Finance 34 Online
OpenStudy (anonymous):

For PE 3-1 through 3-2, do the following for each transaction: a. List the accounts impacted by the transaction. b. For each account, indicate whether the transaction increased or decreased the account. c. For each account, indicate how much the transaction increased or decreased the account. d. Compute the impact of the transaction on total assets, total liabilities, and total owners’ equity. 3-1 Impact of a Transaction The company borrowed $85,000 in cash from Eastern Bank. 3-2Impact of a Transaction The company used$45,000 in cash to purchase land on the west side of Hatu Lake.

OpenStudy (anonymous):

???

OpenStudy (anonymous):

can anyone help...Im so very lost and frustrated.

OpenStudy (anonymous):

are you familiar with the t-account approach in accounting. Look it up, as it is a good way to understand the change in accounts. 3-1 if the company borrows $85,000, the liability (loan) would increase by that amount, and the cash would also increase by the same amount (because they are borrowin cash)- debit cash, credit loan by$85000-- assets and liabilities increase by $85000 3-2 if they use cash to buy land, the cash would decrease by$45000 and the land would increase by $45000. Total assets would stay the same because you are simply changing the type of asset. Credit cash, debit land by$45,000

OpenStudy (amistre64):

each transaction should affect at least 2 accounts. 3-1 Impact of a Transaction The company borrowed $85,000 in cash from Eastern Bank. $\begin{array}c Cash&Accounts\ Payable\\ -----&---------\\ 85,000\ |\ \ 0&0\ \ |\ 85,000 \end{array}$ Without knowing any of the other specifics this amounts to: Assets = Liabilities + Equity ----------------------- 85,000 = 85,000 + 0 -------------------------------- 3-2Impact of a Transaction The company used$45,000 in cash to purchase land on the west side of Hatu Lake. $\begin{array}c Land&Cash\\ -----&---------\\ 45,000\ |\ \ 0&85,000\ \ |\ 45,000 \end{array}$ Assets = Liabilities + Equity --------------------------------- 45,000 + 45,000 = 85,000 + 0

OpenStudy (anonymous):

Thank you so much for your help. I think I am in a little over my head as I have never taken a finance class before. Any advice would be great.

OpenStudy (anonymous):

Journal Entries Refer to PE 3-1. Make the journal entry necessary to record the transaction. Journal Entries Refer to PE 3-2. Make the journal entry necessary to record the transaction.

OpenStudy (anonymous):

Posting Refer to the journal entries made in PE 3-11 through PE 3-15. Construct a T-account representing each account impacted by those five transactions. Post all of the journal entries to these T-accounts. Compute the ending balance in each account. Assume that the beginning balance in each T-account is zero.

OpenStudy (anonymous):

do you know how to lead me in the right direction with this stuff?

OpenStudy (amistre64):

wish I had the time, but my library is closing ... ill be able to check on it 2morrow tho ;)

OpenStudy (anonymous):

Thank you so much. I look forward to hearing back from you. maybe we can chat tomorrow. I hope.

OpenStudy (amistre64):

'AWED' is a good mnemonic device to use; if you can remember that cash comes in on the debit side (the left); and goes out on the credit side (the right); and that cash is and ASSET. Assets, Withdrawals, and Expenses/Dividends (AWED) have the same debit/credit transactions. They increase on the left and decrease on the right. Everything else is the opposite. For example: Money received for services would do this Cash Revenue + - - + ------------- -------------- 20,000| | 20,000 The bill for utilities would do this: Cash Revenue + - - + ------------- -------------- 20,000| | 20,000 Accounts Payable Utilities Expense - + + - --------------- -------------- | 500 500 | When you pay the utility bill it looks like this: Cash Revenue + - - + ------------- -------------- 20,000| | 20,000 | 500 Accounts Payable Utilities Expense - + + - --------------- -------------- | 500 500 | 500 | If you buy a car to use in the business it would look like this: Cash(A) Revenue(Eq) Vehicle(A) + - - + + - ------------- -------------- ------------- 20,000| | 20,000 10,000| | 500 |10,000 Accnts Payable(L) Utilities Expense(Eq) - + + - --------------- --------------- | 500 500 | 500 | The 'T-accounts' are a shorthand version of the ledger. They help you to keep track of how the money flows thru the accounts. And Each transaction has to be recorded in "AT LEAST" 2 accounts - the double entry method. Without knowing any specifics for your transaction that you state above, I got no way to guide you thru them :) When you total your accounts; you simply add up the left side and the right side: Cash(A) + - ------------- 20,000| | 500 | 10,000 -------------- 20,000| 10,500 ; subtract the smaller from the larger ========== 9,500 <------- and the total tells you how much you have or how much you owe depending on which side you end up on :)

OpenStudy (anonymous):

Im sorry that I keep missing you. This is a large amount of work you explained to me and I dont want you to think I am ungrateful. I really want to thank you very much and can offer to help you with anything business/writing related :) But then again, you seem to have that down pat too!

OpenStudy (amistre64):

we could take it in steps if need be. deal with one question at a time that is :) If you need clarification on any of this, just let us know.

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