Week One Exercise: Basic Accounting Equations Recog

Week One Exercise Assignmentbasic Accounting Equations1recognition Of

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.

Prepare journal entries (and explanations) to record the following transactions pertaining to Jennifer Royall Company:

  • May 1: Jennifer Royall invested cash of $25,000 and land valued at $15,000 into the business.
  • May 5: Provided $1,000 of services to Jason Ratchford, on account.
  • May 9: Paid $1,250 of salaries to an employee.
  • May 14: Acquired a new computer for $4,200, on account.
  • May 20: Collected $800 from Jason Ratchford for services provided on May 5.
  • May 24: Borrowed $2,500 from BestBanc via a six-month loan.

Using the above data, prepare journal entries and later a balance sheet as of December 31, 20XX, for Preston Company. Also, record changes from Richard Simmons' sole proprietorship activities in November, analyze their effects on accounting elements, and prepare financial statements. Additionally, analyze Burton Enterprises' first month of activity with journal entries, impact analysis, and financial statements.

Further, record Lee Adkins’ June transactions in detail, post to T-accounts, and prepare a trial balance. Lastly, document Peter Houston’s January transactions, compute cash account balances, and interpret balances for the January 31 trial balance.

Paper For Above instruction

The assignment encompasses comprehensive tasks related to understanding basic accounting concepts such as classification of accounts, journal entries, ledger posting, and financial statement preparation. The initial step involves classifying various items encountered in business operations as assets, liabilities, revenues, or expenses, with indication of their normal balances. This foundational knowledge is essential for accurate accounting and reporting.

The scenario with Jennifer Royall Company illustrates the recording of typical transactions including initial investments, service revenue, salary expenses, equipment acquisition, collections on accounts receivable, and borrowing. These entries demonstrate key principles such as debit and credit rules and the importance of proper documentation. From these transactions, a balance sheet summarizing the company's financial position as of December 31 can be constructed, emphasizing assets, liabilities, and owner’s equity components.

Similarly, Richard Simmons’ sole proprietorship case highlights the flow of transactions within a month, affecting assets such as cash, accounts receivable, and office equipment, alongside liabilities and owner’s equity. Recording each transaction and calculating ending balances showcase the dynamic nature of accounting records. Questions related to accounts payable and month-end financial health encourage understanding of financial statement components and business performance analysis.

Further, Burton Enterprises’ first month activities serve as an example of transaction analysis, where each event impacts specific elements of the accounting equation. The process involves methodical recording of journal entries, posting to ledger T-accounts, and preparing financial statements including income statement, statement of retained earnings, and balance sheet. This reinforces the importance of systematic bookkeeping and accurate financial reporting from startup activities.

In the case of Lee Adkins, detailed journal entries for June transactions are required, followed by posting into T-accounts, and subsequent trial balance preparation. This authentic exercise underscores the operational aspects of accounting, such as handling sales, collections, equipment sales, and expenses, illustrating the real-world application and ensuring comprehension of ledger management.

Lastly, Peter Houston’s January transactions illustrate capital investment, asset acquisition, and expense recording, culminating in a trial balance and cash flow analysis. Calculating the balance in the cash account and understanding whether accounts payable show as debit or credit reinforces core accounting principles. Overall, these tasks collectively deepen understanding of fundamental accounting processes necessary for accurate financial recording and reporting in diverse business contexts.

References

  • Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2020). Financial Statement Analysis (12th ed.). McGraw-Hill Education.
  • Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate Accounting (16th ed.). Wiley.
  • Horngren, C. T., Harrison, W. T., & Oliver, M. (2018). Financial & Managerial Accounting (6th Asia-Pacific ed.). Pearson Education.
  • Schneider, B. (2018). Accounting Principles. Cengage Learning.
  • Horngren, C. T., Datar, S. M., & Rajan, M. (2022). Cost Accounting: A Managerial Emphasis (16th ed.). Pearson.
  • Sun, T., & Kimmel, P. D. (2020). Financial Accounting, IFRS Edition. Cengage Learning.
  • Fields, R., & Sherry, P. (2019). Principles of Financial Accounting. Flat World Knowledge.
  • Needles, B. E., & Powers, M. (2019). Financial Accounting. Cengage Learning.
  • Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2022). Financial Accounting (11th ed.). Wiley.
  • Philips, R. D., & Trueman, B. (2017). Accounting Made Simple. Pearson.

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