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chapter 1 question 40

required question 1 and 2

Introduction to financial Accounting (eleventh edition)

1. By using a format similiar to Exhibit 1-2 (p.12), prepare an analysis showing the effects of the June tranactions on the financial position of nike.

2. Prepare a balance sheet as of June 3.

12 CHAPTER 1. ACCOUNTING: THE LANGUAGE or BusINESS EXHIBIT 1-2 owner's Equity Biwheels Company Analysis of Transactions for January 2 to January 12, 20x2 Capital Description of Transactions store Cash Inventory (2) Loan from bank +15.000 (3) Acquire store equipment +10,000 (4) Acquire inventory for cash -120,000 Acquire inventory on +20,000 (e) Acquire inventory for cash +1.000 7) Sale of equipment (8) Return of inventory acquired on January 6 25.200+ 100,000 (9) Payment to creditor 159.200 352,000 Balance, January 12, 20x2 525,200 7. January 7. Biwheels sells a store display case a neighbor after Lopez decides he dislikes it. Its selling price, si,000, happens to be exactly equal to its cost. The neighbor 8. January 8, Biwheels returns four bicycles (which it had acquired for S200 each) to Schwinn for full credit (an $800 reduction of the amount that Biwheels owes Schwinn). 9. January 10, Biwheels pays $4,000 to Shimano. 10. January 12. Lopez remodels his home for S35,000. paying by check from his personal Use the format in Exhibit 1-2 to analyze each transaction. Try to do your own analysis o each transaction before looking at the entries in the exhibit. INTERPRETING FINANCIAL STATEMENTS 10 does not appear in Echibit 1-2. Why not? accounts Itis important for readers of financial statements identify the entity accounted for in the financial statements-which in ou case is Brwheels, a business. ole 10 is a personal transaction by Lopez and does not l accounts, as a business Lopez would record it in his per- but it does not belong in Biwheels' business TRANSACTION 4, PURCHASE INVENTmRY [n

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