1: Simmons invested $32,000 into the business for $32,000 in common stock.

29 Jun 1: Simmons invested $32,000 into the business for $32,000 in common stock.

Question
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. Amounts paid to a mall for rent.

b. Amounts to be paid in 10 days to suppliers.

c. A new fax machine purchased for office use.

d. Land held as an investment.

e. Amounts due from customers.

f. Daily sales of merchandise sold.

g. Promotional costs to publicize a concert.

h. A long-term loan owed to Citizens Bank.

i. The albums, tapes, and CDs held for sale to customers.

2.Basic journal entries

The following transactions pertain to the Jennifer Royall Company:

May 1

Jenni­fer Royall invested cash of $25,000 and land valued at $15,000 into the business.

5

Provided $1,000 of services to Jason Ratchford, a client, on account.

9

Paid $1,250 of salaries to an employee.

14

Acquired a new computer for $4,200, on account.

20

Collected $800 from Jason Ratchford for services provided on May 5.

24

Borrowed $2,500 from BestBanc by securing a six-month loan.

Prepare journal entries (and explanations) to record the preceding transactions and events.

3. Balance sheet preparation. The following data relate to Preston Company as of December 31, 20XX:

Building $40,000 Accounts receivable $24,000

Cash 21,000 Loan payable 30,000

J. Preston, Capital 65,000 Land 21,000

Accounts payable ?

Prepare a balance sheet as of December 31, 20XX. (See Exhibit 1.1 and 1.4)

4. Basic transaction processing. On November 1 of the current year, Richard Simmons established a sole proprietorship. The following transactions occurred during the month:

1: Simmons invested $32,000 into the business for $32,000 in common stock.

2: Paid $5,000 to acquire a used minivan.

3: Purchased $1,800 of office furniture on account.

4: Performed $2,100 of consulting services on account.

5: Paid $300 of repair expenses.

6: Received $800 from clients who were previously billed in item 4.

7: Paid $500 on account to the supplier of office furniture in item 3.

8: Received a $150 electric bill, to be paid next month.

9: Simmons withdrew $800 from the business.

10: Received $250 in cash from clients for consulting services rendered.

Instructions

a. Arrange the following asset, liability, and owner’s equity elements of the account­ing equation: Cash, Accounts Receivable, Office Furniture, Van, Accounts Payable, Common Stock/Dividends, and Revenues/Expenses. (See Exhibit 1.5)

b. Record each transaction on a separate line. After all transactions have been recorded, compute t