College accounting 21st edition heintz solutions manual by haohao112

College Accounting 21st Edition Heintz SOLUTIONS MANUAL Full download: http://testbanklive.com/download/college-accounting-21st-edition-heintz-solutionsmanual/ College Accounting 21st Edition Heintz TEST BANK Full download: http://testbanklive.com/download/college-accounting-21st-edition-heintz-test-bank/

CH AP TER 2 AN AL Y ZING TR ANS AC TIONS : THE AC C OUNTING E QU ATION REV IE W Q UES TIONS 1. I t is necessar y t o dist inguish bet ween business assets and liabilit ies and nonbusiness asset s and liabil it ies of a sing le pr opr ietor because, accor ding t o t he business ent it y con cept , nonbusiness asset s and liabilit ies ar e not included in t he business ent it y’s account ing recor ds. T hese dist inctions allo w t he owner t o m ak e decisions based on t he f inancial condit ion and r esult s of t he business apart f r om nonbusiness act ivit i es. 2. T he six m aj or elem ent s of t he accounting eq uat ion are list ed below. a. Assets ar e it ems owned by a business that wil l provide f utur e benef it s. b. Liabilit ies ar e item s owed t o another business. c. O wner ’s eq uit y is t he amount by which t he business asset s e xceed t he business liabilit ies. O t her t erm s used f or owner ’s eq uit y include net wort h and capit al. d. Revenues r epr esent t he amount a business charg es cust omer s f or product s sold or services perf or m ed. e. Expenses r epr esent t he decr ease in assets ( or incr ease in liabilit ies) as a r esult of eff ort s m ade t o produce r evenues. f. W ithdr awals, or drawing , r educe owner ’s eq uit y as a r esult of t he owner t ak ing cash or ot her asset s out of t he business f or per sonal use. 3. T he t hr ee basic q uest ions t hat m ust be ans wered when analyzing t he ef f ect s of a business t r ansact ion on t he accounting eq uat ion are as f ollows: a. W hat happened? b. W hich account s ar e aff ect ed? c. How is t he account ing eq uat ion af f ect ed? 4. T he f unct ion of an income st at ement is t o r epor t the prof it abilit y of business operat ions f or a specif ic per iod of t im e. 5. T he f unct ion of a st at ement of owner ’s eq uit y is to r epor t t he investm ents and wit hdr awa ls by t he owner and t he prof it s and losses g ener ated t hr oug h operat ing act ivit ies f or a specif ic per i od of t ime.

6. T he f unct ion of a balance sheet is t o r eport t he assets, liabilit ies, and owner ’s eq uit y on a specif ic dat e. I t is called a balance sheet because it conf ir m s t hat t he account ing eq uat ion is in balance. 7. T he t hr ee basic phases of t he accou nting pr ocess are list ed below. I nput — Business tr ansact ions are used as input to t he account ing process. Processi ng—T he tr ansactions ar e pr ocessed by r ecog nizing t heir ef f ect s on assets, liabilit ies, owner ’s eq uit y, r evenues, and expenses. O utput —O utput f r om t he account ing pr ocess is provided in t he f orm of f inancial st atem ents.

5 © 201 4 C en ga ge Lea rn i n g. All R i gh t s R eserved . M a y n ot b e scann ed , c opi ed or dup li ca t ed , or p ost ed t o a p ub li c ly a c c essi b le web si t e, i n wh ole o r i n pa rt .

CH AP TER 2

E x e rc is e 2 -1A I t em Ac count Cl assifi cati on Mone y in bank Cash A Of f ice supplies Supplies A Mone y o wed Accounts Payable L Of f ice chairs Of f ice Fur nit ure A Net wort h of owner John Smith, Capit al OE Mone y wit hdr awn b y owner John Smith, Dr awing OE Mone y o wed by custom er s Accounts Receivable A

E x e rc is e 2 -2A As set s

$44,000

Liabil it i es

$32,000

$27,000 $18,000

$27,00 0

$ 7, 000

+ +

Ow ner’ sEquit y

$17,000 $14,000

$20,000

E x e rc is e 2 -3A As set s

Liabil it i es

+ Ow ner’ sEquit y

( a)

27, 000

Bal.

27, 000

( b)

7, 500

7,500

Bal.

34, 500

7,500

27, 000

34, 500

7,500

27, 000

( 2,300)

32, 200

5,200

( c)

( 1,600) 1, 600

Bal. ( d) Bal.

27, 000

CHAPTER 2

© 201 4 C en ga ge Le a rn in g. All R igh ts R e se rve d. M ay n ot b e sca nn ed , co pie d o r du pl ic a ted , o r p o st ed t o a pu bl icl y a cc e ssi bl e we bsi te , in wh ol e o r i n pa rt .

E x e rc is e 2 -4A O w n er’s Eq u it y As s e ts = Li a bi li tie s + Cap ita l – Draw in g + Reve nu e s – Ex pe ns es Des c ripti on

Bal . fr om E 2- 3A ( d) 3 2 ,2 00 5 ,2 0 0 2 7 ,0 00

( e) 1 ,5 0 0 1 ,5 0 0 Se rvi c e fe e s ( f ) (6 0 0 ) (6 0 0 ) Ren t e x pe ns e g

(6 4 ) (6 4 ) Te le ph one ex p.

( h) (1 ,0 0 0 ) (1 ,0 0 0 ) ( i) 750 750 Se rvi c e fe e s ( j ) (1 ,2 0 0 ) (1 ,2 0 0 ) Wa ge s e x pens e (k )

400 (4 0 0 )

Bal . 3 T o t al Asset s

1 ,5 86

5 ,2 0 0

$31, 586

2 7 ,0 00

(1 ,0 0 0 )

T o t al L iabilitie s Capit al Draw ing Reven u e s Expen s es T o t al L iabilitie s an d O w n er’s Eq u it y

2 ,2 5 0

( 1 ,8 6 4 )

$ 5, 200 27,0 00 ( 1,000 ) 2,25 0 ( 1,86 4 ) $31, 586

CH AP TER 2

E x e Ercxise erc2is e 2 -5A -7A

Betsy Ray’ s Accounti ng Servi Ac count Cl assifi cati on Financial Statement ce

Cash A BS Rent Expense E IS Accounts Payable L BS Service Fees R IS Supplies A BS W ages Expense E IS Ramon Mart inez, Dr awin g OE SO E Ramon Mart inez, Capit al OE SO E, BS Pr epaid I nsur ance A BS Accounts Receivable A BS

E x e rc is e 2 -6A

Betsy Ray’ s Accounti ng Servi ce St atement of Ow ner’ s Equi t y For M ont h Ended June 30, 20--

Betsy Ray, capit al, June 1, 20 -I nvestment duri ng June

Tot al i nvest ment Net i ncome f or June

$20,000

Less wi t hdraw al s f or June I ncrease i n capit al Betsy Ray, capit al, June 30, 20 --

20, 000 $10, 000 8, 000 2, 000 $22, 000

CH AP TER 2

E x e Ercxise erc2is e 2 -5A -7A

Betsy Ray’ s Accounti ng Servi ce St atement of Ow ner’ s Equi ty For M ont h Ended June 30, 20-

Betsy Ray, capit al, June 1, 20 -I nvestment duri ng June

$ 20, 000

Tot al i nvest ment Less: Net l oss f or June

$20, 000 $ 3, 000

W it hdraw als f or June

8, 000

Decrease i n capit al

( 11, 000)

Betsy Ray, capit al, June 30, 20 --

$ 9, 000

P roble m 2 -8A As set s

1. $26,960

Liabil it i es

Ow ner’ sEquit y

2. $35,500

$ 7, 550 $10,910

$19,410 $24, 590

3. $32,040

$12,910

$19,130

P roble m 2 -9 A: S e e pa ge 10 P roble m 2 -1 0A

Jay Pembroke I ncome St atement For M ont h Ended Apri l 30, 20--

Revenues: Servi ce f ees Expenses: Rent expense Net i ncome

$3, 300 750 $2, 550

CH AP TER 2

E x e Ercxise erc2is e 2 -5A -7A

CH AP TER 2 Betsy Rayâ&#x20AC;&#x2122; s Accounti ng Servi ce

As se ts = Li abil i ti es + Owner’ s E qui t y

Cash +

(I tem s Owned) Ac counts Recei vabl e +

Offi ce S uppl i es +

P repaid I nsurance =

( Am ts. Ow ed) (Ow ner’ s I nvestm ent) Ac counts J. P em broke, P a yabl e + Capi tal –

(E arni ngs) J. P em broke, Draw ing + Revenues – E xpenses Descri pti on

(a ) 1 8 ,0 00 1 8 ,0 00 (b ) (2 ,0 00 ) 4 ,6 0 0 2 ,6 0 0 c

(1 ,2 00 ) 1 ,2 0 0

(d ) 1 ,3 00 2 ,0 0 0 3 ,3 0 0 S ervi ce fees (e ) (2 ,3 00 ) (2 ,3 0 0 ) (f) (7 50 ) 750 Rent exp. (g ) (1 00 ) 100 Ba l . 1 2 ,9 50 2 ,0 0 0 4 ,6 0 0 1 ,2 0 0 300 1 8 ,0 00 100 3 ,3 0 0 750

Cash $12, 950 Accou n t s Re vab le 2,00 0 cei 4,60 0 O f f ice Su p p Prep aid Insu rance 1,20 0 lie s T o t al Asset s $20, 750

Accou n t s P ayab le Jay Pemb ro ke, Capit al Jay Pemb ro ke, Draw ing Ser vic e Fee s Rent Exp ense T o t al L iabilitie s an d O w n er’s Eq u it y

$ 3 00 18,0 00 ( 100 ) 0 3,30 ( 75 0 $20,) 750

CHAPTER 2

© 201 4 C en ga ge Le a rn in g. All R igh ts R e se rve d. M ay n ot b e sca nn ed , co pie d o r du pl ic a ted , o r p o st ed t o a pu bl icl y a cc e ssi bl e we bsi te , in wh ol e o r i n pa rt .

P roble m 2 -9A

CH AP TER 2

E x e Prcroble is e 2m 2 -1 -1B 1 A Ac count

Jay Pembroke Cl assifi cati St atement on of Ow ner’ s Equi ty For M ont h Ended Apri l 30, 20--

Jay Pembroke, capi t al , Apri l 1, 20 --

I nvestment duri ng April

18, 000 $18,000

Tot al i nvest ment Net i ncome f or April

$ 2, 550 100

Less wi t hdraw al s f or Apri l I ncrease i n capit al

2, 450 $20, 450

Jay Pembroke, capi t al , Apri l 30, 20 --

P roble m 2 -1 2A

Jay Pembroke Balance Sheet Apri l 30, 20--

Assets Cash

$12, 950

Accounts recei vable

2, 000

O ff i ce suppli es

4, 600

Prepai d i nsurance

1, 200

Tot al asset s

$20, 750

Liabil it i es e Accounts payabl

$ 300

O w ner ’ s Equit y Jay Pembroke, capi t al Tot al li ab. & ow ner’ s equi t y

20, 450 $20, 750

© 201 4 C © en 201 ga4ge C Lea en garnge i nLea g. All rn iRn ig.ghAll t sRRieserved gh t s R. eserved M a y n.otMbaeyscann n ot bed e scann , c opied ed,or c opi duped li or ca dup t ed li , or capt ost ed ,ed ortpoost a ped ubt lio ca ly p ub a clic cessi ly abclec web essi b le web si t e, i n si wht e, olei no wh r i nole pa ortr. i n pa rt .

CH AP TER 2

E x e Prcroble is e 2m 2 -1 -1B 1 A Ac Cl assifi cati count on Cash A Accounts Payable L Supplies A Bill Jones, Dr awing OE Pr epaid I nsur ance A Accounts Receivable A Bill Jones, Capit al OE

E x e rc is e 2 -2B As set s $25,000

= =

$30,000 $20,000

Liabil it i es

Ow ner’ sEquit y

$20, 000

$ 5, 000

$15,000

$10,000

E x e rc is e 2 -3B As set s = Liabil it i es + Ow ner’ sEquit y ( a) 30, 000 30, 000 Bal. 30, 000 30, 000 ( b) 4, 500 4,500 Bal. 34, 500 4,500 30, 000 ( c) 1, 600 ( 1,600) Bal. 34, 500 4,500 30, 000 ( d) ( 2,000) ( 2,000) Bal. 32, 500 2,500 30, 000

As s e ts

Bal . fr Eom 23B ( d) ( e) (f) g ( h) ( i) (j) (k )

3 2 ,5 00

= Li a bi li tie s + Cap ita l



O w n er’s Eq u it y Draw in g + Reve nu e s



Ex pe ns es

Desc ript ion

CHAPTER 2

2 ,5 0 0 3 0 ,0 00

3 ,0 0 0

Se rvi c e fe e s

3 ,0 0 0

(1 ,0 0 0 ) (6 8 ) (8 0 0 )

1 ,0 0 0

Ren t e x pe ns e

Te le ph one ex p.

800

900

Se rvi c e fe e s

900

(5 0 0 )

500

Wa ge s e x pens e

500 (5 0 0 )

Bal . T o t al Asset s

3 4 ,0 32

2 ,5 0 0 3 0 ,0 00

800 3 ,9 0 0

1 ,5 6 8

$34, 032 T o t al L iabilitie s $ 2, 500 Capit al 30,0 00 Draw ing ( 800 ) Reven u e s 3,90 0 Expen s es ( 1,56 8 ) T o t al L iabilitie s an d O w n er’s Eq u it y $34, 032

© 201 4 C en ga ge Le a rn in g. All R igh ts R e se rve d. M ay n ot b e sca n n ed , co pie d o r du pl ic a ted , o r p o st ed t o a pu bl icl y a cc e ssi bl e we bsi te , in wh ol e o r i n pa rt .

E x e rc is e 2 -4 B

CH AP TER 2

E x e rc is e 2 -5B Ac Cl assifi cati Financial Statement count on Cash A BS Rent Expense E IS Accounts Payable L BS Service Fees R IS Supplies A BS W ages Expense E IS Am anda W ong , Dr awing OE SO E Am anda W ong , Capit al OE SO E, BS Pr epaid I nsur ance A BS Accounts Receivable A BS

E x e rc is e 2 -6B

Lopez Financi al Consul ti ng St atement of Ow ner’ s Equi t y For M ont h Ended June 30, 20--

Ef ran Lopez, capi t al, June 1, 20 -I nvestment duri ng June

$ 15, 000

Tot al i nvest ment Net i ncome f or June

$15,000

Less wi t hdraw al s f or June Decrease i n capit al Ef ran Lopez, capi t al, June 30, 20 --

$6, 000 7, 000 ( 1, 000) $14, 000

CH AP TER 2

E x e rc is e 2 -5B E xAce rc is e 2 -7Bcount

Cl assifi cati on Lopez Financi al Consul ti ng

Financial Statement

St atement of Ow ner’ s Equi ty For M ont h Ended June 30, 20Ef ran Lopez, capi t al, June 1, 20 --

I nvestment duri ng June

15, 000 $15, 000

Tot al i nvest ment Less: Net l oss f or June Wit hdraw als f or June

$ 2, 000 7, 000

Decrease i n capit al

( 9, 000) $ 6, 000

Ef ran Lopez, capi t al, June 30, 20 --

P roble m 2 -8B

As set s $22,860

2. 3.

Liabil it i es

Ow ner’ sEquit y

$ 4, 605

$18,255

$27,425

$ 8, 515

$18,910

$25,235

$10,165

$15,070

P roble m 2 -9 B: S ee pa ge 16 P roble m 2 -10B Davi d Segal I ncome St atement For M ont h Ended O ctober 31, 20 -Revenues: Servi ce f ees

$2, 700

Expenses: Rent expense Net i ncome

650 $2, 050

CH AP TER 2

E x e rc is e 2 -5B Ac count

Cl assifi cati on

Financial Statement

As se ts = Li abil i ti es + Owner’ s E qui t y

Cash +

(I tem s Owned) Ac counts Recei vabl e +

Offi ce S uppl i es +

P repaid I nsurance =

( Am ts. Ow ed) (Ow ner’ s I nvestm ent) Ac counts D. S egal, Capi P a yabl e + tal –

(E arni ngs) D. S egal, Draw ing + Revenues – E xpenses Descri pti on

(a ) 1 5 ,0 00 1 5 ,0 00 (b ) (1 ,8 00 ) 3 ,8 0 0 2 ,0 0 0 c

(1 ,0 00 ) 1 ,0 0 0

(d ) 1 ,7 00 1 ,0 0 0 2 ,7 0 0 S ervi ce fees (e ) (1 ,8 00 ) (1 ,8 0 0 ) (f) (6 50 ) 650 Rent expense (g ) (1 50 ) 150 Ba l . 1 1 ,3 00 1 ,0 0 0 3 ,8 0 0 1 ,0 0 0 200 1 5 ,0 00 150 2 ,7 0 0 650

Cash Accou n t s Re cei vab le O f f ice Su p p lie s Prep aid Insu ranc e T o t al Asset s

$11, 300 1,00 0 3,80 0 1,0 00 $17, 100

Accou n t s P ayab le $ 2 00 David Segal , Capit a l 15,0 00 David Segal , Dr aw ing ( 150 ) Ser vic e Fee s 2,70 0 Rent Exp ense ( 650 ) T o t al L iabilitie s an d O w n er’s Eq u $17, 1 00 it y

CHAPT ER 2

© 201 4 C en ga ge Le a rn in g. All R igh ts R e se rve d. M ay n ot b e sca nn ed , co pie d o r du pl ic a ted , o r p o st ed t o a pu bl icl y a cc e ssi bl e we bsi te , in wh ol e o r i n pa rt .

P roble m 2 -9 B

CH AP TER 2

P roble m 2 11B

Davi d Segal St atement of Ow ner’ s Equi ty For M ont h Ended O ctober 31, 20 --

Davi d Segal, capi t al , October 1, 20--

I nvestment duri ng O ctober

15, 000 $15,000

Tot al i nvest ment Net i ncome f or O ct ober Less wi t hdraw al s f or October

$ 2, 050 150

I ncrease i n capit al

1, 900 $16, 900

Davi d Segal, capi t al , October 31, 20--

P roble m 2 12B

Davi d Segal Balance Sheet O ctober 31, 20Assets

Cash

$11, 300

Accounts recei vable

1, 000

O ff i ce suppli es

3, 800

Prepai d i nsurance

1, 000

Tot al asset s

$17, 100

Liabil it i es Accounts payable

$ 200

O w ner ’ s Equit y Davi d Segal, capi t al Tot al li ab. & ow ner’ s equi t y

16, 900 $17, 100

CH AP TER 2

M AN AGI NG YOUR W RITING T he st udent s should f ocus on t he f ollowing dif f erences: 1. An expense is an outf low of assets or increase in liabilit ies as a r esult of t he ef f ort s m ade t o ear n r evenues. A wit hdr awal i s an outf low of assets f or t he owner ’s per sonal use. T he wit hdr awal is not r elated t o t he ear ning process. 2. A wit hdr awa l t hat incr eases a liabilit y would be unusual. Expenses of t en incr ease liabilit ies. T he st udent should f ocus on t he f ollowing sim ilarity: 1. Expenses and wit hdr awa ls r educe owner ’s eq uit y.

CHAPTER 2

Cash +

Ac c ts. Rec. +

As se ts = Li abil i ti es + Owner’ s E qui t y ( Am ts. (I tem s Owned ) Ow ed ) (Ow ner’ s I nvestm ent ) (E arni ngs ) S up - pl P repaid Ac c ts. P a L. V oz ni ak, L. V oz ni ak, I ns. + Tool s + V an = Draw ing + Rev. – E xp. Descri pti on i es + yabl e + Capi tal –

(a) 8, 000 8, 000 (b) (150) 150 Rent exp. c

(5, 000) 5, 000

(d) 600 600 (e) (200) 300 100 (f ) (100) 100 Wages exp. (g) (75) 75 Adver. exp. (h) (480) 480 (i) 800 800 Cleani ng fees 500

(j) (k )

(40)

(l)

200

(m )

(150)

n

(200)

(o)

600

(p)

(100)

2. B al.

3, 105

500 40

Clean i ng fees Telephon e exp.

(200) 150

Wages exp.

(200) 200

800

Cleani ng fees

100 500

300

480

600

5, 000

500

8, 000

100

2, 100

515

© 201 4 C en ga ge Le a rn in g. All R igh ts R e se rve d. M ay n ot b e sca nn ed , co pie d o r du pl ic a ted , o r p o st ed t o a pu bl icl y a cc e ssi bl e we bsi te , in wh ol e o r i n pa rt .

Ma s ter y P roble m

CH AP TER 2

Ma s ter y P roble m (Continue d) We Do Wi ndow s

I ncome St atement For M ont h Ended Jul y 31, 20-Revenues: Cl eaning f ees

$2, 100

Expenses: Wages expense Rent expense

$250 150

Advert i si ng expense

Tel ephone expense

Tot al expenses

515 $1, 585

Net i ncome

We Do Wi ndow s St atement of Ow nerâ&#x20AC;&#x2122; s Equi t y For M ont h Ended Jul y 31, 20-Lisa Vozni ak, capit al, July 1, 20--

I nvestment i n Jul y

8,000

Tot al i nvest ment Net i ncome f or Jul y

$8, 000

Less wi t hdraw al s f or July I ncrease i n capit al Lisa Vozni ak, capit al, July 31, 20--

$1, 585 100 1, 485 $9, 485

ÂŠ 201 4 C en ga ge Lea rn i n g. All R i gh t s R eserved . M a y n ot b e scann ed , c opi ed or dup li ca t ed , or p ost ed t o a p ub li c ly a c c essi b le web si t e, i n wh ole o r i n pa rt .

CH AP TER 2

Ma s ter y P roble m (Conc lude d) We Do Wi ndow s

Balance Sheet Jul y 31, 20-Assets Cash

$3, 105

Accounts recei vable

500

Suppli es Prepai d i nsurance

300 480

Tools

600

Van Tot al asset s

5, 000 $9, 985

Liabil it i es Accounts payable

$ 500

O w ner ’ s Equit y Lisa Vozni ak, capit al Tot al li ab. & ow ner’ s equi t y

9, 485 $9, 985

CH AP TER 2

ÂŠ 201 4 C en ga ge Lea rn i n g. All R i gh t s R eserved . M a y n ot b e sca nn ed , c opi ed or dup li ca t ed , or p ost ed t o a p ub li c ly a c c essi b le web si t e, i n wh ole o r i n pa rt .

CH AP TER 2

Cha ll e nge P roble m

Cash f r om cust omer s Cash paid f or wag es Cash paid f or r ent Cash paid f or ut ilit ies

$3, 700 $450 300 50

Cash paid f or insur ance

600

Cash paid f or supplies

100

Cash paid f or t elephone T ot al cash paid f or operat ing it em s Dif f erence bet ween cash r eceived f r om cust omers and cash paid f or g oods and ser vices

35 1, 535 $2, 165

Yes, t her e is a dif f er ence of $2, 000. Net incom e does a bet t er j ob of m easuring pr of it s because it of f er s a bet t er m atching of r evenues and expenses. However, cash f lows are im port ant . If you donâ&#x20AC;&#x2122;t have enoug h cash t o pay your bills, you wil l g o out of business.

CH AP TER

2 College Accounting 21st Edition Heintz SOLUTIONS MANUAL Full download: http://testbanklive.com/download/college-accounting-21st-edition-heintz-solutionsmanual/ College Accounting 21st Edition Heintz TEST BANK Full download: http://testbanklive.com/download/college-accounting-21st-edition-heintz-test-bank/

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