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A comprehensive review of chapter 1 in an accounting course, covering fundamental concepts like the accounting equation, classification of accounts, normal balances, and financial statement preparation. It includes practice problems and journal entries to reinforce understanding of key principles. Suitable for high school students studying introductory accounting.
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Problem 1: Effect of transactions on the accounting equation. Jake Ordaz started Lascassas Landscaping in December, and he had the following transactions during the first month. For each of the transactions below, indicate the impact that the transaction has on the total assets, liabilities and owner’s equity of the company. An example is provided for you. TRANSACTIONS ASSETS LIABILITIES OWNER’S EQUITY Example: On December 1, Jake invested $100, of cash and $150,000 of equipment in the company. Increases No Effect Increases
For the accounts below, indicate (1) the type of account, (2) whether the account has a normal debit or credit balance, (3) whether you would debit or credit the account to increase the balance of the account, and (4) identify the financial statement on which the account would appear. For type of account, select from: asset, liability, owner’s capital account, owner’s withdrawal account, revenue and expense. Account Title Type of Account Normal Balance Debit or Credit to Increase the account? On which financial statement does this account appear? Accounts Payable Accounts Receivable Cash Consulting Revenue Equipment Furniture Insurance Expense Interest Expense J. Richards, Capital J. Richards, Withdrawals Land Prepaid Insurance Prepaid Rent Rent Revenue Unearned Consulting Revenue Wage Expense
Problem 3 (continued) DATE ACCOUNT TITLE DEBIT CREDIT
Problem 4: Financial Statement Preparation Maria Goeble manages a consulting firm called Synergy Solutions, which began operations on July 1st. On July 31st, the company’s records show the following general ledger accounts and amounts for the month of July. Prepare in proper form an (1) income statement, (2) statement of owner’s equity, and (3) balance sheet. Space is provided below and on the next two pages. Accounts Payable 3,900 Notes Receivable 7, Accounts Receivable 10,500 Office Supplies 4, Advertising Expense 1,200 Prepaid Insurance 3, Cash 24,000 Rent Expense 6, Consulting Revenue 36,000 Rental Revenue 1, Equipment 12,000 Salaries Expense 9, M. Goeble, Capital 34,800 Unearned Revenue 90 0 M. Goeble, Withdrawals 6,000 Utilities Expense 60 0 Notes Payable 7,