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CHAPTER $1$ A Framework for Financial Accounting

PROBLEMS: SET A

Classify business activities $($LO$1-2)$

Assign account classifications $($LO$1-2)$

Prepare financial statements $($LO$1-3)$

User's Guide Problems marked with this icon can be solved using Microsoft Excel templates.

P$1-1$A Below are typical transactions for Hewlett$-$Packard.

Type of

Business Activity

$q,$

$q,$

$q,$

$q,$

$q,$

$q,$

$8.q,$

$q,$

$10.q,$

Required:

Indicate whether each transaction is classified as a financing, investing, or operating activity.

P$1-2$A Account classifications include assets, liabilities, stockholders' equity, dividends, revenues, and expenses.

Account

Classifications $q,$

$q,$

Common stock

Equipment

$q,$ Salaries payable

$q,$ Service revenue

$q,$ Utilities expense

$6.q,$ Supplies

$q,$

Research and

development expense

$8.$

Land

$q,$ Income tax payable

$q,$ Interest payable $q,$

Sale of common stock to investors.

Equipment used for operations.

Amounts owed to employees.

Sales of services to customers.

Cost of utilities.

Purchase of office supplies.

Cost of research and development.

Property used for operations.

Amounts owed to the IRS for taxes.

Amount of interest owed on borrowing.

Required:

For each transaction, indicate whether the related account would be classified in the balance sheet as $($a$)$ an asset, $($b$)$ a liability, or $($c$)$ stockholders' equity; in the income statement as $($d$)$ a revenue or $($e$)$ an expense; or in the statement of stockholders' equity as $($ f $)$ a dividend.

P$1-3$A Longhorn Corporation provides low$-$cost food delivery services to senior citizens. At the end of the year on December $31,2021,$ the company reports the following amounts:

In addition, the company had common stock of $$40,000$ at the beginning of the year and issued an additional $$4,000$ during the year. The company also had retained earnings of $$18,200$ at the beginning of the year.