Reference no: EM131202415

Identifying Account Titles-

The following are independent situations.

a. A new company is formed and sells 100 shares of stock for $12 per share to investors.

b. A company purchases for $18,000 cash a new delivery truck that has a list, or sticker, price of $21,000.

c. A women's clothing retailer orders 30 new display stands for $300 each for future delivery.

d. A company orders and receives 10 personal computers for office use for which it signs a note promising to pay $25,000 within three months.

e. A construction company signs a contract to build a new $500,000 warehouse for a corporate customer. At the signing, the corporation writes a check for $50,000 to the construction company as the initial payment for the construction (receiving construction in progress). Answer from the standpoint of the corporation.

f. A publishing firm purchases for $40,000 cash the copyright (an intangible asset) to a manuscript for an introductory accounting text.

g. A manufacturing firm pays stockholders a $100,000 cash dividend.

h. A company purchases a piece of land for $50,000 cash. An appraiser for the buyer values the land at $52,500.

i. A manufacturing company acquires the patent (an intangible asset) on a new digital satellite system for television reception paying $500,000 cash and signing a $400,00 note payable due in one year.

j. A local company is a sole proprietorship (one owner); its owner buys a car for $10,000 for personal use. Answer from the company's point of view.

k. A company purchases 100 shares of Apple Inc. common stock as an investment for $5,000 cash.

l. A company borrows $1,000 from a local bank and signs a six-month note for the loan.

m. A company pays $1,500 principle on its note payable (ignore interest).

Required:

1. Indicate the appropriate account titles, if any, affected in each of the preceding events. Consider what is received and what is given.

2. At what amount would you record the truck in (b)? The land in (h)? What measurement principle are you applying?   

3. For (c), what accounting concept did you apply? For (j), what accounting concept did you apply?

Classifying Accounts and Their Usual Balances-

As described in a recent annual report. Verizon Wireless provides wireless voice and data services across one of the most extensive wireless networks in the United States. Verizon now serves more than 80 million customers, making it the largest wireless services providers in the United States in terms of the total number of customers. The following are accounts from a recent balance sheet for Verizon.

(1) Accounts Receivable

(2) Retained Earnings

(3) Taxes Payable

(4) Prepaid Expenses

(5) Contributed Capital

(6) Long-Term Investment

(7) Plant, Property, and Equipment

(8) Account Payable

(9) Short-Term Investment

(10) Long-Term Debt

Required:

For each account, indicate whether the account is classified as a current asset (CA), noncurrent asset (NCA), current liability (CL), noncurrent liability (NCL), or stockholders' equity (SE), and whether the account usually has a debit or credit balance.