Question
The analytical framework used to evaluate transactions is reproduced below: Cash + Non-Cash Assets = Liabilities + Contributed Capital + Accumulated Other Comprehensive Income +
The analytical framework used to evaluate transactions is reproduced below:
Cash | + | Non-Cash Assets | = | Liabilities | + | Contributed Capital | + | Accumulated Other Comprehensive Income | + | Retained Earnings |
Using this analytical framework, indicate the effect of each of the following transactions for Staples Corporation:
1. | Staples recorded cash sales of $25,000. The merchandise had cost $19,000 to manufacture. |
2. | Staples purchased $8,500 of raw material inventory on account. |
3. | The company paid $2,500 for property insurance for the next 12 months. |
4. | Staples paid its employees $5,000 for the month. |
5. | The company purchased $1,000 of supplies on account. |
6. | Staples issued $25,000 of long-term debt. |
7. | The company used $10,000 of excess cash to purchase marketable securities. |
8. | Staples purchased a machine for $16,000 using $8,000 cash with the balance on account. |
9. | Staples paid $2,500 for interest expense on the long-term debt. |
10. | At the end of the year the marketable securities that Staples purchased in transaction 7 were now worth $14,500. |
11. | Depreciation for the period was $1,500. |
12. | Staples examined the equipment and determined that its fair value was $10,000. |
ANS:
Cash | + | Non-Cash Assets | = | Liabilities | + | Contributed Capital | + | Accumulated Other Comprehensive Income | + | Retained Earnings |
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