BUSINESS COLLEGE

Boilermaker House Painting Company incurs the following transactions for September. 1. Paint houses in the current month for $15,000 on account. Assets increase and stockholders' equity increases.
2. Purchase painting equipment for $16,000 cash. One asset increases and another asset decreases.
3. Purchase office supplies on account for $2,500. Assets increase and liabilities increase.
4. Pay employee salaries of $3,200 for the current month. One asset increases and another asset decreases.
5. Purchase advertising to appear in the current month, $1,200. Assets increase and stockholders' equity increases.
6. Pay office rent of $4,400 for the current month. Assets decrease and stockholders' equity decreases.
7. Receive $10,000 from customers in (1) above. One asset increases and another asset decreases.
8. Receive cash of $5,000 in advance from a customer who plans to have his house painted in the following month. Assets increase and liabilities increase.
For each transaction, describe the dual effect on the accounting equation. For example, for the first transaction, (1) assets increase and (2) stockholders' equity increases.

Answers

Answer 1

Answer:

The descriptionof the dual effects of the transactions on the accounting equation is as follows:

1. Asset increases (Accounts Receivable) and stockholders' equity (Retained Earnings) increases.

2. One asset (Equipment) increases and another asset (Cash) decreases.

3. Assets (Supplies) increase and liabilities (Accounts Payable) increase.

4. Assets (Cash) decrease and stockholders' equity (Retained Earnings) decreases.

5. Assets (Cash) decrease and stockholders' equity (Retained Earnings) decreases.

6. Assets (Cash) decrease and stockholders' equity (Retained Earnings) decreases.

7. One asset (Cash) increases and another asset (Accounts Receivable) decreases.

8. Assets (Cash) increase and liabilities (Deferred Revenue) increase.

What is the Accounting Equation?

The accounting equation is a depiction that assets equal liabilities and equity at every given time and with every transaction. This equation gives each transaction the dual effect.

Data Analysis:

1. Accounts Receivable $15,000 Service Revenue $15,000

2. Equipment $16,000 Cash $16,000

3. Supplies $2,500 Accounts Payable $2,500

4. Salaries Expense $3,200 Cash $3,200

5. Advertising Expense $1,200 Cash $3,200

6. Rent Expense $4,400 Cash $4,400

7. Cash $10,000 Accounts Receivable $10,000

8. Cash $5,000 Deferred Revenue $5,000

Thus, the dual effect means that each transaction affects, at least, two accounts of the accounting equation.

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Related Questions

Mutual fund A earned 10 percent while B earned 8 percent. The standard deviations of the returns were 7 percent and 4 percent, respectively. Assumr risk free rate of 2%.a) Estimate the Sharpe ratio of each mutual fundb) According to the Sharpe ratio, which fund performed better?
Hitzu Co. sold a copier costing $6,500 with a two-year parts warranty to a customer on August 16, 2018, for $13,000 cash. Hitzu uses the perpetual inventory system. On November 22, 2019, the copier requires on-site repairs that are completed the same day. The repairs cost $113 for materials taken from the repair parts inventory. These are the only repairs required in 2019 for this copier. Based on experience, Hitzu expects to incur warranty costs equal to 5% of dollar sales. It records warranty expense with an adjusting entry at the end of each year.1. How much warranty expense does the company report in 2018 for this copier? 2. How much is the estimated warranty liability for this copier as of December 31, 2018? 3. How much warranty expense does the company report in 2019 for this copier? 4. How much is the estimated warranty liability for this copier as of December 31, 2019? 5. Prepare journal entries to record (a) the copier's sale; (b) the adjustment on December 31, 2018, to recognize the warranty expense; and (c) the repairs that occur in November 2019.
A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct?a. The mayor would be correct if demand were price elastic; the city manager would be correct if demand were price inelastic.b. The mayor would be correct if demand were price inelastic; the city manager would be correct if demand were price elastic.c. Both the mayor and city manager would be correct if demand were price elastic.d. Both the mayor and city manager would be correct if demand were price inelastic.
Fox Co. sold used equipment for a cash amount equaling its carrying amount for both book and tax purposes. Later that year, Fox replaced the equipment by paying cash and signing a note payable for new equipment. The cash paid for the new equipment exceeded the cash received for the old equipment. How should these equipment transactions be reported in Fox's statement of cash flows? Group of answer choices
An income statement for Sam's Bookstore for the first quarter of the year is presented below:Sam's BookstoreIncome StatementFor Quarter Ended March 31Sales $ 910,000Cost of goods sold 560,000Gross margin 350,000Selling and administrative expensesSelling $ 119,000Administration 142,000 261,000Net operating income $ 89,000On average, a book sells for $65. Variable selling expenses are $4 per book with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales with the remainder being fixed.The contribution margin for Sam's Bookstore for the first quarter is:____________

Gitli Company sells its product for $ 55 and has variable cost of $ 30 per unit. The total fixed costs are $ 25 comma 000. What will be the effect on the breakeven point in units if variable cost increases by $ 10 due to an increase in the cost of direct materials? (Round your answer up to the nearest whole unit.) A. It will decrease by 667 units. B. It will increase by 167 units. C. It will decrease by 167 units. D. It will increase by 667 units.

Answers

Answer:

D. It will increase by 667 units.

Explanation:

The calculation of break-even point is shown below:-

Contribution Per Unit (before increase in Variable Cost) = Unit sale price - Unit Variable Cost

= $55 - $30

= $25

Break-Even (Units) = Fixed Cost ÷ Division Contribution per unit

= $25,000 ÷ $25

= 1,000

New Variable Cost per unit = $30 + $10 (Increase in Direct material cost) = $40

Selling Price = $55

New Contribution per unit = $55 - $40 = $15

New Break-Even (Units) = Fixed Cost ÷ New Contribution per unit

= $25,000 ÷ $15

= 1,667

Increase in Break-Even Units(after increase in D.M cost) = New Break even point - Old Break even point

= 1,667 - 1,000 units

= 667 units

Therefore, The Break even points units will increase by 667 units, if the D.M cost increases by $10 per unit.

Coronado Inc. had beginning inventory of $12700 at cost and $20900 at retail. Net purchases were $113930 at cost and $158500 at retail. Net markups were $9600, net markdowns were $7400, and sales revenue was $151100. Compute ending inventory at cost using the conventional retail method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

Answers

Answer:

Ending Inventory:21,267.70

Explanation:

cost retail

beginning 12,700 20,900

purchases 113,930 158,500

markups 9,600

markdowns (7,400)

total 126,630 181,600

inventory to retail ratio: 126,630 / 181,600 = 0.6973

sales revenues 151,100

COGS: 151,100 x 0.6973 = 105,362.30

Ending Inventory: 126,630 - 105,362.30 = 21,267.70

Read the following descriptions and identify the type of risk or term being described:a. This type of risk relates to fluctuations in exchange rates.
b. This type of risk is inherent in a firmâs operations. A standard measure of the risk per unit of return. This can be used to reduce the stand-alone risk of an investment by combining it with other investments in a portfolio.
c. A standard measure of the risk per unit of return
d. This type of risk relates to fluctuations in exchange rates

Answers

Answer:

Foreign exchange risk

Explanation:

These are the risks that an international financial transaction could accrue because of fluctuations in the currency.

A standard measure of the risk per unit of return and this type of risk relates to fluctuations in exchange rates.

Therefore, according to the following descriptions, the type of risk or term being described is Foreign exchange risk.

Research shows that projects dedicated to information security policies fail due to eight common perceived missteps. Which of the following is not one of the missteps? a. Unclear purpose: This refers to the clarity of value the project brings.b. Doubt: This refers to the need for change; it is necessary to explain why what is in place today is not good enough.c. Lack of organizational incentives: This refers to the inability to motivate behaviorsd. Lack of complexity: This refers to an oversimplication of policies that sacrifices depth and nuance.

Answers

Answer:

d. Lack of complexity: This refers to an oversimplication of policies that sacrifices depth and nuance.

Explanation:

Projects dedicated to information security policy are improved by lack of complexity . When the process for project execution is simplified, it is easy to understand and execute the various project stages, making processes more efficient. Simplification is a valuable tool businesses are using more and more to reduce wastage and increase returns.

On the other hand complexity in a project makes it hard to understand, and easier to make time-wasting mistakes.

The net income reported on the income statement for the current year was $250,771. Depreciation recorded on fixed assets and amortization of patents for the year were $35,093 and $10,838, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:End Beginning
Cash: $50,000 $60,000
Accounts receivable: 112,000 108,000
Inventories: 105,000 93,000
Prepaid expenses: 4,500 6,500
Accounts payable-
(merchandise creditors): 75,000 89,000

What is the amount of cash flows, from operating activities, reported on the statement of cash flows, prepared by the indirect method?

Answers

Answer:

The amount of cash flows, from operating activities, reported on the statement of cash flows, prepared by the indirect method is $268,702

Explanation:

The Net Income for the year is adjusted for non-cash items, items appearing elsewhere and items in movement of working capital to arrive at the net cash flow from operating activities using the indirect method.

Cash flows, from operating activities

Net income $250,771

adjusted for non-cash items

Depreciation $35,093

Amortization $10,838

adjusted for items in movement of working capital

Increase in Accounts receivable ($4,000)

Increase in Inventories ($12,000)

Decrease in Prepaid expenses $2,000

Decrease in Accounts payable (14,000)

Net Cash flows, from operating activities $268,702

A small business owner visits his bank to ask for a loan. The owner states that he can repay a loan at $2,000 per month for the next three years and then $1,000 per month for two years after that. If the bank is charging customers 9.75 percent APR, how much would it be willing to lend the business owner

Answers

Answer:

$78,443.29

Explanation:

we need to use the present value of an annuity formula:

the formula used to determine the present value factor of an annuity is:

present value annuity factor = [1 - 1/(1 + i)ⁿ ] / i

we must divide this into 2 parts:

the first part will deal with the $2,000 monthly payment

the second part deals with the $1,000 monthly payment

i = 9.75% / 12 = 0.8125%

n (first part) = 36

n (second part) = 24

the PV annuity factor for first part = [1 - 1/(1 + 0.8125%)³⁶ ] / 0.8125% = 31.1043

the PV annuity factor for first part = [1 - 1/(1 + 0.8125%)²⁴ ] / 0.8125% = 21.7251

loan = ($2,000 x 31.1043) + ($1,000 x 21.7251)//(1 + 0.8125%)³⁶ = $62,208.60 + $16,234.69 = $78,443.29

= [1 - 1/(1 + 0.0069942)240 ] / 0.0069942 = 116.135183

Final answer:

The bank would calculate the present value of the loan payments to determine how much to lend the small business owner.

Explanation:

The bank would be willing to lend the business owner an amount that corresponds to the present value of the loan payments. To calculate the present value, we need to discount each of the future cash flows to the present time using the bank's annual percentage rate (APR). The formula to calculate the present value of an annuity is:

Present Value = A x [(1 - (1 + r) ^ -n) / r]

Where A is the monthly payment, r is the monthly interest rate, and n is the number of months.

Using this formula, we can calculate the present value of the loan payments and determine how much the bank would be willing to lend the business owner.

Learn more about Bank Loans here:

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