1. Explain the account type purpose and financial statement where Liability first appears. 2. Identify the...
1. Explain the account type purpose and financial statement where Liability first appears.
2. Identify the normal balance of the account and the side on which it increases and decreases for Liability.
3. Develop two transactions for Liability, one that results in an increase to the account group and one that results in a decrease to the account. For each transaction (increase/decrease) prepare the following information...
a. Written description of the business transaction
b. Explanation of an accounting principle or assumption that applies to the transaction.
c. Journal entry of the transaction that involves at least two accounts, correctly formatted with the date, account name, debit or credit, and explanation line.
d. Demonstrate the accounting equation remains in balance after the transaction.
e. Show the effect on the financial statements first affected by the transaction.
All of these questions should be targeted towards the Liability account in Accounting/Accounting Equation.
Homework Answers
Part 1
Liabilities are also classified in the statement of financial position on the basis of their nature:
- Trade and other payables primarily include liabilities due to suppliers and contractors for credit purchases. Sundry payables which are too insignificant to be presented separately on the face of the balance sheet are also classified in this category.
- Short term borrowings typically include bank overdrafts and short term bank loans with a repayment schedule of less than 12 months.
- Long-term borrowings comprise of loans which are to be repaid over a period that exceeds one year. Current portion of long-term borrowings include the installments of long term borrowings that are due within one year of the reporting date.
- Current Tax Payable is usually presented as a separate line item in the statement of financial position due to the materiality of the amount.
Part 2
Liability has a debit balance normally. Accounting equation is Assets = Liabilities + Equity. It increases on the right side when liability increases with corresponding increase on left side too.
Add Answer to:
1. Explain the account type purpose and financial statement
where Liability first appears.
2. Identify the...
TRANSACTIONS 1 Owner invested $90,000 in the business 2 Purchased $26,700 supplies on account. 3. Purchased...
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TRANSACTIONS 1. Paid $2,100 for utilities. 2. Performed services for $10,500 on account 3. Received $6,500...
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1.
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these are three seperate problems....where is the xtra info
needed?
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FootCovers, Inc., with headquarters in Beaverton, Oregon, is one
of the world’s leading manufacturers of athletic shoes and sports
apparel. The following activities occurred during a recent year.
The amounts are rounded to millions.
Purchased additional buildings for $184 and equipment for $270;
paid $402 in cash and signed a long-term note for the rest.
Issued 100 shares of $2 par value common stock for $355
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Declared $145 in dividends...
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TRANSACTIONS 1 Owner invested $90,000 in the business 2 Purchased $26,700 supplies on account. 3. Purchased equipment for $21,000 cash. 4. Paid $6,000 for rent in advance). 5. Performed services for $7,800 cash. 6. Paid $2,160 for utilities 7. Performed services for $10,500 on account 8. Received $6,600 from charge account customers 9. Paid salaries of $4,500 to employees 10. Paid $6,000 to a creditor on account Indicate the impact of each of the transactions above on the fundamental accounting...
TRANSACTIONS 1. Paid $2,100 for utilities. 2. Performed services for $10,500 on account 3. Received $6,500 from charge account customers 4. Paid salaries of $4,500 to employees 5. Paid $8,000 to a creditor on account. 6. Owner invested $90,000 in the business. 7. Purchased $26,700 of supplies on account. 8. Purchased equipment for $21,000 cash 9. Paid $6,000 for rent (in advance). 10. Performed services for $7,800 cash. Indicate the impact of each of the transactions below on the fundamental...
For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense: (2) identify the normal balance of the account; and (3) select debit (Dr.) or credit (Cr.) to identify the kind of entry that would increase the account balance. Type of Account Liability Normal Balance increase (Dr. or Cr.) Credit Credit Account a. Accounts Payable b. Consulting Revenue c. Salaries Expense d. Utilities Expense e. Prepaid Rent f. Wages Payable 9. Notes...
For each of the following (1) identify the account as an asset, liability, equity, revenue, or expense; (2) Identify the normal balance of the account; and (3) select debitor credit to identify the kind of entry that would increase the account balance. Type of Account Normal Balance Increase (Dr. or Cr.) ad Account a. Services Revenue b. Equipment c. Notes Payable d. Common Stock e Supplies Accounts Payable 9. Consulting Revenue h. Salarios Expono i. Utilities Expense Prepaid Rent k...
1.
2.
3.
these are three seperate problems....where is the xtra info
needed?
bull CU. ISSUUS $32,000 of capital stock for cash. Required: For the transaction above, complete the following: (a) Select the accounts that are affected (there will be at least two). (b) Are the selected accounts increased or decreased? (c) What is amount of change in the accounts? (d) If Retaines is selected, choose the reason that it has changed. Account Which accounts are affected? Is the account...
E2-5 Determining Financial Statement Effects of Several
Transactions LO2-3
FootCovers, Inc., with headquarters in Beaverton, Oregon, is one
of the world’s leading manufacturers of athletic shoes and sports
apparel. The following activities occurred during a recent year.
The amounts are rounded to millions.
Purchased additional buildings for $184 and equipment for $270;
paid $402 in cash and signed a long-term note for the rest.
Issued 100 shares of $2 par value common stock for $355
cash.
Declared $145 in dividends...
3 E2-4 (Algo) Determining Financial Statement Effects of Several Transactions LO2-3 The following events occurred for Johnson Company: 5 points Skipped a. Received investment of cash by organizers and distributed to them 1,140 shares of $1 par value common stock with a market price of $20 per share. b. Purchased $7,800 of equipment, paying $1,300 in cash and owing the rest on accounts payable to the manufacturer. c. Borrowed $14,000 cash from a bank. d. Loaned $1,000 to an employee...
E2-4 Determining Financial Statement Effects of Several Transactions (L01, LO2) The following events occurred for Favanta Company a. Received $10,000 cash from owners and issued shares to them. b. Borrowed $7,000 cash from a bank and signed a note due later this year. c. Purchased land for $12,000; paid $1,000 in cash and signed a note for the $11,000 d. Bought and received $800 of equipment on account. e. Purchased $3,000 of equipment, paying $1,000 in cash and charged the...
Exercise 7-1A Analysis of financial statement effects of accounting for uncollectible accounts under the allowance method LO 7-1 Businesses using the allowance method for the recognition of uncollectible accounts expense commonly experience four accounting events: 1. Recognition of uncollectible accounts expense through a year-end adjusting entry. 2. Write-off of uncollectible accounts. 3. Recognition of revenue on account. 4. Collection of cash from accounts recevable. Required Show the effect of each event on the elements of the financial statements, using a...
True or False questions for Accounting
ACCT-1001 Financial Accounting Part 1 Chapter 2 Analyzing and Recording Transactions Module #2 - Chapter #2 Assignment 2C-2020 True / False The steps covered in the Accounting Cycle in this module were adjustments, prepare adjusted trial balance and prepare financial statements The account is a detailed record of the increases and decreases in a specific asset, liability or equity item. A ledger is a group of all the accounts used by a business and...
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