Exercise 1 (Chapter 1) – Classifying Events as an asset source, use, or exchange
ID: 2568760 • Letter: E
Question
Exercise 1 (Chapter 1) – Classifying Events as an asset source, use, or exchange Montana Companies experienced the following events during the first year of its operations:
1. Acquired $1,000 cash from the issue of common stock.
2. Paid $24 cash for utilities expense.
3. Paid a $1,500 cash dividend to the stockholders.
4. Provided boarding services for $6,000 cash.
5. Purchased additional land for $2,500 cash.
6. Determined the market value of the land to be $24,000 at the end of the accounting period.
7. Acquired an additional $16,000 cash from the issue of common stock.
8. Paid $3,500 cash for the salary expense.
9. Borrowed $10,000 cash from New South Bank.
10. Paid $6,000 cash to purchase land.
11. Provided additional boarding services for $10,500 cash.
Explanation / Answer
1
Acquired $1,000 cash from the issue of common stock.
Asset Source
2
Paid $24 cash for utilities expense.
Asset Use
3
Paid a $1,500 cash dividend to the stockholders.
Asset Use
4
Provided boarding services for $6,000 cash
Asset Source
5
Purchased additional land for $2,500 cash
Asset Exchange
6
Determined the market value of the land to be $24,000 at the end of the accounting period.
Not Applicable
7
Acquired an additional $16,000 cash from the issue of common stock.
Asset Source
8
Paid $3,500 cash for the salary expense.
Asset Use
9
Borrowed $10,000 cash from New South Bank.
Asset Source
10
Paid $6,000 cash to purchase land
Asset Exchange
11
Provided additional boarding services for $10,500 cash.
Asset Source
1
Acquired $1,000 cash from the issue of common stock.
Asset Source
2
Paid $24 cash for utilities expense.
Asset Use
3
Paid a $1,500 cash dividend to the stockholders.
Asset Use
4
Provided boarding services for $6,000 cash
Asset Source
5
Purchased additional land for $2,500 cash
Asset Exchange
6
Determined the market value of the land to be $24,000 at the end of the accounting period.
Not Applicable
7
Acquired an additional $16,000 cash from the issue of common stock.
Asset Source
8
Paid $3,500 cash for the salary expense.
Asset Use
9
Borrowed $10,000 cash from New South Bank.
Asset Source
10
Paid $6,000 cash to purchase land
Asset Exchange
11
Provided additional boarding services for $10,500 cash.
Asset Source
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