Question
The following is a list of possible transactions. Using ASPE, analyze the effects of the 20 transactions on the financial statement categories in the table.
The following is a list of possible transactions. Using ASPE, analyze the effects of the 20 transactions on the financial statement categories in the table.
Select an effect from the following- Increase, Decrease, No effect
Transaction | Assets | Liabilities | Shareholders Equity | Net Income | ||||||
---|---|---|---|---|---|---|---|---|---|---|
1. | Purchased inventory for $80,000 on account. (Assume a perpetual system is used.) | select an effect | select an effect | select an effect | select an effect | |||||
2. | Issued an $80,000 note payable in payment of an account (see item 1 above). | |||||||||
3. | Recorded accrued interest on the note from item 2 above. | |||||||||
4. | Borrowed $100,000 from the bank by signing a $104,000, six-month, noninterest-bearing note. | |||||||||
5. | Recognized four months of interest expense on the note from item 4 above. | |||||||||
6. | Recorded cash sales of $81,900, which includes 5% provincial sales tax. | |||||||||
7. | Recorded salaries and wages expense of $35,000. The cash paid was $25,000; the difference was due to various amounts withheld. | |||||||||
8. | Recorded employers payroll taxes. | |||||||||
9. | Accrued accumulated vacation pay. | |||||||||
10. | Signed a $2-million contract with Construction Corp. to build a new plant. | |||||||||
11. | Recorded bonuses due to employees. | |||||||||
12. | Recorded a provision on a lawsuit that the company will probably lose. | |||||||||
13. | Accrued assurance-type warranty expense. | |||||||||
14. | Paid warranty costs that were accrued in item 13 above. | |||||||||
15. | Recorded sales of product and separately sold service-type warranties. | |||||||||
16. | Paid warranty costs under contracts from item 15 above. | |||||||||
17. | Recognized warranty revenue (see item 15 above). | |||||||||
18. | Recorded estimated liability for premium claims outstanding. | |||||||||
19. | Recorded the receipt of a cash down payment on services to be performed in the next accounting period. | |||||||||
20. | Received the remainder of the contracted amount and performed the services related to item 19 above. |
Remember, it says using ASPE Method analyze the effects.
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