Solutions Chapter 2 – Set B Exercises – Libby 7e
E2–1B.
Req. 1
Received
Given
(a)
Cash (A)
Contributed capital (SE)
(b)
Equipment (A) [or Delivery truck]
Cash (A)
(c)
No exchange transaction
—
(d)
Equipment (A) [or Computer equipment]
Note payable (L)
(e)
Building (A) [or Construction in progress]
Cash (A)
Req. 2
The truck in (b) would be recorded as an asset of $19,000. The land in (h) would be
recorded as an asset of $150,000. These are applications of the historical cost
principle.
Req. 3
The agreement in (c) involves no exchange or receipt of cash, goods, or services and
(f)
Intangibles (A) [or Copyright]
Cash (A)
(h)
Land (A)
Cash (A)
(i)
Intangibles (A) [or Patents]
Cash (A) and Note payable (L)
(j)
No exchange transaction
—
(k)
Investments (A)
Cash (A)
(l)
Cash (A)
Short-term note payable (L)
promise to pay]
E2–2B
Account
Balance Sheet
Categorization
Debit or Credit
Balance
(1) Contributed Capital
SE
Credit
(2) Prepaid Expenses
CA
Debit
(3) Taxes Payable
CL
Credit
E2–3B
Event
Assets
=
Liabilities
+
Stockholders’ Equity
a.
Cash
+52,000
Contributed
capital
+52,000
Cash
Cash
Cash
(4) Retained Earnings
SE
Credit
(5) Accounts Receivable
CA
Debit
(6) Long-Term Debt
Credit
CL
Credit
(9) Plant, Property, and Equipment
Debit
Debit
E2–4B
Event
Assets
=
Liabilities
+
Stockholders’ Equity
a.
Buildings
Equipment
Cash
+242.0
+27.3
– 24.3
Notes payable
(long-term)
+245
b.
Dividends
payable
+95.2
Retained
earnings
–95.2
E2–5B
a.
Cash (+A) ………………………………………………………………….
52,000
Contributed capital (+SE) ………………………………………..
52,000
b.
Equipment (+A) ………………………………………………………….
4,000
Cash (−A) ……………………………………………………………..
500
Notes payable (+L) ………………………………………………..
3,500
c.
Cash (+A) ………………………………………………………………….
10,000
Notes payable (+L) …………………………………………………
10,000
Land (+A) …………………………………………………………………..
Cash (−A) ……………………………………………………………..
Mortgage notes payable (+L) ………………………………….
15,000
E2–6B
a.
Buildings (+A) …………………………………………………………….
242.0
Short-term
No effect
Short-term
Investments
Equipment (+A) …………………………………………………………
27.3
Cash (−A) ……………………………………………………………..
24.3
Long-term note payable (+L) …………………………………..
245.0
b.
Retained earnings (−SE) ……………………………………………..
95.2
Dividends payable (+L) …………………………………………..
95.2
c.
Short-term investments (+A) …………………………………………
Cash (−A) ……………………………………………………………..
Cash (+A) …………………………………………………………………
Contributed capital (+SE) ……………………………..
Cash (+A) ………………………………………………………………….
Short-term investments (−A) ……………………………………
E2–7B
Req. 1
Cash
Note Receivable
Equipment
Beg.
0
Beg.
0
Beg.
0
(a)
31,500
9,000
(b)
(e)
3,200
(b)
36,000
(d)
8,000
3,200
(e)
27,300
3,200
36,000
Land
Beg.
Beg.
Beg.
(d)
26,000
27,000
(b)
31,500
(a)
34,000
(d)
26,000
27,000
65,500
E2–8B
a.
Cash (+A) ………………………………………………………………….
72,000
Contributed capital (+SE) ………………………………………..
72,000
b.
No transaction has occurred because there has been no
exchange or receipt of cash, goods, or services.
c.
Cash (+A) ………………………………………………………………….
Notes payable (long-term) (+L) ………………………………..
d.
Equipment (+A) ………………………………………………………….
Notes payable (short-term) (+L) ……………………………….
e.
Notes receivable (short-term) (+A) ………………………………..
Store fixtures (+A) ………………………………………………………
18,000
E2–9B
a.
Retained earnings (−SE) ……………………………………………..
79
Dividends payable (+L) …………………………………………..
79
b. No transaction has occurred because there has been no exchange or receipt of
cash, goods, or services.
Dividends payable (−L) ………………………………………………..
Cash (+A) ………………………………………………………………….
Notes payable (+L) …………………………………………………
Cash (+A) ………………………………………………………………….
Equipment (+A) ………………………………………………………….
Notes payable (+L) ………………………………………………..
Short-term investments (+A) …………………………………………
E2–10B
Req. 1
Assets $ 13,500 = Liabilities $ 3,200 + Stockholders’ Equity $ 10,300
Req. 2
Cash
Short-Term Investments
Property & Equipment
Beg.
6,500
Beg.
2,300
Beg.
4,700
Short-Term
Notes Payable
Long-Term
Notes Payable
1,900
Beg.
1,300
Beg.
10,000
(a)
1,900
End.
11,300
End.
Contributed Capital
Retained Earnings
8,300
Beg.
2,000
Beg.
(d)
8,300
End.
1,600
End.
Current
10.92
Ratio
Req. 3
Assets $ 23,100 = Liabilities $ 13,200 + Stockholders’ Equity $ 9,900
Req. 4
(a)
10,000
1,300
(b)
2,350
(c)
(b)
1,300
(c)
2,350
(d)
E2–11B
Req. 1
Increases with…
Decreases with…
Equipment
Purchases of equipment
Sales of equipment
Req. 2
Equipment
Notes Receivable
Notes Payable
1/1
500
1/1
150
100
1/1
12/31
12/31
12/31
Notes receivable
Additional loans to others
Collection of loans
creditors