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Anthony Leung opens a retail store called The Bead Shop. During the first month of operation, Anthony makes the following accounting transactions:
1. Invests $100,000 in cash in the business Â
Debit: Â [ Select ]["inventory", "cash", "equipment", "trade & accounts receivable", "advertising expense", "trade & accounts payables", "bank loan", "revenue", "equity", "salary expense"]Â Credit: Â [ Select ]["trade and accounts payable", "salary expense", "revenue", "equipment", "advertising expense", "bank loan", "cash", "equity", "trade & account receivable", "inventory"]
2. Buys $50,000 worth of equipment on credit he obtained from the bank Â
Debit: Â [ Select ]["inventory", "revenue", "trade & accounts receivable", "salary expense", "advertising expense", "equipment", "cash", "trade & accounts payable", "bank loan", "equity"]Â Credit: Â [ Select ]["equipment", "salary expense", "cash", "trade & accounts receivable", "equity", "inventory", "trade & accounts payable", "advertising expense", "bank loan", "revenue"]
3. Buys $60,000 worth of goods from different suppliers, pays $30,000 in cash, and puts the rest on credit Â
Debit: Â [ Select ]["salary expense", "bank loan", "equipment", "inventory", "revenue", "cash", "equity", "trade & accounts payable", "trade & accounts receivable", "advertising expense"]Â Credits: Â [ Select ]["trade & accounts payable", "advertising expense", "equipment", "revenue", "salary expense", "inventory", "cash", "trade & accounts receivable", "equity", "bank loan"]Â [ Select ]["salary expense", "revenue", "trade & accounts receivable", "equipment", "equity", "cash", "trade & accounts payable", "bank loan", "advertising expense", "inventory"]
4. Spends $5,000 in cash for advertising Â
Debit: Â [ Select ]["trade & accounts payable", "equity", "advertising", "trade & accounts receivable", "equipment", "revenue", "inventory", "cash", "bank loan", "salary expense"]Â Credit: Â [ Select ]["inventory", "bank loan", "advertising expense", "equity", "trade & accounts payable", "equipment", "cash", "salary expense", "revenue", "trade & accounts receivable"]
5. Sells $20,000 worth of goods on credit Â
Debit: Â [ Select ]["trade & accounts receivable", "inventory", "equity", "advertising expense", "revenue", "cash", "salary expense", "trade & accounts payable", "equipment", "bank loan"]Â Credit: Â [ Select ]["advertising expense", "salary expense", "equipment", "trade & accounts receivable", "trade & accounts payable", "bank loan", "inventory", "revenue", "cash", "equity"]
6. Pays $15,000 in cash for salaries Â
Debit: Â [ Select ]["inventory", "bank loan", "equity", "trade & accounts payable", "trade & accounts receivable", "equipment", "cash", "advertising expense", "revenue", "salary expense"]Â Credit: Â [ Select ]["cash", "equipment", "salary expense", "advertising expense", "inventory", "bank loan", "trade & accounts payable", "trade & accounts receivable", "revenue", "equity"]
7. Pays $10,000 to the bank toward the loan Â
Debit: Â [ Select ]["advertising expense", "bank loan", "equity", "inventory", "equipment", "revenue", "salary expense", "trade & accounts receivable", "trade & accounts payable", "cash"]Â Credit: Â [ Select ]["advertising expense", "revenue", "equity", "salary expense", "inventory", "trade & accounts payable", "cash", "trade & accounts receivable", "bank loan", "equipment"]
8. Pays $5,000 to a supplier Â
Debit: Â [ Select ]["trade & accounts receivable", "equity", "bank loan", "trade & accounts payable", "equipment", "inventory", "cash", "advertising expense", "salary expense", "revenue"]Â Credit: Â [ Select ]["bank loan", "salary expense", "equity", "revenue", "cash", "equipment", "inventory", "trade & accounts receivable", "advertising expense", "trade & accounts payable"]
9. Pays $13,000 for some merchandise that he had purchased on credit Â
Debit: Â [ Select ]["trade & accounts receivable", "bank loan", "equipment", "advertising expense", "equity", "inventory", "trade & accounts payable", "salary expense", "cash", "revenue"]Â Credit: Â [ Select ]["inventory", "revenue", "cash", "trade & accounts payable", "advertising expense", "bank loan", "equipment", "salary expense", "equity", "trade & accounts receivable"]
10. Pays a salary of $3,000 Â
Debit: Â [ Select ]["equipment", "trade & accounts receivable", "inventory", "bank loan", "salary expense", "cash", "trade & accounts payable", "revenue", "advertising expense", "equity"]Â Credit: Â [ Select ]["inventory", "advertising expense", "cash", "revenue", "trade & accounts payable", "bank loan", "equity", "trade & accounts receivable", "equipment", "salary expense"]
Prepare the following the journal entries identifying the proper debit and credit for the relevant transaction.
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Anthony Leung opens a retail store called The Bead Shop. During the first month of operation, Anthony makes the following accounting transactions:
1. Invests $100,000 in cash in the business
2. Buys $50,000 worth of equipment on credit he obtained from the bank
3. Buys $60,000 worth of goods from different suppliers, pays $30,000 in cash, and puts the rest on credit
4. Spends $5,000 in cash for advertising
5. Sells $20,000 worth of goods on credit
6. Pays $15,000 in cash for salaries
7. Pays $10,000 to the bank toward the loan
8. Pays $5,000 to a supplier
9. Pays $13,000 for some merchandise that he had purchased on credit
10. Pays a salary of $3,000
Prepare the trial balance as it relates to the above transactions.
| The Bead Shop | ||
| Trial Balance | ||
| (in $) | ||
| Debit | Credit | |
| Cash | [ Select ]["100,000", "19,000", "12,000", "8,000", "20,000", "5,000", "60,000", "40.000", "50,000"] | |
| Trade & accts. receivable | [ Select ]["19,000", "60,000", "100,000", "40,000", "12,000", "8,000", "20,000", "5,000", "50,000"] | |
| Trade & accounts payable | [ Select ]["20,000", "5,000", "8,000", "100,000", "60,000", "40,000", "12,000", "19,000", "50,000"] | |
| Bank loan | [ Select ]["40,000", "5,000", "19,000", "50,000", "60,000", "100,000", "8,000", "20,000", "12,000"] | |
| Inventory | [ Select ]["12,000", "60,000", "19,000", "50,000", "20,000", "100,000", "40,000", "5,000", "8,000"] | |
| Equipment | [ Select ]["12,000", "20,000", "19,000", "8,000", "5,000", "50,000", "60,000", "40,000", "100,000"] | |
| Equity | [ Select ]["5,000", "19,000", "12,000", "60,000", "40,000", "50,000", "8,000", "20,000", "100,000"] | |
| Revenue | [ Select ]["50,000", "20,000", "5,000", "40,000", "60,000", "12,000", "100,000", "19,000", "8,000"] | |
| Advertising Expense | [ Select ]["8,000", "12,000", "60,000", "40,000", "19,000", "20,000", "5,000", "50,000", "100,000"] | |
| Salary Expense | [ Select ]["20,000", "100,000", "40,000", "19,000", "18,000", "12,000", "60,000", "50,000", "5,000"] | |
| Total | 172,000 | 172,000 |
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At the end of December 31, 2015, Cougar Inc.’s accounts are as follows: Â
|
Office salaries |
$30,000 |
|
Finance costs |
3,000 |
|
Depreciation (administration) |
2,000 |
|
Cost of sales |
300,000 |
|
Income tax expense |
35,000 |
|
Sales salaries |
40,000 |
|
Interest income |
6,000 |
|
Gross revenue |
520,000 |
|
Advertising |
10,000 |
|
Lease (administration) |
3,000 |
|
Promotional expenses |
2,000 |
|
Sales discounts |
20,000 |
|
Travel expenses |
3,000 |
|
Rental charges |
5,000 |
| Cougar Inc. | |
| Statement of Income | |
|
For the year ended December 31, 2015 (in $) |
|
| [ Select ]["Rental Charges", "Sales salaries", "Sales discounts", "Cost of goods sold", "Gross revenue"] | [ Select ]["300,000", "5,000", "520,000", "20,000", "40,000"] |
| Less:Â [ Select ]["Costs of goods sold", "Rental charges", "Sales discounts", "Sales salaries"] | Â [ Select ]["(40,000)", "(20,000)", "(5,000)", "(300,000)"] |
| Net revenue | 500,000 |
| [ Select ]["Depreciation", "Income tax expense", "Interest income", "Costs of goods sold"] | Â [ Select ]["(300,000)", "(3,000)", "(35,000)", "(2,000)", "(6,000)"] |
| Gross profit | [ Select ]["200,000", "250,000", "540,000", "170,000", "520,000"] |
| Other Income | |
| [ Select ]["Finance costs", "Gross revenue", "Interest income", "Depreciation", "Sales discounts"] | [ Select ]["520,000", "3,000", "20,000", "6,000", "2,000"] |
| Total Revenue | 206,000 |
| Distribution costs | |
| [ Select ]["Lease (administration)", "Income tax expense", "Sales salaries", "Rental charges"] | [ Select ]["(30,000)", "(40,000)", "(35,000)", "(5,000)"] |
| [ Select ]["", "Advertising expense"] | [ Select ]["(3,000)", "(5,000)", "(10,000)", "(20,000)"] |
| [ Select ]["Promotional expenses", "Office salaries", "Lease (administration)", "Rental charges"] | [ Select ]["(30,000)", "(3,000)", "(5,000)", "(2,000)"] |
| [ Select ]["Lease (administration)", "Travel expenses", "Office expenses", "Rental expenses"] | [ Select ]["(30,000)", "(3,000)", "(5,000)", "(2,000)"] |
| Total distribution costs | Â (55,000) |
| Administrative expenses | |
| [ Select ]["Sales salaries", "Office salaries", "Promotional expenses", "Income tax expense"] | [ Select ]["(10,000)", "(30,000)", "(40,000)", "(20,000)"] |
| [ Select ]["Travel expenses", "Advertising expenses", "Sales salaries", "Lease (administration)"] | [ Select ]["(10,000)", "(3,000)", "(2,000)", "(6,000)"] |
| [ Select ]["Sales salaries", "Finance costs", "Rental charges", "Sales discounts"] | [ Select ]["(6,000)", "(20,000)", "(5,000)", "(10,000)"] |
| [ Select ]["Depreciation (administration)", "Income tax expense", "Sales discounts", "Advertising expenses"] | [ Select ]["(6,000)", "(2,000)", "(20,000)", "(10,000)"] |
| Total administrative expenses | Â (40,000) |
| [ Select ]["Interest income", "Depreciation", "Finance costs", "Income tax expense"] | Â (3,000) |
| Total Selling, General & Admin. Expenses | Â (98,000) |
| Profit before taxes | 108,000 |
| [ Select ]["Interest income", "Finance costs", "Income tax expense", "Depreciation"] | Â (35,000) |
| Net Income/(Loss) | 73,000 |
| CASH FLOW | |
| [ Select ]["Gross profit", "Depreciation", "Income tax expense", "Total revenue", "Net Income/(Loss)"] | [ Select ]["$200,000", "$35,000", "$108,000", "$520,000", "$73,000"] |
| Add: Â [ Select ]["Depreciation", "Income tax expense", "Total revenue", "Net Income/(Loss)", "Gross profit"] | [ Select ]["$35,000", "$2,000", "$3,000", "$40,000", "$300,000"] |
| Cash Flow | [ Select ]["$70,000", "$76,000", "$171,000", "$108,000", "$75,000"] |
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On its statement of financial position, a company shows buildings purchased for $700,000, equipment purchased for $350,000, and machinery purchased for $170,000. The depreciation rates for these non-current assets are as follows:
|
Straight-Line Depreciation |
|
|
1. Buildings |
7% |
|
2. Equipment |
25% |
|
3. Machinery |
30% |
For the first five years of operation, calculate the amount of straight-line depreciation for the non-current assets. Â Hint: Â It is recommended you create tables inside Excel to arrive at the solutions.
| (in $) | |||
| Buildings | |||
| Years | Beginning Balance | Depreciation @ 7% | Ending Balance |
| 1 | [ Select ]["602,000", "700,000", "602,000", "651,000", "751,000", "553,000"] | [ Select ]["175,000", "749,000", "45,570", "210,000", "49,000"] | [ Select ]["602,000", "553,000", "702,000", "651,000", "751,000"] |
| 2 | [ Select ]["651,000", "553,000", "749,000", "700,000", "602,000"] | [ Select ]["45,570", "42,140", "35,280", "49,000", "38,710"] | [ Select ]["700,000", "749,000", "602,000", "651,000", "553,000"] |
| 3 | [ Select ]["749,000", "651,000", "700,000", "602,000", "553,000"] | [ Select ]["42,140", "38,710", "49,000", "45,570", "35,280"] | [ Select ]["602,000", "651,000", "504,000", "700,000", "553,000"] |
| 4 | [ Select ]["602,000", "455,000", "651,000", "504,000", "553,000"] | [ Select ]["35,280", "45,570", "38,710", "49,000", "42,140"] | [ Select ]["700,000", "504,000", "602,000", "455,000", "651,000"] |
| 5 | [ Select ]["553,000", "504,000", "602,000", "455,000", "406,000"] | [ Select ]["49,000", "38,710", "42,140", "35,280", "45,570"] | [ Select ]["602,000", "553,000", "455,000", "651,000", "504,000"] |
| Equipment | |||
| Years | Beginning Balance | Depreciation @ 25% | Ending Balance |
| 1 | [ Select ]["350,000", "0", "262,500", "175,000", "387,500"] | [ Select ]["65,625", "43,750", "87,500", "0", "21,875"] | [ Select ]["0", "175,000", "350,000", "262,500", "387,500"] |
| 2 | [ Select ]["262,500", "0", "175,000", "350,000", "87,500"] | [ Select ]["87,500", "21,875", "65,625", "0", "43,750"] | [ Select ]["87,500", "262,500", "350,000", "175,000", "0"] |
| 3 | [ Select ]["175,000", "262,500", "87,500", "0", "350,000"] | [ Select ]["43,750", "87,500", "21,875", "0", "65,625"] | [ Select ]["262,500", "87,500", "350,000", "0", "175,000"] |
| 4 | [ Select ]["350,000", "0", "262,500", "87,500", "175,000"] | [ Select ]["65,625", "43,750", "21,875", "0", "87,500"] | [ Select ]["87,500", "262,500", "0", "175,000", "350,000"] |
| 5 | [ Select ]["0", "175,000", "350,000", "262,500", "87,500"] | [ Select ]["87,500", "21,875", "0", "43,750", "65,625"] | [ Select ]["175,000", "0", "131,250", "43,850", "87,500"] |
| Machinery | |||
| Years | Beginning Balance | Depreciation @ 30% | Ending Balance |
| 1 | [ Select ]["170,000", "68,000", "17,000", "221,000", "119,000"] | [ Select ]["35,700", "17,000", "20,400", "0", "51,000"] | [ Select ]["0", "17,000", "119,000", "68,000", "51,000"] |
| 2 | [ Select ]["17,000", "68,000", "119,000", "0", "170,000"] | [ Select ]["51,000", "0", "35,700", "20,400", "17,000"] | [ Select ]["68,000", "20,400", "35,700", "51,000", "0"] |
| 3 | [ Select ]["68,000", "17,000", "0", "119,000", "221,000"] | [ Select ]["17,000", "20,400", "35,700", "51,000", "0"] | [ Select ]["35,700", "0", "20,400", "34,000", "17,000"] |
| 4 | [ Select ]["68,000", "170,000", "119,000", "17,000", "0"] | [ Select ]["51,000", "0", "17,000", "35,700", "20,400"] | [ Select ]["0", "34,000", "20,400", "35,700", "17,000"] |
| 5 | [ Select ]["51,000", "17,000", "34,000", "68,000", "0"] | [ Select ]["0", "51,000", "17,000", "20,400", "35,700"] | [ Select ]["17,000", "34,000", "20,400", "0", "35,700"] |
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Classify the following balance sheet items as current or noncurrent as they would appear on a statement of financial position:
Retained earnings – [ Select ]["current asset", "long-term liability", "current liability", "noncurrent asset"]
Accounts payable – [ Select ]["current liability", "current asset", "long-term liability", "noncurrent asset"]
Prepaid expense – [ Select ]["current liability", "long-term liability", "current asset", "noncurrent asset"]
Plant and equipment – [ Select ]["long-term liability", "current asset", "noncurrent asset", "current liability"]
Inventory – [ Select ]["current liability", "current asset", "noncurrent liability", "noncurrent asset"]
Common stock – [ Select ]["noncurrent asset", "current liability", "current asset", "long-term liability"]
Bonds payable – [ Select ]["noncurrent asset", "long-term liability", "current liability", "current asset"]
Accrued wages payable – [ Select ]["current asset", "current liability", "long-term liability", "noncurrent asset"]
Accounts receivable – [ Select ]["noncurrent asset", "long-term liability", "current asset", "current liability"]
Capital in excess of par – [ Select ]["long-term liability", "current liability", "noncurrent asset", "current asset"]
Preferred stock – [ Select ]["long-term liability", "current liability", "current asset", "noncurrent asset"]
Marketable securities – [ Select ]["noncurrent asset", "current asset", "long-term liability", "current liability"]
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Fill in the blank spaces with the appropriate financial statement and then, for the balance sheet items, classify the account according to the options provided.
|
Indicate Whether the item is on Income Statement or Balance Sheet |
If the Item is on Balance Sheet, Designate Which Category |
Item |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["current liability", "stockholders' equity", "long-term liability", "current asset", "n/a - income statement", "noncurrent asset"] |
Accounts Receivable |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["noncurrent asset", "long-term liability", "current liability", "n/a - income statement", "current asset", "stockholders' equity"] |
Retained Earnings |
|
[ Select ]["Income Statement", "Balance Sheet / Statement of Financial Position"] |
[ Select ]["n/a - income statement", "current asset", "noncurrent asset", "current liability", "long-term liability", "stockholders' equity"]Â |
Income Tax Expense |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["current asset", "n/a - income statement", "stockholders' equity", "current liability", "long-term liability", "noncurrent asset"] |
Accrued Expenses |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["current asset", "noncurrent asset", "long-term liability", "n/a - income statement", "current liability", "stockholders' equity"] |
Cash |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["long-term liability", "noncurrent asset", "current liability", "current asset", "stockholders' equity", "n/a - income statement"] |
Selling and Administrative expenses |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["noncurrent asset", "current liability", "current asset", "n/a - income statement", "long-term liability", "stockholders' equity"] |
Plant & Equipment |
|
[ Select ]["Income Statement", "Balance Sheet / Statement of Financial Position"] |
 [ Select ]["current asset", "noncurrent asset", "current liability", "long-term liability", "stockholders' equity", "n/a - income statement"] |
Operating Expenses |
|
[ Select ]["Income Statement", "Balance Sheet / Statement of Financial Position"] |
[ Select ]["current asset", "n/a - income statement", "current liability", "noncurrent asset", "long-term liability", "stockholders' equity"] |
Marketable Securities |
|
[ Select ]["Income Statement", "Balance Sheet / Statement of Financial Position"] |
 [ Select ]["noncurrent asset", "stockholders' equity", "current liability", "long-term liability", "current asset", "n/a - income statement"] |
Interest Expense |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
 [ Select ]["current asset", "noncurrent asset", "long-term liability", "n/a - income statement", "current liability", "stockholders' equity"] |
Sales |
|
[ Select ]["Income Statement", "Balance Sheet / Statement of Financial Position"] |
[ Select ]["current asset", "long-term liability", "current liability", "stockholders' equity", "noncurrent asset", "n/a - income statement"] |
Notes Payable (6 months) |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["noncurrent asset", "current liability", "stockholders' equity", "n/a - income statement", "long-term liability", "current asset"] |
Bonds payable (Maturity 2009) |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["current asset", "noncurrent asset", "current liability", "n/a - income statement", "long-term liability", "stockholders' equity"] |
Common Stock |
|
[ Select ]["Income Statement", "Balance Sheet / Statement of Financial Position"] |
 [ Select ]["n/a - income statement", "current liability", "current asset", "long-term liability", "stockholders' equity", "noncurrent asset"] |
Depreciation Expense |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["noncurrent asset", "long-term liability", "current asset", "stockholders' equity", "n/a - income statement", "current liability"] |
Inventories |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["stockholders' equity", "current asset", "n/a - income statement", "current liability", "long-term liability", "noncurrent asset"] |
Capital in excess of par value |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
 [ Select ]["noncurrent asset", "current liability", "n/a - income statement", "long-term liability", "stockholders' equity", "current asset"] |
Net Income (Earnings after Taxes) |
|
[ Select ]["Balance Sheet / Statement of Financial Position", "Income Statement"] |
[ Select ]["noncurrent asset", "long-term liability", "current liability", "n/a - income statement", "stockholders' equity", "current asset"] |
Income tax payable  |