207. Several transactions are listed below, with the accounting equation stated to the right side of each. Use the following identification codes to indicate the effects of each transaction on the accounting equation. Write your answers in the space provided under the accounting equation. You need an identification code for each element of the accounting equation. An example is given before the first transaction.
I-Increase
D-Decrease
NE-No Effect
Stockholders’
Assets
=
Liabilities
+
Equity
Example
John Smith invests in a new business by purchasing $3,500 of capital stock.
I
NE
I
A)
Cash sales are made.
B)
Equipment is purchased on credit.
C)
Payment is made for the equipment purchased on credit in (B).
D)
The company sold excess supplies to another company on credit.
E)
Cash is collected from customers for accounts receivable balances.
208. Journalize the five transactions for Mirmax Rentals described below.
August 1
Mirmax purchases two new saws on credit at $425 each. The saws are added to Mirmax’s rental inventory. Payment is due in 30 days.
8
Mirmax accepts advance deposits for tool rentals of $125 that will be applied to the cash rental when the tools are returned.
15
Mirmax receives a bill from Macon Utility Company for $180. Payment is due in 30 days.
20
Customers are charged $1,250 by Mirmax for tool rentals. Payment is due from the customers in 30 days.
31
Mirmax receives $600 in payments from the customers that were billed for rentals on August 20.
209. Journalize the following five transactions for Nexium & Associates, Inc. Omit explanations.
Mar. 1
Bills are sent to clients for services provided in February in the amount of $800.
9
Corner Office, Inc. delivers office furniture ($1,060) and office supplies ($160) to Nexium leaving an invoice for $1,220.
15
Payment is made to Corner Office, Inc. for the furniture and office supplies delivered on March 9.
23
A bill for $430 for electricity for the month of March is received and will be paid on its due date in April.
31
Salaries of $850 are paid to employees.
210. McMann Company has condensed income statements as follows:
2011
2010
Sales
$178,400
$162,500
Wage expenses
100,000
92,500
Rent expenses
33,000
30,000
Utilities expenses
30,000
25,000
Total operating expenses
163,000
147,500
Net income
15,400
15,000
REQUIRED:Prepare a horizontal analysis of McMann Company’s income statements. Comment on the trends, both favorable and unfavorable.
211. Georgia Company has condensed income statements as follows:
2011
2010
Sales
$158,400
$162,500
Wage expenses
80,000
92,500
Rent expenses
28,000
30,000
Utilities expenses
30,000
25,000
Total operating expenses
138,000
147,500
Net income
20,400
15,000
REQUIRED:Prepare a horizontal analysis of Georgia Company’s income statements. Comment on the trends, both favorable and unfavorable.
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