question archive Identifying Account Titles The following are independent situations
Identifying Account Titles The following are independent situations
Subject:AccountingPrice: Bought3
Identifying Account Titles The following are independent situations.
a. A company orders and receives 10 personal computers for office use for which it signs a note promising to pay $25,000 within three months.
b. A company purchases a new delivery truck for $21,000 cash. The truck has a $24,000 list (“sticker”) price.
c. A women’s clothing retailer orders 30 new display stands for $300 each for future delivery.
d. A new company is formed and the owner invests $12,000 cash.
e. A company purchases a piece of land for $50,000 cash. An appraiser for the buyer valued the land at $52,500.
f. A local company’s owner buys a $10,000 car for personal use. Answer from the company’s point of view.
g. A company borrows $1,000 from a local bank and signs a six-month note for the loan.
h. A company pays $1,500 owed on its note payable (ignore interest).
Required:
1. Indicate titles of the appropriate accounts, if any, affected in each of the preceding events. Consider what the business receives and gives in the exchange.
2. At what amount would you record the delivery truck in b? The piece of land in e? What measurement principle are you applying?
3. What reasoning did you apply in c? For f, what accounting concept did you apply?
