Title: 2.1
QA_Ori: See the text or the glossary at the end of the book.
QA_Edit: See the text or the glossary at the end of the book.
Title: 2.2
QA_Ori: Accounting is governed by the balance sheet equation, which shows the equality of
Qa_Edit: The relation between assets, liabilities and shareholder’s equity is displayed in the
Title: 2.3
QA_Ori: Typically, the accountant records journal entries before transferring the amounts to
T-accounts. A T-account is used to record the effects of events and transactions
QA_Edit:
1>Journal entries record the events and transactions before they are transferred to T-account. A
Title: 2.4
Q A _ O r i : The distinction is based on time. Current assets are expected to be
QA_Edit: The dissimilarity between current assets and noncurrent assets is time. For current
Title: 2.5
Q A _ O r i : Contra accounts provide disaggregated information concerning the net
QA_Edit: Thanks to contra accounts, the exact acquisition cost of fixed assets and how many
percent that acquisition cost written off as depreciation will be clarified better than the account
Title: 2.6
QA_Ori:
(Fresh Foods Group; dual effects on balance sheet equation.)
(amounts in millions of euros
Shareholders’
Transaction Assets
=
Li abilities + Equity
QA_Edit:
(Fresh Foods Group; dual effects on balance sheet equation.)
(amounts in millions of euros [€])
Shareholders’
Transaction Assets
=
Li abilities + Equity
Title: 2.7
QA_Ori:
(Cement Plus; dual effects on balance sheet equation.)
(Cement Plus; dual effects on balance sheet equation.)
(amounts in millions of US$)
Title: 2.8
QA_Ori: (Balance sheet classification.)
QA_Edit:
(Balance sheet classification.)
Title: 2.9
QA_Ori: (Balance sheet classification.)
QA_Edit:
(Balance sheet classification.)
Title: 2.10
QA_Ori: (Bullseye Corporation; dual effects of transactions on balance sheet equation
and journal entries.)
(amounts in millions of US$)
b. (1)
Assets
= Liabilities +
Shareholders’
Equity (Class.)
+960.0
+1.7
ContriCap
+958.3
ContriCap
Issue 20 million shares of $0.0833 par value
commo
n
stock for $960 million. Different rounding
Assets
= Liabilities +
Shareholders’
Equity (Class.)
+1,500
+1,500
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+3,200
+930
–4,130
Assets
= Liabilities +
Shareholders’
Equity (Class.)
+860
+860
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
–1,500
–1,500
Pays suppliers in Transaction
(2).
Assets
= Liabilities +
Shareholders’
Equity (Class.)
–430.0
–860.0
+0.7
ContriCap
+429.3
ContriCap
Pays suppliers of fixtures cash of $430 million in
shares
of common stock. Bullseye Corporation
shares
are
trading at $50 per share, so it gave the
Title: 2.11
QA_Ori:
(Inheritance Brands; dual effects of transactions on balance sheet equation and journal
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+550.0
+31.25
ContriCap
+518.75
ContriCap
Issue 10 million shares of $3.125 par value
commo
n
stock for $55 per
share.
(2) Land…………………………………………………………. 250
Building……………………………………………………. 900
Cash……………………………………………………… 400
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+250
+750
+900
–400
Gives $400 million in cash and promises to pay
the
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+30
–30
Assets
=
Liabilities
+
Shareholders’
Equity
(Class.)
+400
+400
Assets
= Liabilities +
Shareholders’
Equity (Class.)
–400
–400
QA_Edit:
(Inheritance Brands; dual effects of transactions on balance sheet equation and journal
entries.) (amounts in millions of US$)
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+550.0
+31.25
ContriCap
+518.75
ContriCap
Issue 10 million shares of $3.125 par value
commo
(2) Land…………………………………………………………. 250
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+250
+750
+900
–400
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+30
–30
Pays $30 million in advance to insurance company
Assets
=
Liabilities
+
Shareholders’
Equity
(Class.)
+400
+400
Assets
= Liabilities +
Shareholders’
Equity (Class.)
–400
–400
Title: 2.12
(Winkle Grocery Store; journal entries for various transactions.) (amounts in US$)
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+30,000
+30,000
ContriCap
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+5,000
+5,000
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+12,000
–12,000
Assets
=
Liabilities
+
Shareholders’
Equity
(Class.)
+8,000
–8,000
Assets
= Liabilities +
Shareholders’
Equity (Class.)
+25,000
+13,000
–12,000
Assets
=
Liabilities
+
Shareholders’
Equity
(Class.)
+4,000
+4,000
Assets
= Liabilities +
Shareholders’
Equity (Class.)
+1,200
–1,200
Title: 2.4
Q A _ O r i : The distinction is based on time. Current assets are expected to be
QA_Edit: The dissimilarity between current assets and noncurrent assets is time. For current
Title: 2.5
Q A _ O r i : Contra accounts provide disaggregated information concerning the net
QA_Edit: Thanks to contra accounts, the exact acquisition cost of fixed assets and how many
percent that acquisition cost written off as depreciation will be clarified better than the account
Title: 2.6
QA_Ori:
(Fresh Foods Group; dual effects on balance sheet equation.)
(amounts in millions of euros
Shareholders’
Transaction Assets
=
Li abilities + Equity
QA_Edit:
(Fresh Foods Group; dual effects on balance sheet equation.)
(amounts in millions of euros [€])
Shareholders’
Transaction Assets
=
Li abilities + Equity
Title: 2.7
QA_Ori:
(Cement Plus; dual effects on balance sheet equation.)
(Cement Plus; dual effects on balance sheet equation.)
(amounts in millions of US$)
Title: 2.8
QA_Ori: (Balance sheet classification.)
QA_Edit:
(Balance sheet classification.)
Title: 2.9
QA_Ori: (Balance sheet classification.)
QA_Edit:
(Balance sheet classification.)
Title: 2.10
QA_Ori: (Bullseye Corporation; dual effects of transactions on balance sheet equation
and journal entries.)
(amounts in millions of US$)
b. (1)
Assets
= Liabilities +
Shareholders’
Equity (Class.)
+960.0
+1.7
ContriCap
+958.3
ContriCap
Issue 20 million shares of $0.0833 par value
commo
n
stock for $960 million. Different rounding
Assets
= Liabilities +
Shareholders’
Equity (Class.)
+1,500
+1,500
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+3,200
+930
–4,130
Assets
= Liabilities +
Shareholders’
Equity (Class.)
+860
+860
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
–1,500
–1,500
Pays suppliers in Transaction
(2).
Assets
= Liabilities +
Shareholders’
Equity (Class.)
–430.0
–860.0
+0.7
ContriCap
+429.3
ContriCap
Pays suppliers of fixtures cash of $430 million in
shares
of common stock. Bullseye Corporation
shares
are
trading at $50 per share, so it gave the
Title: 2.11
QA_Ori:
(Inheritance Brands; dual effects of transactions on balance sheet equation and journal
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+550.0
+31.25
ContriCap
+518.75
ContriCap
Issue 10 million shares of $3.125 par value
commo
n
stock for $55 per
share.
(2) Land…………………………………………………………. 250
Building……………………………………………………. 900
Cash……………………………………………………… 400
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+250
+750
+900
–400
Gives $400 million in cash and promises to pay
the
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+30
–30
Assets
=
Liabilities
+
Shareholders’
Equity
(Class.)
+400
+400
Assets
= Liabilities +
Shareholders’
Equity (Class.)
–400
–400
QA_Edit:
(Inheritance Brands; dual effects of transactions on balance sheet equation and journal
entries.) (amounts in millions of US$)
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+550.0
+31.25
ContriCap
+518.75
ContriCap
Issue 10 million shares of $3.125 par value
commo
(2) Land…………………………………………………………. 250
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+250
+750
+900
–400
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+30
–30
Pays $30 million in advance to insurance company
Assets
=
Liabilities
+
Shareholders’
Equity
(Class.)
+400
+400
Assets
= Liabilities +
Shareholders’
Equity (Class.)
–400
–400
Title: 2.12
(Winkle Grocery Store; journal entries for various transactions.) (amounts in US$)
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+30,000
+30,000
ContriCap
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+5,000
+5,000
Assets
=
Liabilities
+
Shareholder
s’
Equity
(Class.)
+12,000
–12,000
Assets
=
Liabilities
+
Shareholders’
Equity
(Class.)
+8,000
–8,000
Assets
= Liabilities +
Shareholders’
Equity (Class.)
+25,000
+13,000
–12,000
Assets
=
Liabilities
+
Shareholders’
Equity
(Class.)
+4,000
+4,000
Assets
= Liabilities +
Shareholders’
Equity (Class.)
+1,200
–1,200