Angela M. Hill-McBride
December 17, 2012
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. a. The inventory of boating supplies owned by the company. (A) b. Monthly rental charges paid for store space. (L) c. A loan owed to Citizens Bank.(L) d. New computer equipment purchased to handle daily record keeping.(A) e. Daily sales made to customers.(R) f. Amounts due from customers.(R) g. Land owned by the company to be used as a future store site.(A) h. Weekly salaries paid to salespeople.(E)
2. Analysis of transactions.
Set up the following headings across a piece of paper:
Assets = Liabilities + Owner's Equity
By using "+" and "-," indicate the effect of each of the following transactions on total assets, liabilities, and owner's equity: | Asset= | Liabilities+ | Owner’s Equity | a) Processed a $5,000 cash withdrawal for the owner. | - | - | - | b) Recorded the receipt of May's utility bill, to be paid in June | + | + | - | c) Provided services to customers on account. | + | + | + | d) Paid the current month's advertising charges. | - | + | - | e) Purchased a $27,000 delivery truck by paying $5,000 down and securing a loan for the remaining balance. | + | - | - | f) Received $11,000 cash from the owner as an investment in the business. | + | - | + | g) Returned a new computer and printer purchased earlier in the month on account. The bill had not as yet been paid. | - | - | + | h) Paid the utility bill recorded previously in (b) | + | + | - |
3. Balance sheet preparation.
The following data relate to Preston Company as of December 31, 19XX:
December 31, 19XX Assets | | | Liabilities |
References: Orbit Corporation (2012) 3 Year Summary. Retrieved on December 17, 2012 from http://www.orbitcorp.com/en/article/investor-relations/financial/3-years-summary.html Walther. (2012). Principles of Accounting: Volume I (1st ed.). San Diego, CA: Bridgepoint Education, Inc. www.ashford.edu