ACCT 210 Homework Chapter 3, Fall 2011

B. Ex. 3.8 a. b. c. d. e. The purchase of a copying machine does not represent an expense. The asset Cash is excha without any change in owners' equity. The purpose of the transaction was to obtain the use rather than to generate revenue only during the current period. (Evergreen will recognize de throughout its useful life, but the purchase does not represent an expense in March. Deprec Gasoline purchased is an expense because it is ordinarily used up in the current period. The equity and are for the purpose of generating revenue. Payment to an employee for services rendered in March is a March expense. Such a payme decreases owners' equity. The payment to the attorney for services rendered in a prior period reduced an existing liab equity. The payment was not an expense. The dividend does not constitute an expense. Unlike payments for advertising, rent, and sup revenue. Dividends constitute a return to stockholders of a portion of their equity in the bus e. The asset Cash is exchanged for the asset Office Equipment, ction was to obtain the use of the copier over a number of years, Evergreen will recognize depreciation expense on this asset expense in March. Depreciation issues are introduced in Chapter p in the current period. These purchases decrease the owners' ch expense. Such a payment is made to generate revenue and od reduced an existing liability but did not affect the owners' or advertising, rent, and supplies, dividends do not generate n of their equity in the business. B. Ex. 3.9 Revenue is recognized when it is earned, not necessarily when cash is received. Thus, the a $800,000 in its October income statement (of which $500,000 was collected in September a October). ash is received. Thus, the airline will recognize revenue of as collected in September and $300,000 was collected in B. Ex. 3.10 Expenses are recognized when they are incurred, not necessarily when cash is paid. Thus, t of $24,000 in its May income statement (of which $15,000 was paid in May and $9,000 wa when cash is paid. Thus, the company will report salary expense paid in May and $9,000 was paid in June). 50 Minutes, Strong PROBLEM 3.7B AHUNA, INC. a. General Journal 2011 Mar. 3 Cash 1,200 11 Cooking Supplies 700 Cash 15 Accounts Payable 200 Cash 20 Cash 4,000 24 6,200 27 Salaries Expense 900 Cash 30 Travel Expense 400 Cash Accounts Receivab le Collected $1,200 from Kim Mitchell on account. Purchased cooking supplies with cash. Paid $200 of outstanding account payable. Capital Stock Issued additional shares of capital stock. Accounts Receivable Client Revenue Recorded revenue on account. Recorded March salaries expense. Recorded March travel expense. 31 Printing Expense 300 Accounts Payable Recorded printing expense on account. PROBLEM 3.7B AHUNA, INC. General Journal 1,200 700 200 4,000 6,200 900 400 300 PROBLEM 3. AHUNA, INC. (continue Cash Accounts Receivable 5,700 Mar. 11 700 1,800 Mar. 3 1,200 Mar. 15 200 Mar. 24 6,200 Mar. 20 4,000 Mar. 27 900 Mar. 30 400 8,700 6,800 Cooking Supplies Accounts Payable 800 Mar. 15 200 Mar. 11 700 1,500 Dividends Payable Dividends 500 500 Mar. 31 ba 500 500 Capital Stock Retained Earnings 6,000 Mar. 20 4,000 Mar. 31 ba 10,000 Client Revenue Salaries Expense 5,800 Mar. 1 bal 3,100 Mar. 24 6,200 Mar. 27 900 Mar. 31 ba 12,000 Mar. 31 ba 4,000 Travel Expense Printing Expense Mar. 1. bal 1,500 Mar. 1 bal 600 Mar. 30 400 Mar. 31 300 Mar. 31 ba 1,900 Mar. 31 ba 900 Mar. 1 bal. Mar. 1 bal. Mar. 31 bal. Mar. 31 bal. Mar. 1 bal. Mar. 31 bal. Mar. 1 bal. Mar. 1 bal. Mar. 31 bal. Mar. 1 bal. Mar. 1 bal. PROBLEM 3.7B NA, INC. (continued) ounts Receivable Mar. 3 1,200 counts Payable Mar. 1 bal 300 Mar. 31 300 Mar. 31 ba 400 Dividends ained Earnings Mar. 1 bal 1,400 Mar. 31 ba 1,400 laries Expense inting Expense PROBLEM 3.7B AHUNA, INC. (concluded) c. AHUNA, INC. Trial Balance March 31, 2011 Cash $ 8,700 Accounts receivable 6,800 Cooking supplies 1,500 Accounts payable $ 400 Dividends payable 500 Dividends 500 Capital stock 10,000 Retained earnings 1,400 Client revenue 12,000 Salaries expense 4,000 Travel expense 1,900 Printing expense 900 $ 24,300 $ 24,300 d. The company has not paid the dividends it previously declared as evidenced by the $500 dividends payable liability in the trial balance.