Answer:
The Journal entries are as follows:
(i) On August 1,
Cash A/c Dr. $6,500
photography equipment A/c Dr. $33,500
To common stock $40,000
(To record the issuance of common stock for cash and photography equipment)
(ii) On August 2,
Prepaid insurance A/c Dr. $2,100
To cash $2,100
(To record the cash paid in advance for insurance)
(iii) On August 5,
Office supplies A/c Dr. $880
To cash $880
(To record the cash paid for office supplies)
(iv) On August 20,
Cash A/c Dr. $3,331
To photography fees earned $3,331
(To record the photography fees earned)
(v) On August 31,
Utilities A/c Dr. $675
To cash A/c $675
(To record the cash paid for utilities)
Answer:
$1,943.06
Explanation:
Monthly mortgage payment: $6.6 X $229 = $1,511.4
Monthly property taxes: $1,550/12 = $129.16
Monthly property insurance: $630/12 =$52.5
Monthly association fee: $250
Total monthly housing payment: $1,943.06
Answer: Materiality
Explanation: In simple words, materiality refers to the accounting concept which states that only those transaction should be recorded in the financial statements which are important to the stakeholders.
In other words, the transactions should be recorded in such a way that it gives some value to the stakeholders.
Therefore, in the given case, steve reported two expenditures in the fiancial statement as the amount is significant, thus,must be holding the value to stakeholders.
Hence the correct option is D.
From an accounting standpoint, stockholders' investment and revenues increase the assets of the company without adding to the liabilities. Therefore according to the equation (A = L + E), equity must increase.
Similarly, issuing dividends and paying expenses pays cash out of the company, which decreases assets without changing liabilities. Therefore equity must decrease.
Another way to think of it is: what contributes to the company's profit and/or value, and what decreases these things? Well, revenues and people investing in the company are good (and therefore good for stockholders), and giving cash out and paying expenses are costs to the company (and therefore decrease value for stockholders).
Answer:
Journal entry to record the Sale of Patent
Debit : Cash $750,000
Credit : Patent at Book Value $120,000
Credit : Profit and Loss $630,000
Journal entry to record the Sale of Equipment
Debit : Cash $325,000
Debit : Profit and loss $75,000
Debit : Accumulated depreciation $150,000
Credit : Equipment at Cost $550,000
Explanation:
During a sale transaction the entity recognizes 1. The Cash Proceeds resulting from the sale, 2. The Profit or loss resulting from the sale, 3.The entity derecognizes the Cost or Book Value of the Asset as well as the Accumulated depreciation.
A profit of $630,000 has been earned as a result of the sale of the Patent, whereas a loss of $75,000 has been incurred as a result of sale of Equipment.
