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Chapter 1: Q28E (page 40)

Using the accounting equation to analyze business transactions The analysis of the first eight transactions of Advanced Accounting Service follows. Describe each transaction ASSETS EQUITY Common 鈭� Stock Contributed Capital Dividends + Retained Earnings 鈭� 鈭� Salaries Expense Service Revenue + + + + + + + + + + + + + + + + + + + + + + + + + + + 1 2 Bal. 3 Bal. 4 Bal. 5 Bal. 6 Bal. 7 Bal. 8 Bal. Accounts Receivable Cash +13,400 \(13,400 \)13,400 +410 \(13,810 \)13,810 \(13,810 \)13,810 +31,000 \(31,000 \)31,000 +190 \(31,190 鈥�410 \)30,780 鈥�8,000 \(22,780 +790 \)23,570 鈥�1,500 \(22,070 +13,400 \)13,400 \(13,400 \)13,400 鈥�8,000 \(5,400 \)5,400 \(5,400 +31,000 \)31,000 \(31,000 \)31,000 \(31,000 \)31,000 \(31,000 \)31,000 +3,800 \(3,800 \)3,800 鈥�190 \(3,610 \)3,610 \(3,610 \)3,610 \(3,610 +3,800 \)3,800 \(3,800 \)3,800 \(3,800 \)3,800 +790 \(4,590 \)4,590 鈭�1,500 $1,500 LIABILITIES Accounts Payable

Short Answer

Expert verified

(1) Stockholder contribution

(2)Earning of Service Revenue on Account

(3) Purchase of equipment on account

(4) Collection on Account (Accounts Receivable)

(5) Purchase of equipment for cash

(6) Payment on Account (Accounts Payable)

(7) Earning of Service Revenue for Cash

(8) Payment of Salaries Expenses with Cash

Step by step solution

01

Explanation on Transaction Analysis

Trasaction analysis is the process in wffwct of the transaction on various accounts is analyzed.

02

Explanation on Accounting Equation

As per the accounting equation, affect of financial transaction of the business should be equal in both sides of the equation.

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Most popular questions from this chapter

Match the accounting terminology to the definitions. 7. Cost principle a. oversees the creation and governance of accounting standards in the United States 8. GAAP b. requires an organization to be a separate economic unit 9. Faithful representation c. oversees U.S. financial markets 10. SEC d. states that acquired assets and services should be recorded at their actual cost 11. FASB e. creates International Financial Reporting Standards 12. Monetary unit assumption f. the main U.S. accounting rule book 13. Economic entity assumption g. assumes that an entity will remain in operation for the foreseeable future 14. Going concern assumption h. assumes that items on the financial statements are recorded in a monetary unit 15. IASB i. requires information to be complete, neutral, and free from material error

Identifying users of accounting information

For each of the users of accounting information, identify whether the user is an external decision maker (E) or an internal decision maker (I):

a. customer

b. company manager

c. Internal Revenue Service

d. lender

e. investor

f. controller

g. cost accountant

h. SEC

Identifying accounts on the financial statements Consider the following accounts: a. Accounts Payable b. Cash c. Common Stock d. Accounts Receivable e. Rent Expense f. Service Revenue g. Office Supplies h. Dividends i. Land j. Salaries Expense Identify the financial statement (or statements) that each account would appear on. Use I for Income Statement, RE for Statement of Retained Earnings, B for Balance Sheet, and C for Statement of Cash Flows.

How does retained earnings increase? What are the two ways that retained earnings decreases?

Ashley Stamper opened a medical practice. During July, the first month of operation, the business, titled Ashley Stamper, MD, experienced the following events: Jul. 6 Received a contribution of \(68,000 from Stamper and opened a bank account in the name of A. Stamper, MD. The corporation issued common stock to Stamper. 9 Paid \)56,000 cash for land. 12 Purchased medical supplies for \(1,500 on account. 15 Officially opened for business. 20 Paid cash expenses: employees鈥� salaries, \)1,300; office rent, \(1,500; utilities, \)100. 31 Earned service revenue for the month, \(13,000, receiving cash. 31 Paid \)1,050 on account. Analyze the effects of these events on the accounting equation of the medical practice of Ashley Stamper, MD, using the following format:

+ 鈥� ASSETS EQUITY Rent Expense 鈥� Utilities Expense Common 鈥� Stock Contributed Capital + + Dividends Retained Earnings 鈥� Salaries Expense Service Revenue + Medical Supplies C
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