ACCT 101 AE HW-FALL 2018 DUE 9/182018 Q1. During 2016, Peaceful River Spa report
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ACCT 101 AE HW-FALL 2018 DUE 9/182018 Q1. During 2016, Peaceful River Spa reported revenue of $40.000. Total expenses for the year were $35,000. Peaceful River Spa ended the year with total assets of $23,000, and it owed 2015, the business reported total assets of $18,000 and total iabilities of $9,000 debts totaling $9,000. At year-end Requirements Compute Peaceful River Spa's net income for 2016. 2. Did Peacerful River Spa's stockholders equity increase or decrease during 20167 By how much? Q2. Use the accounting equation to analyze business transactions a. Received cash of $10,000 from issuance of common stock b. Earned video rental revenue on account, $2,800 c. Purchased office furniture on account, $300 d. Received cash on account, $400 e. Paid cash on account, $100 f. Rented videos and received cash of $200. g. Paid monthly office rent of $1,000 h. Paid $100 cash to purchase office supplies. HW Q3. Do the Accounting Equation from the above transactions. a. The business received $90,000 cash and issued stock to the owner. b. The company buys equipment for $10,000 cash. c. The company buys $12,000 of equipment on account. d. The firm purchases supplies for $3,000 cash. e. The firm makes a payment of $5,000 on account. f. The firm makes a payment of $7,000 rent in advance. g. Purchased goods from Naan for cash $40,000 h. He purchased furniture for cash $ 35,000 i. Purchased machinery on credit $40,000 j. Do the Accounting Equation from the above transactions.Explanation / Answer
Q 1:
1. Computation of Net income for 2016
Revenues = 40,000
Less expenses = 35,000
Net income = 5,000
2. Peaceful river Spa's shareholder's equity will increase by 14,000
This is because 2015 their equity was 9000 ( difference between assets 18000 and debt 9000)
2016"s net income of 5000 will get added to 2015's equity. so total equity in 2016 will increase
to 14000.
Q 2:
a) Common stock will be credited with Rs. 10,000 and cash will be debited with 10,000 i.e. Asset is 10000 and liability is 10000
b) video rental business account is debited with Rs. 2,800 and rent receivable account is credited with 2,800. Rental business is Asset and rent receivable is liability.
c) Office furniture is an asset for 300 and purchases is an nominal expense for 300
d) Cash of 400 is an asset and liability is 400, as it is borrowed
e) Borrower is debited for 100 and cash is credited for 100
f) cash is an asset for 200 and vedio rental account is a liability for 200
g) Rent account is an expense and so is debited for 1,000 and cash is an asset and is going out, so credited for 1000.
h) office supplies is an asset for 100 and cash is going out, so credited for 100
Q 3:
a) Stock account is credited and cash account is debited for $ 90000
b) Equipment account is debited and cash account is credited for $10,000
c) Equipment account is debited and seller account is credited for $12,000
d) Office supplies account is debited and cash account is credited for $3,000
e) Receiver's a/c is debited and cash a/c is credited for $5,000
f) Rent in Advance account is debited and cash a/c is credited for $ 7,000
g) Goods account is debited and cash account is credited for $ 40,000
h) Furniture account is debited and cash account is credited for $ 35,000
i) Machinery account is debited and seller account is credited for $ 40,000
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