Transaction Exercises 3.16 - 3.

19

The exercises in this section describe various transactions and ask

yourself how they affect the balance sheet. Take a few moments to test
your understanding of this material.

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Transaction Exercises 3.16

Long-term
debt (Non-
Cash $40,000 +$75,000 $115,000 current $0 +$75,000 $75,000
liability)

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Transaction Exercises 3.17

On June 2, 2014, Mansfield purchases a computer system for

$22,000 from Infostore Systems. Mansfield pays $10,000 in cash
and promises to pay Infostore the rest in equal installments over
the rest of the year. The computer system is expected to last 4
years. Which of the following would you do in this situation?

a) Record a new asset, Computer System, for $10,000

b) Record a new asset, Computer System, for $22,000
c) Do not record the asset until it is fully paid for in a year's time
d) Record a new asset, Computer System, for $12,000

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Transaction Exercises 3.18

Cash $105,000 -$6,000 $99,000

No
Prepaid change
expenses $2,000 +$6,000 $8,000

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Transaction Exercises 3.19

Common
Cash $99,000 +$25,000 $124,000
stock
$130,000 +$25,000 $155,000

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ReCap: Balance Sheet

In this chapter you learned:

 How a balance sheet is organized.

 Assets, liabilities and owners’ equity were defined.
 The key relationship linking assets, liabilities and owners’
equity – the fundamental accounting equation- was
explained.
 The dual aspect and historical cost concepts were
introduced and used to record all of Global Grocer’s
business transactions in August.
 The two simple but important balance sheet ratios

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