Week One Exercise Assignment
Basic Accounting Equations
1. Basic concepts. Jean's Marine Supply specializes in the sale of boating equipment and accessories. Identify the items that follow as an asset (A), liability (L), revenue (R), or expense (E) from the firm's viewpoint.
2. Basic computations. The following selected balances were extracted from the accounting records of Rossi Enterprises on December 31, 20X3:
a. Determine Rossi’s total assets as of December 31. 30000+18000+7400+56900+14800=$127100 b. Determine the company’s total liabilities as of December 31. 3200+1900+2500+40000+3300+4100+37500=$92500 c. Compute 20X3 net income or loss.$34600 income
3. Balance sheet preparation
December 31, 19XX
Accounts Receivacle $24000
Liabilities and Owners equity
Accounts payable ?
Owner Equity 65000
(accounts payable should be $11000 to balance equation?)
(1) How much does the company owe to its creditors at month-end? On which financial statement(s) would this information be found? Furniture(1800-500)1300+Expenses(300+150)450=1750 (2) Did the company have a “good” month from an accounting viewpoint? I would have to say no. The cash coming in vs. the cash out is near doubled. Cash on hand decreased by 2350 while cash actually received was 1300. On the other hand, considering the increase of asset value detracts from the offset and intial startup cost the company is starting out better than most. 5. Transaction analysis and statement preparation.
6. Recognition of normal balances
The following items appeared in the accounting records of Triguero's, a retail music store that also sponsors concerts. Classify each of the items as an asset, liability; revenue; or expense from the company's viewpoint. Also indicate the normal account balance of each item.
a. The albums, tapes, and CDs held for sale to customers. Asset/debit b. A long-term loan owed to Citizens Bank. Liability/credit c. Promotional costs to publicize a concert. Expense/credit d. Daily receipts for merchandise sold, revenue/debit
e. Amounts due from customers, revenue/credit
f. Land held as an investment,Asset/debit
g. A new fax machine purchased for office use. Asset/debit h. Amounts to be paid in 10 days to suppliers, Liability/credit i. Amounts paid to a mall for rent. Expense/credit
7. Basic journal entries
The following transactions pertain to the Jennifer Royall Company:
| Received cash of $15,000 and land valued at $10,000 from Jennifer Royall as an investment in the business.
| Provided $1,200 of services to Jason Ratchford, a client.
| Ratchford agreed to pay $800 in 15 days and the remaining amount in May.
| Paid $250 of salaries to an employee.
| Acquired a new computer for $3,200; Royall will pay the dealer in May.
| Collected $800 from Jason Ratchford for services provided on April 5.
| Borrowed $7,500 from BestBanc by securing a six-month loan.
| Prepare journal entries (and explanations) to record the preceding transactions and events.
8. Trial balance preparation. Brighton, a sole proprietorship began operation on March 1 of the current year. The following account balances were extracted from the general ledger on March 31; all accounts have normal balances.
| $ 12,000
| Interest Expense
| $ 300
| Accounts Receivable
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