Acc 205 Week1

1964 words 8 pages
Week One Exercise Assignment
Basic Accounting Equations
1. Recognition of normal balances
The following items appeared in the accounting records of Triguero's, a retail music store that also sponsors concerts. Classify each of the items as an asset, liability, revenue, or expense from the company's viewpoint. Also indicate the normal account balance of each item.

a. The albums, tapes, and CDs held for sale to customers. * Asset; Normal account balance is debit b. A long-term loan owed to Citizens Bank. * Liability; Normal account balance is credit c. Promotional costs to publicize a concert. * Expense; Normal account balance is debit d. Daily sales of merchandise sold, * Revenue; Normal account
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Briefly explain. From an accounting viewpoint, the company did have a “good” month. Their accounting equation is as followed, $ 21,350 (Total Assets)=$1,300 (Total Liability) + $20,050 (Total Equity)

5. Transaction analysis and statement preparation. The transactions that follow relate to Burton Enterprises for March 20X1, the company’s first month of activity.

3/1: Joanne Burton, the owner invested $20,000 into the business for $20,000 of Common Stock.
3/4: Performed $2,400 of services on account.
3/7: Acquired a small parcel of land by paying $6,000 cash.
3/12: Received $700 from a client, who was billed previously on March 4.
3/15: Paid $800 to the Journal Herald for advertising expense.
3/18: Acquired $9,000 of equipment from Park Central Outfitters by paying $7,000 down and agreeing to remit the balance owed within the next 2 weeks, (Accounts Payable).
3/22: Received $300 cash from clients for services.
3/24: Paid $1,500 on account to Park Central Outfitters in partial settlement of the balance due from the transaction on March 18.
3/28: Rented a car from United Car Rental for use on March 28. Total charges amounted to $75, with United billing Burton for the amount due.
3/31: Paid $900 for March wages.
3/31: Processed a $600 cash withdrawal (dividend) from the business for Joanne Burton.

a. Determine the impact of each of the preceding transactions on Burton’s assets, liabilities, and owner’s equity. See exhibit 1.5. Use