On which financial statement will a decision maker find each of the following account balances?

a.____ Sales revenue

b.____ Cash

c.____ Gain on sale of building

d.____ Retained earnings

e.____ Salary expense

f.____ Salary payable

g.____ Capital stock

h.____ Dividends paid

i.____ Loss on the sale of land

j.____ Income tax expense

k.____ Net income

The Maverick Company has the following account balances at the end of December. Show that Mavericks balance sheet does balance using the accounting equation.

Cash

$8,000

Capital Stock

$120,000

Inventory

$16,000

Note Payable

$45,000

Retained Earnings

$29,000

Building

$158,000

Equipment

$30,000

Accounts Payable

$11,000

Salary Payable

$7,000

1.The Ramond Company has hired you to prepare financial statements for the year ending December 31 of the current year. On your first day of work, your assistant uncovers several items that could be classified as expenses or could be classified as assets. The assistant has asked for your help. Determine whether the following items should be recorded as an expense or an asset within the financial statements currently being prepared.

a.On December 31, Ramond paid $14,000 to rent office space for the next twelve months.

b.On October 1, Ramond paid $40,000 for fire insurance that covered the companys property for the last quarter of the year.

c.On July 1, Ramond purchased $27,000 in supplies, all of which were used by the end of the year.

d.On December 31, Ramond purchased $5,000 worth of supplies for the coming month.

2.

For each of the following transactions of the Hamner Corporation, indicate what accounts are affected and whether they increase or decrease.

a.Owners put $30,000 in cash into the business.

b.The company borrows $15,000 in cash from the bank on a note payable.

c.The company buys equipment for $19,000 using cash.

d.The company buys machinery at a cost of $11,000 that will be paid within thirty days.

e.The company sells services for $14,000. It collects $2,000 immediately (when the work is done) with the rest due at the end of the month.

f.The company pays $5,000 in rent on a building that was used during the past month. The expense has not been accrued over that time.

g.The company pays a $3,000 dividend to its owners.

h.The company buys inventory for $10,000 on credit.

i.The company sells the above inventory for $18,000. It collects $7,000 immediately with the rest to be received within the next few weeks.

j.The company pays for inventory bought in transaction h.

k.The company collects money due from the sale in transaction i.

For each of the following is a debit or credit needed to reflect the impact?

a.Equipment increases

b.Salary payable increases

c.Cash decreases

d.Rent expense increases

e.Sales revenue increases

f.Accounts receivable decreases

g.Capital stock increases

h.Inventory decreases

i.Accounts payable decreases

j.Salary expense decreases

State whether a debit or credit balance is normal for each of the following T-accounts:

a.Cash

b.Dividends paid

c.Notes payable

d.Unearned revenue

e.Cost of goods sold

f.Prepaid rent

g.Accounts receivable

h.Capital stock