Problem 3.2B Lyons, Inc. | Assignment

University:
Michigan State University
Course:
ACC 300 | Intermediate Financial Accounting I
Academic year:

2021
Views:

376

Pages:

2
Author:

Alexa Livingston

PROBLEM 3.2B LYONS, INC. 30 Minutes, Medium a. (1) (a) The asset Accounts Receivable was increased. Increases in assets are recorded by debits. Debit Accounts Receivable, $5,000. (b) Revenue has been earned. Revenue increases owners’ equity. Increases in owners’ equity are recorded by credits. Credit Consulting Revenue, $5,000. (2) (a) The asset Office Supplies was increased. Increases in assets are recorded by debits. Debit Office Supplies, $3,200. (b) The asset Cash was decreased. Decreases in assets are recorded by credits. Credit Cash, $800. (c) The liability Accounts Payable was increased. Increases in liabilities are recorded by credits. Credit Accounts Payable, $2,400. (3) (a) The liability Accounts Payable was decreased. Decreases in liabilities are recorded by debits. Debit Accounts Payable, $100. (b) The asset Office Supplies was decreased. Decreases in assets are recorded by credits. Credit Office Supplies, $100. (4) (a) The asset Cash was increased. Increases in assets are recorded by debits. Debit Cash, $5,000. (b) The owners’ equity account Capital Stock was increased. Increases in owners’ equity are recorded by credits. Credit Capital Stock, $5,000. (5) (a) The asset Cash was increased. Increases in assets are recorded by debits. Debit Cash, $1,200. (b) The asset Accounts Receivable was decreased. Decreases in assets are recorded by credits. Credit Accounts Receivable, $1,200. (6) (a) The liability Accounts Payable was decreased. Decreases in liabilities are recorded by debits. Debit Accounts Payable, $2,300 ($2,400 - $100). (b) The asset Cash was decreased. Decreases in assets are recorded by credits. Credit Cash, $2,300. (7) (a) The Dividends account was increased. Dividends decrease the owners’ equity account Retained Earnings. Decreases in owners’ equity are recorded by debits. Debit Dividends, $1,800. (b) The asset Cash was decreased. Decreases in assets are recorded by credits. Credit Cash, $1,800. P3.2B PROBLEM 3.2B LYONS, INC. (continued) b. General Journal 20_ June (1) 1 Accounts Receivable Consultin g Revenue Billed customers for services rendered. 5,000 5,000 (2) 3 Office Supplies Cash Accounts Pa y able Purchased Office Supplies. 3,200 800 2,400 (3) 5 Accounts Payable Office Su pp lies Returned portion of supplies purchased June 3. 100 100 (4) 17 Cash 5,000 Ca p ital Stock Issued 1,000 shares of capital stock at $5/share. 5,000 (5) 22 Cash 1,200 Accounts Receivable Received partial payment for services billed on June 1. (6) 29 Accounts Payable Cash Paid outstanding balance owed for office supplies purchased on June 3. 30 (7) Dividends Cash Declared and paid a cash dividend. 1,200 2,300 2,300 1,800 1,800 c. The realization principle requires that revenue be recorded when it is earned , even if cash for the goods or services provided has not been received. d. The matching principle requires that expenses incurred in an accounting period be matched with revenue earned in the same period. Office supplies are recorded as an asset when they are first purchased. As these supplies are used in a particular accounting period, their cost will be matched against the revenue earned in that period. P3.2B (p.2)