Chapter 02 – Investing and Financing Decisions and the Accounting System
E2–13.
Req. 1
Assets $ 10,500 = Liabilities $ 3,000 + Stockholders’ Equity $ 7,500
Req. 2
Cash
Short-Term Investments
Property & Equipment
Beg.
5,000
Beg.
2,500
Beg.
3,000
(a)
4,000
1,500
(b)
1,500
(c)
(b)
1,500
(c)
1,500
800
(d)
End.
11,200
End.
1,000
End.
1,500
Beg.
800
Beg.
4,000
(a)
2,200
End.
4,800
End.
Beg.
4,000
Beg.
3,000
Beg.
(d)
4,000
2,200
Current
5.55
Ratio
Chapter 02 – Investing and Financing Decisions and the Accounting System
E2–15. (continued)
Req. 2
Strauderman Delivery Company, Inc.
Trial Balance
December 31, 2014
Debit
Credit
Cash
$35,000
Short-term notes receivable
4,000
Land
12,000
Equipment
21,000
Short-term notes payable
$16,000
Long-term notes payable
16,000
Common stock
10,000
Additional paid-in capital
30,000
Totals
$72,000
$72,000
Chapter 02 – Investing and Financing Decisions and the Accounting System
Financial Accounting, 8/e 2-25
E2–16.
Transaction
Brief Explanation
(a)
Issued 100,000 shares of common stock (par value $0.02 per share) to
shareholders in exchange for $20,000 cash and $5,000 tools and
equipment.
(b)
Loaned $1,800 cash; borrower signed a note receivable for this amount.
(c)
Purchased a building for $40,000; paid $10,000 cash and signed a
$30,000 note payable for the balance.
(d)
Sold tools and equipment for $900 cash (their original cost).
E2–17.
Req. 1
Increases with…
Decreases with…
Equipment
Purchases of equipment
Sales of equipment
Notes receivable
Additional loans to others
Collection of loans
Notes payable
Additional borrowings
Payments of debt
Req. 2
Equipment
Notes Receivable
Notes Payable
1/1
500
1/1
150
100
1/1
250
650
245
225
110
170
12/31
100
12/31
170
160
12/31
Beginning
balance
+
“+”
−
“−”
=
Ending
balance
Equipment
$500
+
250
−
?
=
$100
?
=
650
Notes receivable
150
+
?
−
225
=
170
?
=
245
Notes payable
100
+
170
−
?
=
160
?
=
110
Chapter 02 – Investing and Financing Decisions and the Accounting System
PROBLEMS
P2–1.
Balance
Sheet
Classification
Debit or
Credit
Balance
(1)
Notes and Loans Payable (short-term)
CL
Credit
(2)
Materials and Supplies
CA
Debit
(3)
Common Stock
SE
Credit
(4)
Patents (an intangible asset)
NCA
Debit
(5)
Income Taxes Payable
CL
Credit
(6)
Long-Term Debt
NCL
Credit
(7)
Marketable Securities (short-term)
CA
Debit
(8)
Property, Plant, and Equipment
NCA
Debit
(9)
Retained Earnings
SE
Credit
(10)
Notes and Accounts Receivable (short-term)
CA
Debit
(11)
Investments (long-term)
NCA
Debit
(12)
Cash and Cash Equivalents
CA
Debit
(13)
Accounts Payable
CL
Credit
(14)
Crude Oil Products and Merchandise
CA
Debit
(15)
Additional Paid-in Capital
SE
Credit
Chapter 02 – Investing and Financing Decisions and the Accounting System
P2–2. (continued)
Req. 2
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Short-Term
Investments
Notes
Receivable
Land
Buildings
Equipment
ST Notes LT Notes
Payable Payable
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Beg.
50,000
500,000
100,000
50,000
=
100,000 100,000
20,000
80,000
400,000
(a)
+90,000
=
+9,000
+81,000
(b)
–9,000
+14,000
+60,000
+15,000
=
+80,000
(c)
+3,500
–3,500
=
(d)
–18,000
+18,000
=
(e)
No effect
(f)
–5,000
+5,000
=
+111,500
+18,000
+5,000
+510,500
+160,000
+65,000
=
+100,000 +180,000
+29,000
+161,000
+400,000
$870,000 $280,000 $590,000
Chapter 02 – Investing and Financing Decisions and the Accounting System
P2–3. (continued)
Req. 3
No effect was recorded for (d). The agreement in (d) involves no exchange or receipt of
cash, goods, or services and thus is not a transaction.
Req. 4
Cougar Plastics Company
Trial Balance
At December 31, 2015
Debit
Credit
Cash
$ 12,000
Investments (short-term)
13,000
Accounts receivable
3,000
Inventory
20,000
Notes receivable (long-term)
6,000
Equipment
67,000
Factory building
114,000
Intangibles
8,000
Accounts payable
$ 15,000
Accrued liabilities payable
4,000
Notes payable (short-term)
29,000
Notes payable (long-term)
63,000
Common stock
11,000
Additional paid-in capital
90,000
Retained earnings
31,000
Totals
$243,000
$243,000
Chapter 02 – Investing and Financing Decisions and the Accounting System
P2–4.
Transaction
Type of Activity
Effect on Cash
(a)
I
–
(b)
I
–
(c)
I
–
(d)
NE
NE
(e)
F
+
(f)
F
+
(g)
I
–
(h)
I
–
(i)
I
+
P2–5.
Req. 1
a.
Cash (+A) ………………………………………………………………….
50
Long-term liabilities (+L) ………………………………………….
50
b.
Receivables and other assets (+A) ………………………………..
300
Cash (−A) ……………………………………………………………..
300
c.
Long-term investments (+A) …………………………………………
2,600
Short-term investments (+A) ………………………………………..
10,400
Cash (−A) ……………………………………………………………..
13,000
d.
Property, plant, and equipment (+A) ………………………………
2,285
Cash (−A) ……………………………………………………………..
875
Long-term liabilities (+L) ………………………………………….
1,410
e.
Cash (+A) ………………………………………………………………….
400
Common stock (+SE) ……………………………………………..
10
Additional paid-in capital (+SE) ………………………………..
390
f.
Cash (+A) ………………………………………………………………….
11,000
Short-term investments (−A) ……………………………………
11,000
g.
Retained earnings (−SE) ……………………………………………..
60
Cash (−A) ……………………………………………………………..
60
Chapter 02 – Investing and Financing Decisions and the Accounting System
P2–5. (continued)
Req. 3
Dell, Inc.
Balance Sheet
At February 1, 2013
(in millions)
ASSETS
Current Assets:
Cash
$11,067
Short-term investments
366
Receivables and other assets
10,103
Inventories
1,404
Other current assets
3,423
Total current assets
26,363
Property, plant and equipment
4,409
Long-term investments
6,004
Other noncurrent assets
9,557
Total assets
$46,333
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
$11,656
Other short-term obligations
10,345
Total current liabilities
22,001
Long-term Liabilities
15,075
Total liabilities
37,076
Stockholders’ Equity:
Common stock
44
Additional paid-in capital
12,543
Retained earnings
28,176
Other stockholders’ equity items
(31,506)
Total stockholders’ equity
9,257
Total liabilities and stockholders’ equity
$46,333
Req. 4
Current
=
=
$26,363
=
1.20
Ratio
$22,001
For every $1 of short-term liabilities, Dell has $1.20 of current assets. This low current
Chapter 02 – Investing and Financing Decisions and the Accounting System
AP2–2.
Req. 1
Adamson Incorporated was organized as a corporation. Only a corporation issues
shares of capital stock to its owners in exchange for their investment, as Adamson did
in transaction (c).
Req. 2 (On next page)
Req. 3