Angela M. Hill-McBride
December 17, 2012
Basic Accounting Equations 1. Basic concepts. Jean's Marine Supply specializes in the sale of boating equipment and accessories. Identify the items that follow as an asset (A), liability (L), revenue (R), or expense (E) from the firm's viewpoint. a. The inventory of boating supplies owned by the company. (A) b. Monthly rental charges paid for store space. (L) c. A loan owed to Citizens Bank.(L) d. New computer equipment purchased to handle daily record keeping.(A) e. Daily sales made to customers.(R) f. Amounts due from customers.(R) g. Land owned by the company to be used as a future store site.(A) …show more content…
On January 1 of the current year, MuniServ began operations with $100,000 cash. The cash was obtained from an owner investment by Peter Houston of $70,000 and a $30,000 bank loan. Shortly thereafter, the company acquired selected assets of a bankrupt competitor. The acquisition included land ($15,000), a building ($40,000), and vehicles ($10,000). MuniServ paid $45,000 at the time of the transaction and agreed to remit the remaining balance due of $20,000 (an account payable) by February 15.
Date | Account | Debit | Credit | January 1 | Cash | 100,000 | | | Peter Houston (Loan) | | 70,000 | | Bank Loan | | 30,000 | | Land | 15,000 | | | Building | 40,000 | | | Vehicles | 10,000 | | | Payment | | 45,000 | January 15 | Store Equipment | | 4,600 | | Loan Payment | | 600.00 | | Salary Expense | | 2,300 | | Advertising Expense | | 700.00 | Feb 1 | Loan Payment | | 20,000 | Feb 10 | | | 200.00 | | Accounts Receivable | $9400.00 | | Feb 28 | Accounts Receivable | $3700.00 | | $178,100 $173,400
During January, the company had additional cash outlays for the following items:
Purchases of store equipment | $4,600 | Loan payment, including $100 interest | 500 | Salaries expense | 2,300 | Advertising expense | 700 | | |
The January utilities bill of $200 was received