UB Person# 50083028

Homework Problems

Sagar Bansal

E2-2) Listed below are eight transactions. In each case, identify whether the transaction is an example of financing, investing, or operating activities and which of the financial statements it would affect.

1.

ompany borrows !"#,### in cash, signing a $#-year note payable. The above said transaction is an example of financing activity. This transaction affects the balance sheet and the statement of cash flows.

2. %wenty units of inventory are purchased from suppliers on account for !$2,###.
The above said transaction is an example of operating activity. This transaction affects the balance sheet and the statement of cash flows.

3. %he utility bill is paid at the end of the month, !",2##.

The above said transaction is an example of investing activity. This transaction affects the balance sheet and the statement of cash flows.

4. &ervices are performed, and customers are billed for !$',###.

The above said transaction is an example of operating activity. This transaction affects the balance sheet, income statement and the statement of cash flows.

5. (ive parcels of real estate are purchased for a total of !"",### in cash.
The above said transaction is an example of investing activity. This transaction affects the balance sheet and the statement of cash flows.

6. ) long-term investment in an e*uity security is sold for !+,"## cash.

The above said transaction is an example of financing activity. This transaction affects the balance sheet, the statement of shareholders equity and the statement of cash flows.

7. ,rincipal payments are made on outstanding debts.

The above said transaction is an example of financing activity. This transaction affects the balance sheet and the statement of cash flows.

8.

ash is received from customers for services completed in a previous period. The above said transaction is an example of operating activity. This transaction affects the balance sheet, the income statement and the statement of cash flows.

UB Person# 50083028

Homework Problems

Sagar Bansal

E2-') Listed below are accounts that may appear on either the balance sheet or the income statement. (or each account, indicate whether a company would ordinarily disclose the account on the balance sheet or the income statement.

a. E*uipment b. (ees earned

----- Balance sheet ----- Income statement

c. .etained Earnings ----- Balance sheet d. /age expenses e. ,atent f. g.

----- Income statement ----- Balance sheet

ost of 0oods sold ----- Income statement ommon &toc1 ----- Balance sheet ----- Balance sheet

h. 2ividend ,ayable

i. )ccumulated depreciation ----- Balance sheet j. ,repaid expense

----- Balance sheet

k. 0ain on sale of short-term investments ----- Income statement l. .ent .evenue m. &upplies inventory n. )ccounts .eceivable o. Land p. Insurance Expense
----- Income statement ----- Balance sheet ----- Balance sheet ----- Balance sheet ----- Income statement

UB Person# 50083028

Homework Problems ----- Balance sheet ----- Balance sheet

Sagar Bansal

q. Interest payable r. 2eferred .evenue

E+-$) 3n a separate piece of paper, complete the following chart to show the effect of each transaction on the accounting e*uation. %ransaction $. 3wners contributed !'#,### cash. 2. ,urchased land for !2#,### cash. '. 7orrowed !8,### cash from ban1. +. ,rovided services for !9,### on account. ". ,aid !","## cash for expenses. :. ,aid !"## cash dividend to owners. )ssets !'#,### 4 Liabilities !# 5 &hareholders6 E*uity !'#,###

-!2#,### 5 !2#,###

!#

!#

!8,###

!8,###

!#

!9,###

!9,###

!#

-!","## !"##

-!","## !#

!# !"##

E+-2) onsider the same transactions as in E+;$, but this time complete the following chart, using a separate sheet of paper.

)&&E%& %rans. ash $. 2. '. +. !'#,### -!2#,### !8,### !# ). !# !# !# !9,### Land !# !2#,### !# !#

4 Liabilities 5 <otes ,ayable 5 !# !# !8### !9,###

&hareholders6 E*uity ontributed apital !'#,### !# !# !# .etained Earnings !# !# !# !#

UB Person# 50083028

Homework Problems

Sagar Bansal

". :.

-!","## -!"##

!# !#

!# !#

-!","## !#

!# !#

!# -!"##

E+-') %otal each asset, liability, and shareholders6 e*uity account in E+;2, and prepare an income statement, a statement of shareholders6 e*uity, a balance sheet, and a statement of cash flows. )ssume that the current year is the company6s first year of operations.

)ssets Cash &ccounts 'eceivable )and %otal )ssets

7alance sheet )7 ompany )s of =arch '$, 2#$' Liabilities and &hareholders6 E*uity !",### $otes %ayable !$$,"## (,### Contributed Capital !'#,### *#,### 'etained +arnings -!"## %otal Liabilities and !+$,### !+$,### shareholders6 E*uity