Financial Accounting (12th Edition) (What's New in Accounting)

12th Edition

ISBN: 9780134725987

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

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Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business…

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Textbook Question

Chapter 1, Problem 1.62AP

LO 3, 4

(Learning Objectives 3, 4: Apply the accounting equation; evaluate business operations) Compute the missing amount (?) for each company. (Amounts are in millions.)

	Kennedy Corp.	Caring Co.	Childress, Inc.
Beginning
Assets.................................	$76	$ 30	$ ?
Liabilities...........................	51	21	1
Common stock...................	7	7	6
Retained earnings...............	?	2	10
Ending
Assets.................................	$ ?	$ 48	$20
Liabilities...........................	53	32	?
Common stock...................	7	?	8
Retained earnings...............	26	?	?
Income statement
Revenues............................	$227	?	$22
Expenses............................	218	157	?
Net income.........................	?	?	?
Statement of retained earnings
Beginning RE.....................	$ 18	$ 2	$10
+ Net income.........................	?	8	4
− Dividends declared.............	(1)	(6)	(2)
= Ending RE..........................	$ 26	$ 4	$12

At the end of the year, which company had the

highest net income?
highest percent of net income to revenues?

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Chapter 1, Problem 1.61Q

Chapter 1, Problem 1.63AP

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Chapter 1 Solutions

Financial Accounting (12th Edition) (What's New in Accounting)

Ch. 1 - Financial statements can be used by which of the...Ch. 1 - Prob. 2QC Ch. 1 - Hoot Enterprises buys a warehouse for 590,000 to...Ch. 1 - Prob. 4QC Ch. 1 - Prob. 5QC Ch. 1 - The accounting equation can be expressed as a....Ch. 1 - Prob. 7QC Ch. 1 - Alliance Corporation holds cash of 8,000 and owes...Ch. 1 - During the year, ChemClean Corporation has 280,000...Ch. 1 - Prob. 10QC

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Solution Summary: The author explains the accounting equation, which creates a relationship between the resources or assets of the company, and claims by the creditors and the owners.

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