Financial Accounting Problems

1. Show the impact of the transactions on the fundamental equation of accounting. Assume that each transaction is an independent event.

Rehabilitation Services Inc (RSI) had the following financial events during the past year:

a) Received $50,000 from a foundation. The foundation had approved and committed the grant during the prior year, and the grant was treated as revenue in that year.

b) RSI signed a contract with the County to provide rehab services to eligible residents during the year. The contract obligates the County to pay up to $225,000 to RSI if they (a) provide services as agreed, and (b) submit a report and statement for payment. RSI delivered the services as agreed and submitted a report and statement for the entire contract before the end of the year.

c) RSI received payment from the County for the contract amount.

d) Payment of $10,000 was made to a consultant who had completed a project for RSI and submitted an invoice the previous year.

e) RSI borrowed $20,000 from a local bank on a five-year term to buy furniture.

f) Furniture was purchased for $20,000. Full payment was made.

g) RSI promptly paid salaries, benefits and other expenses totaling $250,000 over the course of the year.

h) RSI negotiated the purchase of an information system complete with hardware and software for $35,000. They have not yet paid for nor received the system, but they have signed a purchase contract, and expect it to be delivered and installed within the next month.

Transaction

Assets (A)=Liabilities (L)+Net Assets (NA)

a.

b.

c.

d.

e.

f

g.

h.