| | | | | | | | | 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. |
achcks
financial_accounting.xlsx
