ACC120 Lecture 12: Accounting Concpets
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Several years ago, your client, Brooks Robinson, started an office cleaning service. His business was very successful, owing much to his legacy as the greatest defensive third baseman in major league history and his nickname, âThe Human Vacuum Cleaner.â Brooks operated his business as a sole proprietorship and used the cash method of accounting. Brooks was advised by his attorney that it is too risky to operate his business as a sole proprietorship and that he should incorporate to limit his liability. Brooks has come to you for advice on the tax implications of incorporation. His balance sheet is presented below. Under the terms of the incorporation, Brooks would transfer the assets to the corporation in return for 100 percent of the companyâs common stock. The corporation would also assume the companyâs liabilities (payables and mortgage). (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
| Balance Sheet | |||||
| Adjusted Basis | FMV | ||||
| Assets | |||||
| Accounts receivable | $ | 0 | $ | 5,000 | |
| Cleaning equipment (net) | 25,000 | 20,000 | |||
| Building | 50,000 | 75,000 | |||
| Land | 25,000 | 50,000 | |||
| Total assets | $ | 100,000 | $ | 150,000 | |
| Liabilities | |||||
| Accounts payable | $ | 0 | $ | 10,000 | |
| Salaries payable | 0 | 5,000 | |||
| Mortgage on land and building | 35,000 | 35,000 | |||
| Total liabilities | $ | 35,000 | $ | 50,000 | |
a. How much gain or loss does Brooks realize on the transfer of each asset to the corporation?
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b. How much, if any, gain or loss (on a per asset basis) does Brooks recognize?
| Realized gain/loss | |
| Accounts receivable | |
| Equipment | |
| Building | |
| Land | |
| Total | $0 |
c. How much gain or loss, if any, must the corporation recognize on the receipt of the assets of the sole proprietorship in exchange for the corporationâs stock?
Gain or loss recognized -
d. What tax basis does Brooks have in the corporationâs stock?
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e. What is the corporationâs tax basis in each asset it receives from Brooks?
| Tax Basis | |
| Accounts Receivable | |
| Equipment | |
| Building | |
| Land | |
| Total |
f. How much if any gain or loss will Brooks recognize if he had taken back a 10-year note worth $25,000 plus stock worth $75,000 plus the liability assumption? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)
| Realized gain/loss | |
| Accounts receivable | |
| Equipment | |
| Building | |
| Land | |
| Total | $0 |
Monthly Transactions, Adjustments, and Financial Statements
Moonlight Bay Inn is incorporated on January 2, 2014, by itsthree owners, each of whom contributes $20,000 in cash in exchangefor shares of stock in the business. In addition to the sale ofstock, the following transactions are entered into during the monthof January:
| January 2: | A Victorian inn is purchased for$50,000 in cash. An appraisal performed on this date indicates thatthe land is worth $15,000, and the remaining balance of thepurchase price is attributable to the house. The owners estimatethat the house will have an estimated useful life of 25 years andan estimated salvage value of $5,000. |
| January 3: | A two-year, 12%, $30,000 promissorynote was signed at Second State Bank. Interest and principal willbe repaid on the maturity date of January 3, 2016. |
| January 4: | New furniture for the inn ispurchased at a cost of $15,000 in cash. The furniture has anestimated useful life of ten years and no salvage value. |
| January 5: | A 24-month property insurancepolicy is purchased for $6,000 in cash. |
| January 6: | An advertisement for the inn isplaced in the local newspaper. Moonlight Bay pays $450 cash for thead, which will run in the paper throughout January. |
| January 7: | Cleaning supplies are purchased onaccount for $950. The bill is payable within 30 days. |
| January 15: | Wages of $4,230 for the first halfof the month are paid in cash. |
| January 16: | A guest mails the business $980 incash as a deposit for a room to be rented for two weeks. The guestplans to stay at the inn during the last week of January and thefirst week of February. |
| January 31: | Cash receipts from rentals of roomsfor the month amount to $8,300. |
| January 31: | Cash receipts from operation of therestaurant for the month amount to $6,600. |
| January 31: | Each stockholder is paid $200 incash dividends. |
Assume a 360-day year.
Required:
1. Identify and analyze each of the precedingtransactions.
January 2: Each of three owners contribute $20,000 in cash inexchange for shares of stock in the business.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 1 |
| Accounts | - Select your answer -CashIncrease, Capital Stock IncreaseCash Increase, Capital StockDecreaseCash Decrease, Capital Stock IncreaseCash Decrease, CapitalStock DecreaseCorrect 2 of Item 1 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 1 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | ||||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | ||||||
| - Select your answer -AccountsReceivableCapital StockCashRetained EarningsRestaurant RevenueNoEntryCorrect 1 of Item 2 | - Select your answer -AccountsPayableAccounts ReceivableCapital StockCashSales RevenueNoEntryCorrect 3 of Item 2 | - Select your answer -AccountsReceivableCapital StockCashRetained EarningsRestaurant RevenueNoEntryCorrect 5 of Item 2 | - Select your answer -AccountsPayableCapital StockCashRetained EarningsRestaurant RevenueNoEntryCorrect 7 of Item 2 | - Select your answer -AccountsReceivableCapital StockCashRetained EarningsRestaurant RevenueNoEntryCorrect 9 of Item 2 | |||||||||||
January 2: A Victorian inn is purchased for $50,000 in cash. Anappraisal performed on this date indicates that the land is worth$15,000, and the remaining balance of the purchase price isattributable to the house. The owners estimate that the house willhave an estimated useful life of 25 years and an estimated salvagevalue of $5,000.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 3 |
| Accounts | - Select your answer -LandIncrease, House Increase, Cash DecreaseLand Increase, HouseDecrease, Cash DecreaseLand Decrease, House Increase, CashDecreaseLand Decrease, House Decrease, Cash DecreaseCorrect 2 ofItem 3 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 3 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | |||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | |||||
| - Select your answer -AccountsPayableFurnitureLandNotes PayableRetained EarningsNo EntryCorrect 1of Item 4 | - Select your answer -AccountsReceivableCashHouseInterest ExpenseNotes PayableNo EntryCorrect 3of Item 4 | - Select your answer -AccountsReceivableCashHouseInterest ExpenseNotes PayableNo EntryCorrect 6of Item 4 | - Select your answer -AccountsPayableFurnitureLandNotes PayableRetained EarningsNo EntryCorrect 8of Item 4 | |||||||||||
| - Select your answer -AccountsReceivableHouseInterest ExpenseNotes ReceivableNotes PayableNoEntryCorrect 11 of Item 4 | - Select your answer -CapitalStockCashHouseLandNotes PayableNo EntryCorrect 13 of Item 4 | - Select your answer -CapitalStockCashHouseLandNotes PayableNo EntryCorrect 16 of Item 4 | - Select your answer -AccountsReceivableHouseInterest ExpenseNotes ReceivableNotes PayableNoEntryCorrect 18 of Item 4 | |||||||||||
| - Select your answer -AccountsReceivableCapital StockCashNotes PayableRetained EarningsNoEntryCorrect 21 of Item 4 | - Select your answer-CashFurnitureLandNotes PayableRetained EarningsNo EntryCorrect 23of Item 4 | - Select your answer-CashFurnitureLandNotes PayableRetained EarningsNo EntryCorrect 26of Item 4 | - Select your answer -AccountsReceivableCapital StockCashNotes PayableRetained EarningsNoEntryCorrect 28 of Item 4 | |||||||||||
January 3: A two-year, 12%, $30,000 promissory note was signedat Second State Bank. Interest and principal will be repaid on thematurity date of January 3, 2016.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 5 |
| Accounts | - Select your answer -CashIncrease, Notes Payable IncreaseCash Increase, Notes PayableDecreaseCash Decrease, Notes Payable IncreaseCash Decrease, NotesPayable DecreaseCorrect 2 of Item 5 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 5 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | |||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | |||||
| - Select your answer -AccountsPayableAccounts ReceivableCashNotes PayableNotes ReceivableNoEntryCorrect 1 of Item 6 | - Select your answer -AccountsPayableCashInterest PayableNotes PayableRetained EarningsNoEntryCorrect 3 of Item 6 | - Select your answer -AccountsPayableAccounts ReceivableCashNotes PayableNotes ReceivableNoEntryCorrect 6 of Item 6 | - Select your answer -AccountsPayableCashInterest PayableNotes PayableRetained EarningsNoEntryCorrect 8 of Item 6 | |||||||||||
January 4: New furniture for the inn is purchased at a cost of$15,000 in cash. The furniture has an estimated useful life of tenyears and no salvage value.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 7 |
| Accounts | - Select your answer -FurnitureIncrease, Cash IncreaseFurniture Increase, Cash DecreaseFurnitureDecrease, Cash IncreaseFurniture Decrease, Cash DecreaseCorrect 2of Item 7 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 7 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | |||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | |||||
| - Select your answer -AccountsReceivableDepreciation ExpenseFurnitureHouseNotes PayableNoEntryCorrect 1 of Item 8 | - Select your answer -AccountsPayableAccumulated Depreciation-FurnitureCashFurnitureNotesPayableNo EntryCorrect 3 of Item 8 | - Select your answer -AccountsPayableAccumulated Depreciation-FurnitureCashFurnitureNotesPayableNo EntryCorrect 6 of Item 8 | - Select your answer -AccountsReceivableDepreciation ExpenseFurnitureHouseNotes PayableNoEntryCorrect 8 of Item 8 | |||||||||||
| - Select your answer -AccountsReceivableCashDepreciation ExpenseHouseNotes PayableNo EntryCorrect11 of Item 8 | - Select your answer -AccountsPayableAccumulated Depreciation-FurnitureCashFurnitureNotesPayableNo EntryCorrect 13 of Item 8 | - Select your answer -AccountsPayableAccumulated Depreciation-FurnitureCashFurnitureNotesPayableNo EntryCorrect 16 of Item 8 | - Select your answer -AccountsReceivableCashDepreciation ExpenseHouseNotes PayableNo EntryCorrect18 of Item 8 | |||||||||||
January 5: A 24-month property insurance policy is purchased for$6,000 in cash.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 9 |
| Accounts | - Select your answer -PrepaidInsurance Increase, Cash IncreasePrepaid Insurance Increase, CashDecreasePrepaid Insurance Decrease, Cash IncreasePrepaid InsuranceDecrease, Cash DecreaseCorrect 2 of Item 9 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 9 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | |||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | |||||
| - Select your answer -AccountsReceivableAccounts PayableCapital StockInsurance ExpensePrepaidInsuranceNo EntryCorrect 1 of Item 10 | - Select your answer -AccountsPayableCashInsurance ExpenseNotes PayablePrepaid InsuranceNoEntryCorrect 3 of Item 10 | - Select your answer -AccountsReceivableAccounts PayableCapital StockInsurance ExpensePrepaidInsuranceNo EntryCorrect 6 of Item 10 | - Select your answer -AccountsPayableCashInsurance ExpenseNotes PayablePrepaid InsuranceNoEntryCorrect 8 of Item 10 | |||||||||||
| - Select your answer -AccountsReceivableAccounts PayableCashCapital StockInsurance ExpenseNoEntryCorrect 11 of Item 10 | - Select your answer -AccountsPayableCashInsurance ExpenseNotes PayablePrepaid InsuranceNoEntryCorrect 13 of Item 10 | - Select your answer -AccountsReceivableAccounts PayableCashCapital StockInsurance ExpenseNoEntryCorrect 16 of Item 10 | - Select your answer -AccountsPayableCashInsurance ExpenseNotes PayablePrepaid InsuranceNoEntryCorrect 18 of Item 10 | |||||||||||
January 6: An advertisement for the inn is placed in the localnewspaper. Moonlight Bay pays $450 cash for the ad, which will runin the paper throughout January.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 11 |
| Accounts | - Select your answer -CashIncrease, Advertising Expense IncreaseCash Increase, AdvertisingExpense DecreaseCash Decrease, Advertising Expense IncreaseCashDecrease, Advertising Expense DecreaseCorrect 2 of Item 11 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 11 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | |||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | |||||
| - Select your answer -AdvertisingExpenseAccounts ReceivableCashPrepaid AdvertisingRetainedEarningsNo EntryCorrect 1 of Item 12 | - Select your answer -AccountsPayableAdvertising ExpenseCashNotes PayablePrepaid AdvertisingNoEntryCorrect 3 of Item 12 | - Select your answer -AccountsPayableAdvertising ExpenseCashNotes PayablePrepaid AdvertisingNoEntryCorrect 6 of Item 12 | - Select your answer -AdvertisingExpenseAccounts ReceivableCashPrepaid AdvertisingRetainedEarningsNo EntryCorrect 8 of Item 12 | |||||||||||
January 7: Cleaning supplies are purchased on account for $950.The bill is payable within 30 days.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 13 |
| Accounts | - Select your answer -CleaningSupplies Increase, Accounts Payable IncreaseCleaning SuppliesIncrease, Accounts Payable DecreaseCleaning Supplies Decrease,Accounts Payable IncreaseCleaning Supplies Decrease, AccountsPayable DecreaseCorrect 2 of Item 13 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 13 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | |||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | |||||
| - Select your answer -AccountsReceivableCashCleaning SuppliesHouseNotes PayableNo EntryCorrect 1of Item 14 | - Select your answer -AccountsPayableCashCleaning Supplies ExpenseCleaning SuppliesRetainedEarningsNo EntryCorrect 3 of Item 14 | - Select your answer -AccountsPayableCashCleaning Supplies ExpenseCleaning SuppliesRetainedEarningsNo EntryCorrect 6 of Item 14 | - Select your answer -AccountsReceivableCashCleaning SuppliesHouseNotes PayableNo EntryCorrect 8of Item 14 | |||||||||||
January 15: Wages of $4,230 for the first half of the month arepaid in cash.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 15 |
| Accounts | - Select your answer -CashIncrease, Wages Expense IncreaseCash Increase, Wages ExpenseDecreaseCash Decrease, Wages Expense IncreaseCash Decrease, WagesExpense DecreaseCorrect 2 of Item 15 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 15 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | |||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | |||||
| - Select your answer -AccountsPayableCashRevenue from Rental of RoomsWages ExpenseWages PayableNoEntryCorrect 1 of Item 16 | - Select your answer -AccountsPayableCashDividendsWages ExpenseWages PayableNo EntryCorrect 3 ofItem 16 | - Select your answer -AccountsPayableCashDividendsWages ExpenseWages PayableNo EntryCorrect 6 ofItem 16 | - Select your answer -AccountsPayableCashRevenue from Rental of RoomsWages ExpenseWages PayableNoEntryCorrect 8 of Item 16 | |||||||||||
January 16: A guest mails the business $980 in cash as a depositfor a room to be rented for two weeks. The guest plans to stay atthe inn during the last week of January and the first week ofFebruary.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 17 |
| Accounts | - Select your answer -CashIncrease, Rent Received in Advance IncreaseCash Increase, RentReceived in Advance DecreaseCash Decrease, Rent Received in AdvanceIncreaseCash Decrease, Rent Received in Advance DecreaseCorrect 2of Item 17 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 17 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | |||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | |||||
| - Select your answer -AccountsPayableCashPrepaid RentRent Received in AdvanceRent RevenueNoEntryCorrect 1 of Item 18 | - Select your answer -CashPrepaidRentRent Received in AdvanceRent ExpenseRent RevenueNo EntryCorrect3 of Item 18 | - Select your answer -CashPrepaidRentRent Received in AdvanceRent ExpenseRent RevenueNo EntryCorrect6 of Item 18 | - Select your answer -AccountsPayableCashPrepaid RentRent Received in AdvanceRent RevenueNoEntryCorrect 8 of Item 18 | |||||||||||
January 31: Cash receipts from rentals of rooms for the monthamount to $8,300.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 19 |
| Accounts | - Select your answer -CashIncrease, Revenue from Rental of Rooms IncreaseCash Increase,Revenue from Rental of Rooms DecreaseCash Decrease, Revenue fromRental of Rooms IncreaseCash Decrease, Revenue from Rental of RoomsDecreaseCorrect 2 of Item 19 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 19 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | |||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | |||||
| - Select your answer -AccountsReceivableCashPrepaid RentRent Received in AdvanceRevenue fromRental of RoomsNo EntryCorrect 1 of Item 20 | - Select your answer -AccountsPayableCashRent ExpenseRent Received in AdvanceRevenue from Rentalof RoomsNo EntryCorrect 3 of Item 20 | - Select your answer -AccountsPayableCashRent ExpenseRent Received in AdvanceRevenue from Rentalof RoomsNo EntryCorrect 6 of Item 20 | - Select your answer -AccountsReceivableCashPrepaid RentRent Received in AdvanceRevenue fromRental of RoomsNo EntryCorrect 8 of Item 20 | |||||||||||
January 31: Cash receipts from operation of the restaurant forthe month amount to $6,600.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 21 |
| Accounts | - Select your answer -CashIncrease, Restaurant Revenue IncreaseCash Increase, RestaurantRevenue DecreaseCash Decrease, Restaurant Revenue IncreaseCashDecrease, Restaurant Revenue DecreaseCorrect 2 of Item 21 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 21 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | |||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | |||||
| - Select your answer -AccountsReceivableCashNotes ReceivableRestaurant RevenueRent Received inAdvanceNo EntryCorrect 1 of Item 22 | - Select your answer -AccountsReceivableAccounts PayableCashRestaurant RevenueRetained EarningsNoEntryCorrect 3 of Item 22 | - Select your answer -AccountsReceivableAccounts PayableCashRestaurant RevenueRetained EarningsNoEntryCorrect 6 of Item 22 | - Select your answer -AccountsReceivableCashNotes ReceivableRestaurant RevenueRent Received inAdvanceNo EntryCorrect 8 of Item 22 | |||||||||||
January 31: Each stockholder is paid $200 in cash dividends.
| Activity | - Select your answer-OperatingInvestingFinancingCorrect 1 of Item 23 |
| Accounts | - Select your answer -CashIncrease, Dividends IncreaseCash Increase, Dividends DecreaseCashDecrease, Dividends IncreaseCash Decrease, DividendsDecreaseCorrect 2 of Item 23 |
| Statement(s) | - Select your answer -Balance SheetonlyIncome Statement onlyBalance Sheet and Income StatementCorrect3 of Item 23 |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"and leave the amount box blank. If the effect on a financialstatement item is negative, i.e, a decrease, be sure to enter theanswer with a minus sign.
| BalanceSheet | IncomeStatement | ||||||||||||||
| Assets | = | Liabilities | + | Stockholders'Equity | Revenues | â | Expenses | = | Net Income | ||||||
| - Select your answer -CapitalStockCashDividends PayableDividendsRetained EarningsNo EntryCorrect1 of Item 24 | - Select your answer -AccountsPayableCashDividends PayableDividendsIncome SummaryNo EntryCorrect3 of Item 24 | - Select your answer -CapitalStockCashDividends PayableDividendsRetained EarningsNo EntryCorrect5 of Item 24 | - Select your answer -AccountsPayableCashDividends PayableDividendsIncome SummaryNo EntryCorrect7 of Item 24 | - Select your answer -CapitalStockCashDividends PayableDividendsRetained EarningsNo EntryCorrect9 of Item 24 | |||||||||||
2. Prepare a list of accounts and theirbalances for Moonlight Bay at January 31, 2014. Reflect therecurring transactions for the month of January but not thenecessary month-end adjustments.
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