Tesc Acc 101 Wa2

Brief Exercise 3.2 – Page 120

Oct 1 Cash ……………………….……………………………….. 200,000

Capital Stock ………………………………. 200,000

Issued capital stock at $50 per share.

4 Diagnostic Equipment ……………………………… 75,000

Cash ……………………………………………. 25,000

Notes Payable ……………………………. 50,000

Purchased equipment, paying part in cash and

singing a note payable for the balance

12 Accounts Payable ………………………………….... 9,000

Cash ……………………………………………. 9,000

Paid account payable to Zeller Laboratories.

19 Surgical Supplies ………………………………………. 2,600

Accounts Payable ………………………… 2,600

Purchased surgical supplies on account.

25 Cash …………………………………………………………. 24,000

Accounts Receivable …………………… 24,000

Collected amount owed from Health One Insurance.

30 Dividends …………………………………………………. 300,000

Cash ……………………………………………. 300,000

Paid cash dividend.

Brief Exercise 3.7 – Page 121

a. Stockholder investments do not constitute revenue. They do result in an increase in the owner’s equity but the increase isn’t “earned.” This is true because earned revenue results from rendering of services or sale of product to outsides. Nothing was provided and the stockholder is not an outsider. Stockholders are part of the company. In fact they own a portion of it.

b. The collection of an account receivable does not represent revenue because it does not increase the owner’s equity.

c. Borrowing money presents a liability which is the opposite of increasing equity so it doesn’t represent revenue.

d. Interest was earned in May and represents revenue of that month even if no withdrawals were made to take that money from the bank.

e. This fee was earned in May and represents revenue of that month even if the collection was made in June the money was earned in May.

Brief Exercise 3.8 – Page 121

a. Buying a copier doesn’t represent an expense. Asset Cash is exchanged for asset Office Equipment without change to owner’s equity. Also the copier won’t be “used...