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sheetalcool089 sheetalcool089 Question: Assignment: Chapter 9 homework 1. Show Me How Transaction Analysis Polly's Cards & Gifts Shop had the following transactions during the year:

sheetalcool089

sheetalcool089 Question:
Assignment: Chapter 9 homework

1.

Show Me How

Transaction Analysis

Polly's Cards & Gifts Shop had the following transactions during the year:

Required:

1. Identify and analyze the effect of transactions a-g.

a. Polly's purchased inventory on account from a supplier for $8,180. Assume that Polly's uses a periodic inventory system.

Activity _________

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

b. On May 1, land was purchased for $49,900. A 10% down payment was made, and an 18-month, 9% note was signed for the remainder.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _

c. Polly's returned $500 worth of inventory purchased in (a), which was found broken when the inventory was received.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

d. Polly's paid the balance due on the purchase of inventory.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

e. On June 1, Polly signed a one-year, $18,600 note to First State Bank and received $16,740.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _

f. Polly's sold 200 gift certificates for $30 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 39% of the gift certificates had been redeemed.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

g. Sales for the year were $141,000, of which 80% were for cash. State sales tax of 5% applied to all sales must be remitted to the state by January 31.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _

2. Assume that Polly's accounting year ends on December 31. Identify and analyze the effect of any necessary adjusting entries based on transactions below. Do not round intermediate calculations. If required, round your final answers to the nearest cent. Use full months instead of days when calculating interest expense.

b. On May 1, land was purchased for $49,900. A 10% down payment was made, and an 18-month, 9% note was signed for the remainder.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

e. On June 1, Polly signed a one-year, $18,600 note to First State Bank and received $16,740.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

f. Polly's sold 200 gift certificates for $30 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 39% of the gift certificates had been redeemed.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

3. What is the total of the current liabilities at the end of the year? Do not round intermediate calculations. Round your final answer to the nearest cent. $ _

2.

Show Me How

Non-Interest-Bearing Notes Payable

On October 1, 2014, Timur Enterprises borrowed $18,200 from Redhills Savings and Loan by issuing a 12-month note. The bank discounted the note at 9%.

Required:

1. Identify and analyze the effect of the issuance of the note.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _

2. Identify and analyze the effect of the accrual of interest on December 31, 2014.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. Use months in calculation.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

3. Identify and analyze the effect of the payment of the note on October 1, 2015.

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _

4. What effective rate of interest did Timur pay? Round effective interest rate calculations to four decimal places, but enter as a percentage with two decimals; for example, .17629 rounds to .1763 and would be entered as 17.63, indicating 17.63%. _ %

3.

Show Me How

Warranties

Bakem Enterprises manufactures and sells Ovens. Bakem provides all customers with a two-year warranty guaranteeing to repair, free of charge, any defects reported during this time period. During the year, it sold 100,000 Ovens for $270 each. Analysis of past warranty records indicates that 12% of all sales will be returned for repair within the warranty period. Bakem expects to incur expenditures of $9 to repair each Oven. The account Estimated Liability for Warranties had a balance of $120,000 on January 1. Bakem incurred $165,000 in actual expenditures during the year.

Required:

Identify and analyze the effect of the events related to the warranty transactions during the year.

The effect of recording the sales transaction:

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

The effect of recording estimated warranty cost:

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

The effect of recording actual warranty cost:

Activity _

Accounts _

Statement(s) _

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 financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet Income Statement

Assets = Liabilities + Stockholders' Equity Revenues - Expenses = Net Income

_ _ _ _ _ _ _ _ _ _

Determine the adjusted ending balance in the Estimated Liability for Warranties account.

$ _________

4.

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