTRUCTIONS For each transaction, set up T accounts from the following list: Cash; Shop Equipment; Store Equipment; Truck; Accounts Payable; Carmen Farris, Capital; and Carmen Farris, Drawing.Analyze each transaction.
15. The following transactions occurred at several different businesses and are not related.INSTRUCTIONS Analyze each of the transactions. For each transaction, set up T accounts. Record the effects of the transaction in the T accounts.TRANSACTIONS 1. A firm purchased equipment for $64,000 in
14. The following accounts and transactions are for Vin Nguyen, Landscape Consultant.INSTRUCTIONS Analyze the transactions. Record each in the appropriate T accounts. Identify each entry in the T accounts by writing the letter of the transaction next to the entry.ASSETS Cash Accounts Receivable
13. The following occurred during June at Robinson Financial Planning and Wealth Management.INSTRUCTIONS Analyze each transaction. Use T accounts to record these transactions and be sure to put the name of the account on the top of each account. Record the effects of the transaction in the T
12. The following transactions took place at Wesson Counseling Services, a business established by Alexis Wesson.INSTRUCTIONS For each transaction, set up T accounts from this list: Cash; Office Furniture; Office Equipment;Automobile; Accounts Payable; Alexis Wesson, Capital; and Alexis Wesson,
11. The following transactions occurred at several different businesses and are not related.INSTRUCTIONS Analyze each of the transactions. For each, decide what accounts are affected and set up T accounts.Record the effects of the transaction in the T accounts.TRANSACTIONS 1. Shirley Cosby, an
10. From the trial balance and the net income or net loss determined in Exercise 3.9, prepare a statement of owner’s equity and a balance sheet for Cedar Canyon Nursery and Landscape as of December 31, 20X1.
9. The following T accounts show transactions that were recorded in December 20X1 by Cedar Canyon Nursery and Landscape, a firm that specializes in residential and commercial landscaping. The entries for the first transaction are labeled with the letter (a), the entries for the second transaction
8. The accounts that will be used by Merino Moving Relocators follow. Prepare a chart of accounts for the firm. Classify the accounts by type, arrange them in an appropriate order, and assign suitable account numbers.Office Supplies Accounts Payable Cash Utilities Expense Office Equipment Barbara
7. From the trial balance and the net income or net loss determined in Exercise 3.6, prepare a statement of owner’s equity and a balance sheet for Residential Rental Consultants as of December 31, 20X1.
6. Using the account balances from Exercise 3.5, prepare a trial balance and an income statement for Residential Rental Consultants. The trial balance is for December 31, 20X1, and the income statement is for the month ended December 31, 20X1.
5. The following T accounts show transactions that were recorded on December 31, 20X1 by Residential Rental Consultant, a firm that specializes in local housing rentals. The entries for the first transaction are labeled with the letter (a), the entries for the second transaction with the letter(b),
4. In each of the following sentences, fill in the blanks with the word debit or credit:1. The owner’s capital account normally has a ? balance. This account increases on the ?side and decreases on the ? side.2. Asset accounts normally have ? balances. These accounts increase on the ? side and
3. Indicate whether each of the following accounts normally has a debit balance or a credit balance:1. Cash 2. Supplies 3. Equipment 4. Accounts Receivable 5. Salaries Expense 6. Accounts Payable 7. Fee Income 8. Brenda Smith, Capital
2. Bobby Collins decided to start a dental practice. The first five transactions for the business follow.For each transaction, (1) determine which two accounts are affected, (2) set up T accounts for the affected accounts, and (3) enter the debit and credit amounts in the T accounts.1. Collins
1. Huddleston Cleaning Service has the following account balances on December 31, 20X1. Set up a T account for each account and enter the balance on the proper side of the account.Cash $38,000 Equipment 92,000 Accounts Payable 48,400 Robert Huddleston, Capital 81,600
11. Are the following accounts permanent or temporary accounts?a. Fees Incomeb. Johnny Jones, Drawingc. Accounts Payabled. Accounts Receivablee. Johnny Jones, Capitalf. Prepaid Rent g. Cash h. Advertising Expense i. Utilities Expense j. Equipment k. Salaries Expense l. Prepaid Insurance
10. Why is the modern system of accounting usually called the double-entry system?
9. Why is Prepaid Rent considered an asset account?
8. The terms debit and credit are often used in describing the effects of transactions on different accounts. What do these terms mean?
7. Indicate whether each of the following types of account would normally have a debit balance or a credit balance:a. An asset accountb. A liability accountc. The owner’s capital accountd. A revenue accounte. An expense account
6. How is the balance of an account determined?
5. Accounts are classified as permanent or temporary accounts. What do these classifications mean?
4. When a chart of accounts is created, number gaps are left within groups of accounts. Why are these number gaps necessary?
3. In what order do accounts appear in the chart of accounts?
2. What is the purpose of a chart of accounts?
1. What are accounts?
5. Your friend has prepared financial statements for her business. She has asked you to review the statements for accuracy. The trial balance debit column totals $91,000 and the credit column totals $104,000. What steps would you take to find the error?
4. On which side of asset, liability, and owner’s equity accounts are decreases recorded?
3. What type of accounts are found on the balance sheet?
2. What are withdrawals, and how are they recorded?
1. What is a chart of accounts?
39. Gloria’s Fabrics is a large fabric provider to the general public. The accounting office has three employees: accounts receivable clerk, accounts payable clerk, and full charge bookkeeper. The accounts receivable clerk creates the sales invoices and records the cash receipts, the accounts
38. Review the following excerpt from the 2020 consolidated statement of income for Southwest Airlines Co. Answer the questions that follow.Analyze:1. Although the format for the heading of an income statement can vary from company to company, the heading should contain the answers to who, what,
37. A good system of internal control requires business entities to have well-documented (written) policies and procedures on accounts receivable. These policies and procedures should cover segregation of duties of staff, credit and collection policies, and the review and reconciliation of
36. How does an accounting system help managers control operations and make sound decisions?
35. Why should managers be concerned with changes in the amount of creditors’ claims against the business?
34. Is it reasonable to expect that all new businesses will have a net income from the first month’s operations? From the first year’s operations?
33. After examining financial data for a monthly period, the owner of a small business expressed surprise that the firm’s cash balance had decreased during the month even though there was substantial net income. Do you think this owner is right to expect cash to increase because of a substantial
32. Santiago Madrid opened a gym and fitness studio called Perfect Body Fitness and Spa Center at the beginning of November 20X1. It is now January 3, 20X2, and Madrid is trying to determine whether he made a profit during his first two months of operations in 20X1 which ended on December 31, 20X1.
31. The following account balances are for Lisa Assaad, Certified Public Accountant, as of April 30, 20X1.Cash $60,000 Accounts Receivable 24,000 Maintenance Expense 9,200 Advertising Expense 7,780 Fees Earned 53,600 Lisa Assaad, Capital, April 1 ?Salaries Expense 26,000 Machinery 42,000 Accounts
30. The equation below shows the transactions of Mary Amos, Attorney and Counselor at Law, during August. This law firm is owned by Mary Amos.INSTRUCTIONS Analyze each transaction carefully. Prepare an income statement and a statement of owner’s equity for the month. Prepare a balance sheet for
29. Calvin Paxton is opening a tax preparation service on December 1, which will be called Paxton’s Tax Service. Paxton plans to open the business by depositing $100,000 cash into a business checking account. The following assets will also be owned by the business: furniture (fair market value
28. Kimberly Ashley owns Ashley’s Consulting Service. At the beginning of September, her firm’s financial records showed the following assets, liabilities, and owner’s equity.Cash $76,000 Accounts Receivable 24,000 Supplies 25,600 Office Furniture 48,000 Accounts Payable 20,000 Kimberly
27. On September 1, Antonio Alvarez opened Alvarez Tutoring Service.INSTRUCTIONS Analyze the following transactions. Use the fundamental accounting equation form to record the changes in property, claims of creditors, and owner’s equity. (Use plus, minus, and equals signs.)TRANSACTIONS 1. The
26. The following equation shows the transactions of Hogan Cleaning Service during May. The business is owned by Brecha Hogan.INSTRUCTIONS Analyze each transaction carefully. Prepare an income statement and a statement of owner’s equity for the month. Prepare a balance sheet for May 31, 20X1.
25. Machinery and Equipment Repair Service is owned by William Giese.INSTRUCTIONS Use the following figures to prepare a balance sheet dated March 31, 20X1. (You will need to compute the owner’s equity.)Cash $168,600 Supplies 12,760 Accounts Receivable 26,400 Equipment 156,000 Accounts Payable
24. Kawonza Carter is a painting contractor who specializes in painting commercial buildings. At the beginning of June, her firm’s financial records showed the following assets, liabilities, and owner’s equity.Cash $288,000 Accounts Receivable 74,000 Office Furniture 170,000 Auto 110,000
23. On July 1, Roberto Alonzo established Alonzo Commercial Appraisal Services, a firm that provides expert commercial appraisals and represents clients in commercial appraisal hearings.INSTRUCTIONS Analyze the following transactions. Record in equation form the changes that occur in assets,
22. Using the information provided in Exercise 2.8, prepare a statement of owner’s equity for the month of September and a balance sheet for Rodriguez Wealth Management Consulting as of September 30, 20X1.
21. On December 1, Vincent Nguyen opened a speech and hearing clinic. During December, his firm had the following transactions involving revenue and expenses. Did the firm earn a net income or incur a net loss for the period? What was the amount?Paid $3,100 for advertising.Provided services for
20. At the beginning of September, Jorge Rodriguez started Rodriguez Wealth Management Consulting, a firm that offers financial planning and advice about investing and managing money. On September 30, the accounting records of the business showed the following information. Prepare an income
19. The following equation shows the effects of a number of transactions that took place at Sanchez Auto Repair Company during the month of July. Describe each transaction. Assets = Liabilities + Owner's Equity Accounts Accounts Cash + Receivable + Equipment = Payable + Alfredo Sanchez, Capital +
18. Technology Mart had the following revenue and expenses during the month ended July 31. Did the firm earn a net income or incur a net loss for the period? What was the amount?Fees for computer repairs $46,800 Advertising expense 8,100 Salaries expense 20,500 Telephone expense 1,080 Fees for
17. The Business Resource Center had the transactions listed below during the month of June. Show how each transaction would be recorded in the accounting equation. Compute the totals at the end of the month. The headings to be used in the equation follow.TRANSACTIONS 1. Justin Cole started the
16. The following financial data are for the dental practice of Dr. Carlos Martinez when he began operations in July. Determine the amounts that would appear in Dr. Martinez’s balance sheet.1. Owes $26,000 to the Duncanville Equipment Company.2. Has cash balance of $15,500.3. Has dental supplies
15. Indicate the impact of each of the transactions below on the fundamental accounting equation(Assets = Liabilities + Owner’s Equity) by placing an “I” to indicate an increase and a “D” to indicate a decrease. The first transaction is entered as an example.TRANSACTIONS 1. Paid $2,100
14. The fundamental accounting equations for several businesses follow. Supply the missing amounts.Assets = Liabilities + Owner’s Equity 1. $32,350 = $6,720 + $ ?2. $28,900 = $6,380 + $ ?3. $48,075 = $ ? + $12,300 4. $ ? = $5,700 + $33,876 5. $54,000 = $ ? + $27,200
13. Just before Ward Laboratories opened for business, Pamela Ward, the owner, had the following assets and liabilities. Determine the totals that would appear in the firm’s fundamental accounting equation (Assets = Liabilities + Owner’s Equity).Cash $101,000 Laboratory Equipment 160,000
12. Describe the effects of each of the following business transactions on assets, liabilities, and owner’s equity.a. Bought equipment on credit.b. Paid salaries to employees.c. Sold services for cash.d. Paid cash to a creditor.e. Bought furniture for cash.f. Sold services on credit.
11. How does net income affect owner’s equity?
10. How is net income or net loss determined?
9. What are expenses?
8. What is revenue?
7. Why does the third line of the headings differ on the balance sheet and the income statement?
6. What information is shown in the heading of a financial statement?
5. What information does the statement of owner’s equity contain?
4. What information does the income statement contain?
3. What information does the balance sheet contain?
2. What are assets, liabilities, and owner’s equity?
1. What is the fundamental accounting equation?
5. In what order are the financial statements prepared? Why?
4. What effect do revenue and expenses have on owner’s equity?
3. Describe a transaction that will cause Accounts Receivable to decrease and Cash to increase by $2,800.
2. If one side of the fundamental accounting equation increases, what will happen to the other side? Why?
1. What is the difference between buying for cash and buying on account?
10. Restful Sleep Mattress company is planning to expand into selling bedroom furniture. This expansion will require a loan from the bank. The bank has requested financial information. In a group, discuss the information the bank would require. What information, if any, would you provide to the
9. Within a company’s annual report, a section called “Notes to Consolidated Financial Statements”offers general information about the company along with detailed notes related to its financial statements.Analyze Online: On the American Eagle Outfitters, Inc., website (www.ae.com), click on
8. Why are international accounting standards important to management?
7. Does a business owner/manager need to worry about the separate entity assumption? Why or why not?
6. What is the role of the manager versus the accountant?
5. What would you tell a small business owner who says he does not see a need for an accounting system in his business because he closely supervises the day-to-day operations and knows exactly what is happening with the business?
4. What kind of problems can you foresee if a business owner and/or manager does not have a basic knowledge of accounting?
3. Besides earning a profit, what other objectives might a business have? Can financial information play an important role in these objectives?
2. Why is financial information important?
1. As an owner or manager of a business, what questions would you ask to judge the firm’s performance, control operations, decision making, and plans for the future?
22. Selecting the right employees is a critical step for enhancing the entity’s system of internal control and fraud prevention. Reflected below are several possible ways to check the background of employees. For each item listed, indicate why the background check is important, what type of
21. Since graduating from college five years ago, you have worked for a national chain of men’s clothing stores. You have held several positions within the company and are currently manager of a local branch store.Over the past three years, you have observed a pattern in the purchases of men’s
20. Employees sometimes make mistakes and errors in recording accounting transactions. Is this considered fraud?
19. Name two common internal control and fraud prevention procedures.
18. What is the goal of internal control?
17. Define fraud.
16. Define internal control.
15. What is a limited liability company (LLC)?
14. How does one become a Certified Bookkeeper (CB)?
13. What does the Certified Bookkeeper (CB) designation imply?
12. What is the purpose of the Public Company Accounting Oversight Board?
11. What led to the passage of the Public Company Accounting Reform and Investor Protection Act of 2002?
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