Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN: 9781285595047
Author: Weil
Publisher: Cengage
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The Donahoo Western Furnishings Company was formed on December 31, 2017, with $1,000,000 in equity plus $500,000 in long-term debt. On January 1, 2018, all the firm's capital was held in cash. The following transactions occurred during January 2018:
January 2: Donahoo purchased $1,000,000 worth of furniture for resale. It paid $500,000 in cash and financed the balance using trade credit that required payment in 60 days.
January 3: Donahoo sold $250,000 worth of furniture that it had paid $200,000 to acquire. The entire sale was on credit terms of net 90 days.
January 15: Donahoo purchased more furniture for $200,000. This time, it used trade credit for the entire amount of the purchase, with credit terms of net 60 days.
January 31: Donahoo sold $500,000 worth of furniture, for which it had paid $400,000. The furniture was sold for 10 percent cash down, with the remainder payable in 90 days. In addition, the firm paid a cash dividend of $100,000 to its stockholders and paid off…
The Donahoo Western Furnishings Company was formed on December 31, 2017, with $1,000,000 in equity plus $500,000 in long-term debt. On January 1, 2018, all the firm's capital was held in cash. The following transactions occurred during January 2018:
January 2: Donahoo purchased $1,000,000 worth of furniture for resale. It paid $500,000 in cash and financed the balance using trade credit that required payment in 60 days.
January 3: Donahoo sold $250,000 worth of furniture that it had paid $200,000 to acquire. The entire sale was on credit terms of net 90 days.
January 15: Donahoo purchased more furniture for $200,000. This time, it used trade credit for the entire amount of the purchase, with credit terms of net 60 days.
January 31: Donahoo sold $500,000 worth of furniture, for which it had paid $400,000. The furniture was sold for 10 percent cash down, with the remainder payable in 90 days. In addition, the firm paid a cash dividend of $100,000 to its stockholders and paid off…
On 2 August 2022, Boris Johnson began a new business, called Starbucks Inc.,
company delivering high quality coffee and beverages. The following
transactions were completed by the business during May:
2 Aug Issued to Boris 10,000 shares of capital stock in exchange for his
investment of 3,500,000€ cash.
3 Aug
Purchased a store of 1000 square meters for 3,780,000€ paying
780,000 cash and signing a note payable for the balance. The interest rate for
the Note payable is 3% on annual terms, and it will be paid at maturity which
will be August 3rd 2025.
4 Aug
Purchased machinery for 1,500,000€ in order to be prepared to
deliver the product to its customers, and paid cash.
5 Aug
Purchased Equipment for 500.000€, he paid 40% cash and received
an invoice stating that the remaining amount would be paid October 5th 2022.
6 Aug
Hired 5 employees with an average annual salary of 16.000€, the
employees will be paid at the end of every month.
7 Aug
Signed an insurance contract for 24.000€, and paid…
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- Big Cup Berhad engages in the manufacturing business. The financial year end is 30 April annually. On 1 March 2016, Big Cup Berhad purchased from Big Tea Berhad a 10-year debenture for RM5,000,000 with an interest rate of 8% to be received at the end of each year. The effective interest rate is 10%. On 1 March 2018, Big Cup Berhad discovers that Big Tea Berhad had a financial difficulty. Big Cup Berhad estimates that Big Tea Berhad will not be able to pay the interest for the current year and will be able to pay on 60% of the principal amount. Required: Justify how the above transaction should be recognized and measured on 1 March 2018, in compliance with the MFRS 9: Financial Instruments.arrow_forwardKochi Service was formed on May 1,2020. The following transactions took place during the first month (amounts in thousands) Transactions on May 1: Rahul Shah invested ₤40,000 cash in the company in exchange for ordinary shares. Hired two employees to work in the warehouse. They will each paid a salary of ₤3,050 per month. Signed a 2-year rental agreement on a warehouse; paid ₤24,000 cash in advance for the first year Purchase furniture and equipment costing ₤30,000. A cash payment of ₤10,000 was immediately; the remainder will be paid in 6 months. Paid ₤1,800 cash for a one-year insurance policy on the furniture and equipment Transactions during the remainder of the month: Purchased basic office supplies for ₤420 cash. Purchased more office supplies for ₤1,500 on account. Total revenues earned were ₤20,000 - ₤8,000 cash and ₤12,000 on account Paid ₤400 to suppliers for accounts payable due. Received ₤3,000 from customers in payment of accounts receivable. Received utility bills in…arrow_forwardOn January 2020 Nemea SA is founded with shareholders capital €100,000 paid in cash. Next month Nemea purchases: i) land for €30,000 and ii) inventories for €50,000 all paid in cash. On June 2020 half of inventories sold for €30,000, receivable on June 2021. On November 2020 Nemea pays €6,000 (in cash) for various operating expenses. What is the result of Nemea for 2020? Select one: Oa: none of the suggested answers is correct b. 24,000 profit O O O c. 1,000 profit d. 1,000 loss e.0arrow_forward
- Tran Company acquired an equipment from a manufacturer on June 30, 2018 and signed a $540,000, 18 month interest-bearing note in exchange. The company is obligated to pay a total of $562,500 when the note matures. Determine accrued interest on December 31, 2018? C. $7,500 is the Answer. Please explain how you get to this answer and explain math computation thoroughly.arrow_forwardGreflow Communications Ltd manufactures component parts for cellular telephones. The business was restructured in 2021 which included refinancing debt and obtaining additional loan obligations. You are the accountant and the following entries relate to the year ended December 31, 2021. A. On February 1st, the company borrowed $500,000, by signing a one-year 5% interest-bearing note at BRN Financial Bank. B. On March 1st, the company purchased equipment for $350,000 from LaserFuse Equipment Limited. This was financed by paying 50,000 in cash and borrowing the balance of $300,000 by signing a one-year $350,000 zero coupon note from XN International. C. On March 5th, the company purchased metal parts from Metalcell Company Limited for $1,000,000 with related terms 2.5/10, n/15. Greyflow paid for this purchase on March 18th. Purchases and accounts payable are recorded at net amounts. D.Greflow had a loan obligation of $500,000 which was due on March 31, 2022 plus interest of $24,000…arrow_forwardBailey Company was formed in January 2017 and is preparing its financial statements under GAAP for the first time at the end of 2019. Its general ledger at December 31, 2019, includes the following assets: Patent $120,000 Copyright 140,000 Trade name 150,000 Computer software 90,000 Start-up costs 30,000 Intellectual capital 150,000 Goodwill 90,000 As the recently hired accountant for Bailey, you have been asked to make sure that the company’s accounting for intangible assets follows GAAP. Based on your investigation, you determine the following: • The patent acquired in January 2019 has an expected life of 15 years and no residual value, and it will generate approximately equal benefits each year. • Bailey will use the copyright and trade name for the foreseeable future. • The computer software was purchased in January 2019 and is used in the Bailey’s 20 offices around the country. It is expected to be replaced with new software at the beginning of 2021.…arrow_forward
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