Question
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.
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. Pollys purchased inventory on account from a supplier for $8,000. Assume that Pollys uses a periodic inventory system.
| Activity | - Select your answer -OperatingInvestingFinancingCorrect 1 of Item 1 |
| Accounts | - Select your answer -Accounts Payable Increase, Purchases IncreaseAccounts Payable Increase, Purchases DecreaseAccounts Payable Decrease, Purchases IncreaseAccounts Payable Decrease, Purchases DecreaseCorrect 2 of Item 1 |
| Statement(s) | - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 1 |
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 | ||||||
| - Select your answer -Accounts PayableAccounts ReceivableCashInventoryPurchasesNo EntryCorrect 1 of Item 2 | - Select your answer -Accounts PayableAccounts ReceivableCashInventory ExpensePurchasesNo EntryCorrect 3 of Item 2 | - Select your answer -Accounts PayableAccounts ReceivableCashInventory ExpensePurchasesNo EntryCorrect 6 of Item 2 | - Select your answer -Accounts PayableAccounts ReceivableCashInventoryPurchasesNo EntryCorrect 8 of Item 2 | |||||||||||
b. On May 1, land was purchased for $44,500. A 20% down payment was made, and an 18-month, 8% note was signed for the remainder.
| Activity | - Select your answer -OperatingInvestingFinancingOperating and InvestingInvesting and FinancingOperating and FinancingCorrect 1 of Item 3 |
| Accounts | - Select your answer -Land Increase, Cash Decrease, Notes Payable IncreaseLand Increase, Cash Decrease, Notes Payable DecreaseLand Decrease, Cash Decrease, Notes Payable IncreaseLand Decrease, Cash Decrease, Notes Payable DecreaseCorrect 2 of Item 3 |
| Statement(s) | - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 3 |
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 | ||||||
| - Select your answer -Accounts PayableEquipmentLandNotes PayableUnearned Sales RevenueNo EntryCorrect 1 of Item 4 | - Select your answer -Accounts PayableAccounts ReceivableLandNotes PayablePurchasesNo EntryCorrect 3 of Item 4 | - Select your answer -Accounts PayableAccounts ReceivableCashLandPurchasesNo EntryCorrect 6 of Item 4 | - Select your answer -Accounts PayableEquipmentLandNotes PayableUnearned Sales RevenueNo EntryCorrect 8 of Item 4 | |||||||||||
| - Select your answer -Accounts PayableAccounts ReceivableCashEquipmentPurchasesNo EntryCorrect 11 of Item 4 | - Select your answer -Accounts PayableAccounts ReceivableLandNotes ReceivablePurchasesNo EntryCorrect 13 of Item 4 | - Select your answer -Accounts PayableAccounts ReceivableLandNotes ReceivablePurchasesNo EntryCorrect 16 of Item 4 | - Select your answer -Accounts PayableAccounts ReceivableCashEquipmentPurchasesNo EntryCorrect 18 of Item 4 | |||||||||||
c. Pollys returned $450 worth of inventory purchased in (a), which was found broken when the inventory was received.
| Activity | - Select your answer -OperatingInvestingFinancingCorrect 1 of Item 5 |
| Accounts | - Select your answer -Accounts Payable Increase, Purchase Returns and Allowances IncreaseAccounts Payable Increase, Purchase Returns and Allowances DecreaseAccounts Payable Decrease, Purchase Returns and Allowances IncreaseAccounts Payable Decrease, Purchase Returns and Allowances DecreaseCorrect 2 of Item 5 |
| Statement(s) | - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 5 |
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 | ||||||
| - Select your answer -Accounts PayableAccounts ReceivablePurchase Returns and AllowancesSales Tax PayableUnearned Sales RevenueNo EntryCorrect 1 of Item 6 | - Select your answer -Accounts PayableNotes PayablePurchasesPurchase DiscountsPurchase Returns and AllowancesNo EntryCorrect 3 of Item 6 | - Select your answer -Accounts PayableNotes PayablePurchasesPurchase DiscountsPurchase Returns and AllowancesNo EntryCorrect 6 of Item 6 | - Select your answer -Accounts PayableAccounts ReceivablePurchase Returns and AllowancesSales Tax PayableUnearned Sales RevenueNo EntryCorrect 8 of Item 6 | |||||||||||
d. Pollys paid the balance due on the purchase of inventory.
| Activity | - Select your answer -OperatingInvestingFinancingCorrect 1 of Item 7 |
| Accounts | - Select your answer -Accounts Payable Increase, Cash IncreaseAccounts Payable Increase, Cash DecreaseAccounts Payable Decrease, Cash IncreaseAccounts Payable Decrease, Cash DecreaseCorrect 2 of Item 7 |
| Statement(s) | - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 7 |
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 | ||||||
| - Select your answer -Accounts PayableAccounts ReceivableCashPurchase Returns and AllowancesSalesNo EntryCorrect 1 of Item 8 | - Select your answer -Accounts PayableAccounts ReceivableCashInterest ExpenseNotes ReceivableNo EntryCorrect 3 of Item 8 | - Select your answer -Accounts PayableAccounts ReceivableCashInterest ExpenseNotes ReceivableNo EntryCorrect 6 of Item 8 | - Select your answer -Accounts PayableAccounts ReceivableCashPurchase Returns and AllowancesSalesNo EntryCorrect 8 of Item 8 | |||||||||||
e. On June 1, Polly signed a one-year, $15,000 note to First State Bank and received $13,800.
| Activity | - Select your answer -OperatingInvestingFinancingCorrect 1 of Item 9 |
| Accounts | - Select your answer -Cash Increase, Discount on Notes Payable Increase, Notes Payable IncreaseCash Increase, Discount on Notes Payable Increase, Notes Payable DecreaseCash Decrease, Discount on Notes Payable Increase, Notes Payable IncreaseCash Decrease, Discount on Notes Payable Increase, Notes Payable DecreaseCorrect 2 of Item 9 |
| Statement(s) | - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 9 |
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 | ||||||
| - Select your answer -Accounts PayableAccounts ReceivableCashInterest ExpenseNotes PayableNo EntryCorrect 1 of Item 10 | - Select your answer -Accounts PayableAccounts ReceivableCashInterest ExpenseNotes PayableNo EntryCorrect 3 of Item 10 | - Select your answer -Accounts PayableAccounts ReceivableCashInterest ExpenseNotes PayableNo EntryCorrect 6 of Item 10 | - Select your answer -Accounts PayableAccounts ReceivableCashInterest ExpenseNotes PayableNo EntryCorrect 8 of Item 10 | |||||||||||
| - Select your answer -Accounts PayableAccounts ReceivableDiscount on Notes PayableInterest ExpenseNotes PayableNo EntryCorrect 11 of Item 10 | - Select your answer -Accounts PayableDiscount on Notes PayableInterest ExpenseInterest RevenueNotes PayableNo EntryCorrect 13 of Item 10 | - Select your answer -Discount on Notes PayableInterest ExpenseInterest RevenueNotes PayableUnearned Sales RevenueNo EntryCorrect 16 of Item 10 | - Select your answer -Accounts PayableAccounts ReceivableDiscount on Notes PayableInterest ExpenseNotes PayableNo EntryCorrect 18 of Item 10 | |||||||||||
f. Pollys sold 200 gift certificates for $25 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 35% of the gift certificates had been redeemed.
| Activity | - Select your answer -OperatingInvestingFinancingCorrect 1 of Item 11 |
| Accounts | - Select your answer -Cash Increase, Unearned Sales Revenue IncreaseCash Increase, Unearned Sales Revenue DecreaseCash Decrease, Unearned Sales Revenue IncreaseCash Decrease, Unearned Sales Revenue DecreaseCorrect 2 of Item 11 |
| Statement(s) | - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 11 |
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 | ||||||
| - Select your answer -Accounts ReceivableCashInterest PayableSales Tax PayableUnearned Sales RevenueNo EntryCorrect 1 of Item 12 | - Select your answer -Accounts PayableAccounts ReceivableCashInterest ExpenseUnearned Sales RevenueNo EntryCorrect 3 of Item 12 | - Select your answer -Accounts PayableAccounts ReceivableCashInterest ExpenseUnearned Sales RevenueNo EntryCorrect 6 of Item 12 | - Select your answer -Accounts ReceivableCashInterest PayableSales Tax PayableUnearned Sales RevenueNo EntryCorrect 8 of Item 12 | |||||||||||
g. Sales for the year were $120,000, of which 90% were for cash. State sales tax of 6% applied to all sales must be remitted to the state by January 31.
| Activity | - Select your answer -OperatingInvestingFinancingCorrect 1 of Item 13 |
| Accounts | - Select your answer -Cash Increase, Accounts Receivable Increase, Sales Increase, Sales Tax Payable IncreaseCash Increase, Accounts Receivable Increase, Sales Increase, Sales Tax Payable DecreaseCash Decrease, Accounts Receivable Increase, Sales Increase, Sales Tax Payable IncreaseCash Decrease, Accounts Receivable Increase, Sales Increase, Sales Tax Payable DecreaseCorrect 2 of Item 13 |
| Statement(s) | - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 13 |
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 | ||||||
| - Select your answer -Accounts PayableCashSalesSales Tax ExpenseSales Tax PayableNo EntryCorrect 1 of Item 14 | - Select your answer -Accounts PayableAccounts ReceivableNotes payableSales Tax ExpenseSales Tax PayableNo EntryCorrect 3 of Item 14 | - Select your answer -Accounts PayableAccounts ReceivableCashSalesSales Tax ExpenseNo EntryCorrect 6 of Item 14 | - Select your answer -Accounts PayableAccounts ReceivableSalesSales Tax ExpenseUnearned Sales RevenueNo EntryCorrect 8 of Item 14 | |||||||||||
| - Select your answer -Accounts PayableAccounts ReceivableSalesSales Tax ExpenseUnearned Sales RevenueNo EntryCorrect 11 of Item 14 | - Select your answer -Accounts PayableAccounts ReceivableCashSalesSales Tax ExpenseNo EntryCorrect 13 of Item 14 | - Select your answer -Accounts PayableAccounts ReceivableNotes payableSales Tax ExpenseSales Tax PayableNo EntryCorrect 16 of Item 14 | - Select your answer -Accounts PayableCashSalesSales Tax ExpenseSales Tax PayableNo EntryCorrect 18 of Item 14 | |||||||||||
2. Assume that Pollys 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 $44,500. A 20% down payment was made, and an 18-month, 8% note was signed for the remainder.
| Activity | - Select your answer -OperatingInvestingFinancingCorrect 1 of Item 15 |
| Accounts | - Select your answer -Interest Payable Increase, Interest Expense IncreaseInterest Payable Increase, Interest Expense DecreaseInterest Payable Decrease, Interest Expense IncreaseInterest Payable Decrease, Interest Expense DecreaseCorrect 2 of Item 15 |
| Statement(s) | - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 15 |
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 | ||||||
| - Select your answer -Discount on Notes PayableInterest ExpenseInterest PayableInterest RevenueSalesNo EntryCorrect 1 of Item 16 | - Select your answer -CashInterest ExpenseInterest PayableInterest RevenueUnearned Sales RevenueNo EntryCorrect 3 of Item 16 | - Select your answer -CashInterest ExpenseInterest PayableInterest RevenueUnearned Sales RevenueNo EntryCorrect 6 of Item 16 | - Select your answer -Discount on Notes PayableInterest ExpenseInterest PayableInterest RevenueSalesNo EntryCorrect 8 of Item 16 | |||||||||||
e. On June 1, Polly signed a one-year, $15,000 note to First State Bank and received $13,800.
| Activity | - Select your answer -OperatingInvestingFinancingCorrect 1 of Item 17 |
| Accounts | - Select your answer -Discount on Notes Payable Increase, Interest Expense IncreaseDiscount on Notes Payable Increase, Interest Expense DecreaseDiscount on Notes Payable Decrease, Interest Expense IncreaseDiscount on Notes Payable Decrease, Interest Expense DecreaseCorrect 2 of Item 17 |
| Statement(s) | - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 17 |
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 | ||||||
| - Select your answer -Discount on Notes PayableInterest ExpenseInterest PayableInterest RevenueUnearned Sales RevenueNo EntryCorrect 1 of Item 18 | - Select your answer -CashDiscount on Notes PayableInterest ExpenseInterest PayableInterest RevenueNo EntryCorrect 3 of Item 18 | - Select your answer -CashDiscount on Notes PayableInterest ExpenseInterest PayableInterest RevenueNo EntryCorrect 6 of Item 18 | - Select your answer -Discount on Notes PayableInterest ExpenseInterest PayableInterest RevenueUnearned Sales RevenueNo EntryCorrect 8 of Item 18 | |||||||||||
f. Pollys sold 200 gift certificates for $25 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 35% of the gift certificates had been redeemed.
| Activity | - Select your answer -OperatingInvestingFinancingCorrect 1 of Item 19 |
| Accounts | - Select your answer -Unearned Sales Revenue Increase, Sales IncreaseUnearned Sales Revenue Increase, Sales DecreaseUnearned Sales Revenue Decrease, Sales IncreaseUnearned Sales Revenue Decrease, Sales DecreaseCorrect 2 of Item 19 |
| Statement(s) | - Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 19 |
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 | ||||||
| - Select your answer -Discount on Notes PayableInterest ExpenseInterest PayableSalesUnearned Sales RevenueNo EntryCorrect 1 of Item 20 | - Select your answer -Discount on Notes PayableInterest ExpenseNotes PayableSalesUnearned Sales RevenueNo EntryCorrect 3 of Item 20 | - Select your answer -Discount on Notes PayableInterest ExpenseNotes PayableSalesUnearned Sales RevenueNo EntryCorrect 6 of Item 20 | - Select your answer -Discount on Notes PayableInterest ExpenseInterest PayableSalesUnearned Sales RevenueNo EntryCorrect 8 of Item 20 | |||||||||||
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. $
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Good Better Best A Guidebook For Performance Auditing
Authors: Gary Blackmer
1st Edition
131265869X, 978-1312658691
