Sheet1
Financial Accounting | ||||||||||||||||||||||
*Part One* | ||||||||||||||||||||||
A tabular analysis of the transactions made during August 2012 by Nigel Company during its first month of operations is shown below. | ||||||||||||||||||||||
Each increase and decrease in stockholders’ equity is explained. | ||||||||||||||||||||||
Assets | = | Liabilities | + | Stockholders' Liabilities | ||||||||||||||||||
Retained Earnings | ||||||||||||||||||||||
Cash | + | A/R | + | Supp. | + | Equip. | - | Accounts Payable | + | Common Stock | + | Rev. | - | Exp. | - | Div. | ||||||
1 | $ 20,000.00 | $ 4,000.00 | $ 20,000.00 | Com. Stock | ||||||||||||||||||
2 | $ (1,000.00) | $ 5,000.00 | ||||||||||||||||||||
3 | $ (750.00) | $ 750.00 | ||||||||||||||||||||
4 | $ 4,100.00 | $ 5,400.00 | Serv. Rev. | |||||||||||||||||||
5 | $ (1,500.00) | $ (1,500.00) | $ 9,500.00 | |||||||||||||||||||
6 | $ (2,000.00) | $ (2,000.00) | ||||||||||||||||||||
7 | $ (800.00) | $ (800.00) | Rent Exp. | |||||||||||||||||||
8 | $ 450.00 | $ (450.00) | ||||||||||||||||||||
9 | $ (3,000.00) | $ (3,000.00) | Sale Exp. | |||||||||||||||||||
10 | $ 300.00 | $ (300.00) | Util. Exp. | |||||||||||||||||||
Instructions | ||||||||||||||||||||||
(a) Describe each transaction. | ||||||||||||||||||||||
(b) Determine how much stockholders’ equity increased for the month. | ||||||||||||||||||||||
(c) Compute the net income for the month. | ||||||||||||||||||||||
(d) Prepare an income statement and a retained earnings statement for August and a classified balance sheet at August 31, 2012. | ||||||||||||||||||||||
*Part Two* | ||||||||||||||||||||||
Selected transactions for Home Place, an interior decorator corporation, in its first month of business, are as follows. | ||||||||||||||||||||||
1. Issued stock to investors for $15,000 in cash. | ||||||||||||||||||||||
2. Purchased used car for $10,000 cash for use in business. | ||||||||||||||||||||||
3. Purchased supplies on account for $300. | ||||||||||||||||||||||
4. Billed customers $3,700 for services performed. | ||||||||||||||||||||||
5. Paid $200 cash for advertising start of the business. | ||||||||||||||||||||||
6. Received $1,100 cash from customers billed in transaction (4). | ||||||||||||||||||||||
7. Paid creditor $300 cash on account. | ||||||||||||||||||||||
8. Paid dividends of $400 cash to stockholders. | ||||||||||||||||||||||
Instructions | ||||||||||||||||||||||
(a) For each transaction indicate (a) the basic type of account debited and credited (asset, liability, stockholders’ equity); (b) the specific account debited and credited (Cash,Rent Expense, Service Revenue, etc.); (c) whether the specific account is increased | ||||||||||||||||||||||
or decreased; and (d) the normal balance of the specific account. | ||||||||||||||||||||||
****Use the format shown below, in which transaction one(1) is given as an example.**** | ||||||||||||||||||||||
= | Liabilities | + | Stockholders' Liabilities | |||||||||||||||||||
Assets | Retained Earnings | |||||||||||||||||||||
© | (d) | (a) | (b) | (c) | (d) | |||||||||||||||||
(a) | (b) | + | Effect | - | Normal Balance | + | Basic Type | + | Specific Amount | - | Effect | - | Normal Balance | |||||||||
Transactions | + | Basic Types | + | Specific Amount | Increase | Debit | Stockholders' equity | Common Stock | Increase | Credit | ||||||||||||
1 | Asset | Cash | ||||||||||||||||||||
*Part Three* | ||||||||||||||||||||||
Instructions | ||||||||||||||||||||||
Journalize the transactions. Do not provide explanations. | ||||||||||||||||||||||
The May transactions of StepAside Corporation were as follows. | ||||||||||||||||||||||
May | ||||||||||||||||||||||
4 Paid $700 due for supplies previously purchased on account. | ||||||||||||||||||||||
7 Performed advisory services on account for $6,800. | ||||||||||||||||||||||
8 Purchased supplies for $850 on account. | ||||||||||||||||||||||
9 Purchased equipment for $1,000 in cash. | ||||||||||||||||||||||
17 Paid employees $530 in cash. | ||||||||||||||||||||||
22 Received bill for equipment repairs of $900. | ||||||||||||||||||||||
29 Paid $1,200 for 12 months of insurance policy. Coverage begins June 1. |

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