Basic accounting equations
Week One Exercise Assignment
Basic Accounting Equations
1. 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. Amounts paid to a mall for rent.
b. Amounts to be paid in 10 days to suppliers.
c. A new fax machine purchased for office use.
d. Land held as an investment.
e. Amounts due from customers.
f. Daily sales of merchandise sold.
g. Promotional costs to publicize a concert.
h. A long-term loan owed to Citizens Bank.
i. The albums, tapes, and CDs held for sale to customers.
2. Basic journal entries
The following transactions pertain to the Jennifer Royall Company:
May 1 Jenni¬fer Royall invested cash of $25,000 and land valued at $15,000 into the business.
5 Provided $1,000 of services to Jason Ratchford, a client, on account.
9 Paid $1,250 of salaries to an employee.
14 Acquired a new computer for $4,200, on account.
20 Collected $800 from Jason Ratchford for services provided on May 5.
24 Borrowed $2,500 from BestBanc by securing a six-month loan.
Prepare journal entries (and explanations) to record the preceding transactions and events.
3. Balance sheet preparation. The following data relate to Preston Company as of December 31, 20XX:
Building $40,000 Accounts receivable $24,000
Cash 21,000 Loan payable 30,000
J. Preston, Capital 65,000 Land 21,000
Accounts payable ?
Prepare a balance sheet as of December 31, 20XX. (See Exhibit 1.1 and 1.4)
4. Basic transaction processing. On November 1 of the current year, Richard Simmons established a sole proprietorship. The following transactions occurred during the month:
1: Simmons invested $32,000 into the business for $32,000 in common stock.
2: Paid $5,000 to acquire a used
Basic Accounting Equations
1. 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. Amounts paid to a mall for rent.
b. Amounts to be paid in 10 days to suppliers.
c. A new fax machine purchased for office use.
d. Land held as an investment.
e. Amounts due from customers.
f. Daily sales of merchandise sold.
g. Promotional costs to publicize a concert.
h. A long-term loan owed to Citizens Bank.
i. The albums, tapes, and CDs held for sale to customers.
2. Basic journal entries
The following transactions pertain to the Jennifer Royall Company:
May 1 Jenni¬fer Royall invested cash of $25,000 and land valued at $15,000 into the business.
5 Provided $1,000 of services to Jason Ratchford, a client, on account.
9 Paid $1,250 of salaries to an employee.
14 Acquired a new computer for $4,200, on account.
20 Collected $800 from Jason Ratchford for services provided on May 5.
24 Borrowed $2,500 from BestBanc by securing a six-month loan.
Prepare journal entries (and explanations) to record the preceding transactions and events.
3. Balance sheet preparation. The following data relate to Preston Company as of December 31, 20XX:
Building $40,000 Accounts receivable $24,000
Cash 21,000 Loan payable 30,000
J. Preston, Capital 65,000 Land 21,000
Accounts payable ?
Prepare a balance sheet as of December 31, 20XX. (See Exhibit 1.1 and 1.4)
4. Basic transaction processing. On November 1 of the current year, Richard Simmons established a sole proprietorship. The following transactions occurred during the month:
1: Simmons invested $32,000 into the business for $32,000 in common stock.
2: Paid $5,000 to acquire a used