Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

E2-2 Identifying Account Titles (LO 2-1, LO 2-2, LO 2-5) The following are independent situations a A company orders and receives 10 personal computers for

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
E2-2 Identifying Account Titles (LO 2-1, LO 2-2, LO 2-5) The following are independent situations a A company orders and receives 10 personal computers for office use for which it signs a note promising to pay $20,000 within three months. b. A company purchases for $27,000 cash a new delivery truck that has a list (sticker") price of $30,000 c A women's clothing retaller orders 30 new display stands for $360 each for future delivery. d. A new company is formed and issues 100 shares of stock for $11 per share to investors. e. A company purchases a piece of land for $56,000 cash. An appraiser for the buyer valued the land at $59,700 The owner of a local company uses a personal check to buy a $13,000 car for personal use. Answer from the company's point of 9. A company borrows $5,000 from a local bank and signs a six-month note for the loan. n. A company pays $2,100 owed on its 10-year notes payable (ignore interest), view Required: 1. Indicate titles of the appropriate accounts, if any, affected in each of the preceding events. 2-a. At what amount would you record the delivery truck in (o 2-b. At what amount would you record the plece of land in (or 2-c. What measurement principle are you applying? 3-a. What reasoning did you apply in (c? 3-b. For (0.what accounting concept did you apply? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 26 Red 20 Rea 3A Regja Indicate titles of the appropriate accounts, if any, affected in each of the preceding events. Consider what the company gives and receives Given Received ) ) ) Reg 1 Reg 2A Reg 28 Reg 2c Req 3A Req 3B At what amount would you record the delivery truck in (b)? Amount Reg 1 Req 2A Req 2B Req 2c Req Req 3B At what amount would you record the piece of land in (e)? Amount Reg 1 Reg 2A Reg 2B Rearc Reg Reg 38 What measurement principle are you applying? These are applications of the cost principle. These are applications of the market price principle. Reg 1 Req 2A Req 2B Req 2c Heq 3A Reg 3B What reasoning did you apply in (c)? The agreement in (c) involves exchange of cash and goods and thus it is a transaction. The agreement in (c) involves no exchange or receipt of cash, goods, or services and thus is not a transaction. Reg 1 Reg 2A Req 2B Reg 2c Reg 3A Req For (1), what accounting concept did you apply? Because transaction (1) occurs between the company and others, the separate entity assumption implies this transaction does affect the business. Because transaction (1) occurs between the owner and others, the separate entity assumption implies this transaction does not affect the business

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sound Investing, Chapter 19 - Related-Party Transaction Ruse

Authors: Kate Mooney

1st Edition

0071719415, 9780071719414

More Books

Students also viewed these Accounting questions

Question

=+7. What is the big message you want them to know?

Answered: 1 week ago