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ACC557 Week 1 E1-4 E1-7 E1-11 P1-2A

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ACC557 Week 1 E1-4 E1-7 E1-11 P1-2A
Financial Accounting 8e

E1-4 The following situations involve accounting principles and assumptions.
1. Julia Company owns buildings that are worth substantially more than they originally
cost. In an effort to provide more relevant information, Julia reports the buildings at
fair value in its accounting reports.
2. Dekalb Company includes in its accounting records only transaction data that can be
expressed in terms of money.
3. Omar Shariff, president of Omar’s Oasis, records his personal living costs as expenses
of the Oasis.

Instructions
For each of the three situations, state if the accounting method used is correct or incorrect.
If correct, identify which principle or assumption supports the method used. If incorrect,
identify which principle or assumption has been violated.

E1-7 Collins Computer Timeshare Company entered into the following transactions
during May 2014.








Instructions
Indicate with the appropriate letter whether each of the transactions above results in:
(a) An increase in assets and a decrease in assets.
(b) An increase in assets and an increase in stockholders’ equity.
(c) An increase in assets and an increase in liabilities.
(d) A decrease in assets and a decrease in stockholders’ equity.
(e) A decrease in assets and a decrease in liabilities.
(f) An increase in liabilities and a decrease in stockholders’ equity.
(g) An increase in stockholders’ equity and a decrease in liabilities.

E1-11 Two items are omitted from each of the following summaries of balance sheet and
income statement data for two corporations for the year 2014, Steven Craig and Georgia
Enterprises.



Instructions
Determine the missing amounts.


P1-2A On August 31, the balance sheet of Donahue Veterinary Clinic showed Cash $9,000,
Accounts Receivable $1,700, Supplies $600, Equipment $6,000, Accounts Payable $3,600,
Common Stock $13,000, and Retained Earnings $700. During September, the following
transactions occurred.



Instructions
(a) Prepare a tabular analysis of the September transactions beginning with August 31
balances. The column headings should be as follows: Cash 1 Accounts Receivable 1
Supplies 1 Equipment 5 Notes Payable 1 Accounts Payable 1 Common Stock 1
Retained Earnings 1 Revenues 2 Expenses 2 Dividends.
(b) Prepare an income statement for September, a retained earnings statement for
September, and a balance sheet at September 30.

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