Exercise 1-11 Effect of transactions on general ledger accounts [L.O. 5, 8] At t
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Question
Exercise 1-11 Effect of transactions on general ledger accounts [L.O. 5, 8]
At the beginning of 2011, T & M Corp.'s accounting records had the following general ledger accounts and balances.
T & M CORP.
Accounting Equation
Assets
= Liabilities
+
Stockholders' Equity
Event
Cash
Land
Notes
Payable
Common
Stock
Retained Earnings
Acct. Titles
for RE
Balance 1/1/2011
10,000
20,000
12,000
7,000
11,000
T & M Corp. completed the following transactions during 2011.
1.
Purchased land for $5,000 cash.
2.
Acquired $25,000 cash from the issue of common stock.
3.
Received $75,000 cash for providing services to customers.
4.
Paid cash operating expenses of $42,000.
5.
Borrowed $10,000 cash from the bank.
6.
Paid a $5,000 cash dividend to the stockholders.
7.
Determined that the market value of the land is $35,000
Requirement 1:
Record the transactions in the appropriate general ledger accounts. Record the amounts of revenue, expense, and dividends in the Retained Earnings column. Provide the appropriate titles for these accounts in the last column of the table. (Amounts to be deducted should be indicated with minus sign. Leave no cells blank - be certain to enter "0" and select "NA" wherever required. Omit the "$" sign in your response.)
T & M Corporation
Accounting Equation for 2011
Assets
=
Liabilities
+
Stockholders' Equity
Event
Cash
+
Land
=
Notes
Payable
+
Com.
Stock
+
Retained
Earnings
Acct. Title
for RE
Balance 1/1/2011
10,000
20,000
12,000
7,000
11,000
1.
Pur. Land
2.
Issued stk.
3.
Provide Svc.
4.
Paid Exp.
5.
Loan
6.
Paid Div.
7.
Land Value
Totals
+
=
+
+
Requirement 2:
Determine the amount of net income for the 2011 period. (Omit the "$" sign in your response.)
Net income
$
Requirement 3:
What is the amount of total assets and total stockholders' equity at the end of 2011? (Omit the "$" sign in your response.)
Total assets
$
Total stockholders' equity
$
Requirement 4:
What is the balance in the retained earnings account immediately after Transaction 3 is recorded?
Balance
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Exercise 1-11
At the beginning of 2011, T & M Corp.'s accounting records had the following general ledger accounts and balances.
Explanation / Answer
T & M CORP. Accounting Equation Assets = Liabilities + Stockholders' Equity Event Cash Land Notes Payable Common Stock Retained Earnings Acct. Titles for RE Balance 1/1/2011 10,000 20,000 12,000 7,000 11,000 ________________________________________ 1. Purchased land -5,000 +5,000 2. Issue of 10,000 10,000 3. Services 75,000 75,000 4. Exps -42,000 -42,000 5. Borrowed 10,000 10,000 6. Dividends - 5,000 -5,000 TOTAL 53,000 25,000 22,000 17,000 39,000 Requirement 2: Determine the amount of net income for the 2011 period. (Omit the "$" sign in your response.) Net income $ 28,000 (75,000 – 42,000 – 5,000) Requirement 3: What is the amount of total assets and total stockholders' equity at the end of 2011? (Omit the "$" sign in your response.) Total assets $ 78,000 (53,000 + 25,000) Total stockholders' equity $ 56,0000 (17,000 + 39,000) Requirement 4: What is the balance in the retained earnings account immediately after Transaction 3 is recorded? Balance $86,000 (11,000 + 75,000)
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