Notes: Word Process Your Solutions Within This Template

Notes Word Process Your Solutions Within This Template Copy And Pa

Notes: • Word-process your solutions within this template. Copy and paste tables from Excel as needed. • Show all steps used in arriving at the final answers. Incomplete solutions will receive partial credit. Problem 1 For the following accounts, classify as a current asset (CA), noncurrent asset (NCA), current liability (CL), noncurrent liability (NCL), or stockholders’ equity (SE). Indicate whether each account usually has a debit or credit balance.

Accounts Receivable Retained Earnings Taxes Payable Prepaid Expenses Contributed Capital Long-Term Investments Plant, Property, and Equipment Accounts Payable Short-Term Investments Long-Term Debt Problem 2 Suppose a company performs the following activities within a year. For each activity, perform transaction analysis and indicate the account, amount, and direction of the effect on the account equation. Use the following headings: Assets = Liabilities + Stockholders’ Equity The activities are shown below. (a) Purchased new equipment costing $20,000, paying $14,000 in cash and signing a note for the rest (b) Declared $11,000 in dividends to be paid the following year (c) Sold $2,312 in short-term investments for cash (d) Investors sold their own stock to other investors on the stock exchange for $121,000 (e) Issued $1,000 of additional common stock shares, and received cash from investors Problem 3 Shown below are several transactions for a corporation and what accounts are affected.

Using the given dollar amounts, explain in words the transaction that took place. Use the transactions to create a balance sheet. (a) Cash = +$8,000, Contributed Capital = +$8,000 (b) Cash = +$42,000, Note payable (short-term) = + $42,000 (c) Cash = −$2,000, Equipment +$5,000, Note payable (short-term) = +$3,000 (d) Cash = −$6,000, Note receivable (short-term) = +6,000 (e) Cash = −$1,800, Supplies = +$1,800 Problem 4 Given below is the balance sheet for a company. Balance Sheet (Millions of Dollars) Assets Current Assets Cash $5,846 Short-term investments 518 Receivables and other assets 4,510 Inventories 607 Other 2,624 $14,105 Noncurrent Assets Property, plant, and equipment $1,594 Long-term investments 318 Other non-current assets 2,533 Total assets $18,550 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $5,816 Other short-term obligations 4,585 $10,401 Long-term Liabilities $5,159 Stockholders' equity Contributed Capital $7,832 Retained Earnings 14,690 Other stockholders' equity items −19,532 Total stockholders' equity and liabilities $18,550 Assume the following transactions (in millions) during the remainder of the initial year. (a) Borrowed $20 from banks due in two years (b) Lent $170 to affiliates, who signed a six-month note (c) Purchased additional investments for $6,000 cash; one-third were long term and the rest were short-term (d) Purchased $1820 worth of property, plant, and equipment; paid $600 in cash and the remainder with additional long-term bank loans (e) Issued additional shares of stock for $400 in cash (f) Sold short-term investments costing $3,000 for $3,000 cash (g) Declared and paid $13 in dividends during Year 1 Prepare a journal entry for each transaction. Then create T-accounts for each balance sheet account and include the new transactions. Post each journey entry to the appropriate T-accounts. Finally, create an updated balance sheet. PS. I need this done by 4 pm tomorrow, if you do before that time I will pay more. PLZ help.

Paper For Above instruction

The given set of problems focuses on fundamental accounting principles, specifically the classification of accounts, transaction analysis, journal entries, T-account preparation, and updating a balance sheet through various financial activities. These exercises serve to reinforce understanding of how transactions impact the accounting equation, aid in practicing proper journal entry procedures, and illustrate the changes in financial statements over time. This comprehensive approach is vital for developing competency in financial accounting and ensuring accurate financial reporting.

Problem 1: Account Classification and Normal Balances

In accounting, understanding the nature and classification of accounts is critical. Current assets (CA) include resources expected to be converted into cash or used up within one year, such as accounts receivable, prepaid expenses, and short-term investments. Noncurrent assets (NCA), like long-term investments and property, plant, and equipment, are long-term resources. Current liabilities (CL) are obligations payable within a year, including taxes payable and accounts payable, while long-term liabilities (NCL) are obligations due after a year, exemplified by long-term debt. Stockholders’ equity (SE) encompasses contributed capital and retained earnings, representing the owners’ residual interest.

Most accounts carry specific normal balances: assets debit, liabilities and equity credit. For instance, accounts receivable and prepaid expenses normally have debit balances, indicating assets. Conversely, accounts payable and taxes payable usually have credit balances as liabilities.

Problem 2: Transaction Analysis and Effect on the Accounting Equation

The analysis involves examining each activity and determining how it impacts assets, liabilities, and equity. For instance, purchasing equipment involves increasing assets (equipment) and reducing cash if paid immediately, or creating a liability (note payable) if financed. Declaring dividends decreases retained earnings under equity. Selling investments converts short-term assets (investments) into cash, affecting the composition of current assets. Issuing stock increases both assets (cash) and stockholders’ equity (contributed capital).

Analyzing each activity carefully helps in recording accurate journal entries, which ensures the accounting equation balances after every transaction.

Problem 3: Transactions and Balance Sheet Construction

In this problem, each transaction involves specific accounts, and explaining these in words delineates how the company's financial position is affected. For example, an increase in cash and contributed capital suggests issuance of stock for cash, expanding assets and equity. Increases in cash and notes payable imply borrowing funds, enhancing assets and liabilities respectively. Purchases of equipment with partial financing increase property, plant, and equipment along with liabilities. Selling notes receivable for cash involves converting one current asset to another, affecting the balance sheet accordingly.

The creation of the balance sheet involves updating the account balances based on these transactions, ensuring the fundamental accounting equation remains balanced.

Problem 4: Complex Transactions and Balance Sheet Management

This problem extends to creating journal entries for multiple activities, posting them to T-accounts, and updating the balance sheet comprehensively. Borrowing funds adds liabilities; lending adds assets; purchasing investments alters asset composition; purchasing property expands assets and liabilities; issuing stock increases equity; selling investments affects asset distributions. Calculating the impact of dividends reduces retained earnings. By tracking these changes, a dynamic and accurate financial picture emerges.

Accounting for these transactions requires careful journal entries, proper posting, and ensuring the balance sheet reflects the company's real financial position accurately at the year's end.

References

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