Homework Assignment Chapter 1 &b2

| June 6, 2016

Question
Homework Assignment Chapter 2
1. The analytical framework used to evaluate transactions is reproduced below:
Cash

+ Non­Cash
Assets

= Liabilities

+ Contributed
Capital

+ Accumulated Other
Comprehensive
Income

+ Retained
Earnings

Using this analytical framework indicate the effect of each of the following transactions for TX
Corporation:
a.
b.
c.

TX Corporation purchased marketable securities for $150,000 for cash.
At the end of the period TX Corporation revalued the securities to $125,000.
During the next period TX Corporation sells the securities for $165,000

2. The analytical framework used to evaluate transactions is reproduced below:
Cash

+ Non­Cash
Assets

= Liabilities

+ Contributed
Capital

+ Accumulated Other
Comprehensive
Income

+ Retained
Earnings

Using this analytical framework indicate the effect of each of the following transactions for
Wisco Corporation:
1.
2.
3.

Wisco sold merchandise for $225,000 on account which cost $170,000 to manufacture.
Wisco purchased for cash $110,000 of raw material inventory.
The company paid $25,000 in advance for an advertising campaign that would be aired next
year.
4. Wisco paid its employees $15,000 for the month.
5. The company purchased $7,000 of supplies on account.
6. Wisco issued $25,000 of long­term debt.
7. The company used $10,000 of excess cash to purchase marketable securities.
8. Wisco purchased a machine for $22,000 in cash.
9. At the end of the year Wisco paid dividends of $5,000.
10. At the end of the year the marketable securities that Wisco purchased in transaction 7 were
now worth $11,500.
11. Depreciation for the period was $1,500.

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