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Problems-

Points vary per problem

25. For each of the transactions listed below, indicate whether it is an operating (O), investing (I) or financing (F) activity on the statement of cash flows. Also, indicate if the transaction increases (+) or decreases (-) cash. 12 points

Transaction

Type of Activity

Effect on Cash

A)

Paid dividends to the owners

B)

Purchased equipment by paying cash

C)

Issued stock for cash

D)

Paid wages to employees

E)

Repaid the bank loan

F)

Collected cash on account from customers

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26. Record the following transactions for Red Eye Company indicating the account affected and whether the account increased (+) or decreased (-). 18 points
Transaction Assets Liabilities Stockholders Equity -15,000 +20,000 -5,000 -18,000 +2,000 +35,000 +/- 30,000 +20,000 -8,000 +75,000 -8,000 +75,000 +20,000 -2,000 +35,000

A) B) C) D) E) F) G) H) I) J)

Paid dividends of $15,000 Borrowed $20,000 cash by signing a note payable with the bank Repaid loan of $5,000 Paid operating expenses of $18,000 Purchased supplies on account, $2,000 Earned $35,000 of revenue on account Collected $30,000 accounts receivable Sold stock to new investors for $20,000 cash Paid accounts payable, $8,000 cash Received cash for services provided, $75,000

-15,000 +20,000 -5,000 -18,000

27. The accounts with identification letters for Ward Company are listed below.

Letter A B C D E F

Account Title Cash Accounts receivable Supplies Prepaid Insurance Equipment Accounts payable

Letter G H I J K

Account Title Notes payable Contributed capital Retained earning Revenue Operating expenses

During 2010, the company completed the transactions given below. Indicate the appropriate

journal entry for each transaction by giving the account letter and amount. 11 points

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The first transaction is given as an example.


Transaction Paid dividends to stockholders, $3,000 Earned $15,000 of revenue on account Purchased equipment for $50,000. Paid $10,000 cash and signed a $40,000 note Issued capital stock and received $8,000 cash Paid $20,000 of operating expenses Received $2,100 on accounts receivable. Letter I B E Debit $3,000 15,000 50,000 Letter A J A G A K A 8,000 20,000 2,100 H A B Credit $3,000 15,000 10,000 4,000 8,000 20,000 2,100

1) 2) 3)

4) 5) 6)

28. On September 1, 2011, Fast Track, Inc. was started with $30,000 invested by the owners as contributed capital. On September 30, 2011, the accounting records contained the following amounts:

Prepare an income statement (in good form, on the page below) for September for the first month of Fast Track's operation. Ignore income taxes. 12 points

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Fast Track, Inc Income Statement For the Month Ended September 31,2011

Operating Revenues Consulting Fees Revenue Total Operating Revenues Operating Expenses Office supplies expense Rent Expense Telephone Expense Salary Expense Depreciation Expense Total Operating Expenses $600 2,400 250 6, 900 500 10,650 $19,200 19,200

Net Income

$8,550

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