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"As chief financial officer, it is your responsibility to weigh the finanical pros and cons of the many investment opportunities developed by your company’s research and development division. You are currently evaluating two competing 15-year projects that differ in several ways. Relative to your firm’s current EPS, the first project is expected to generate above-average EPS during the first 5 years, average EPS during the second five years, and then below-average EPS during the last 5 years. The second project is expected to generate below-average EPS during the first 5 years, average EPS during the second 5 years, and then well-above-average EPS during the last 5 years.
Is the choice obvious if you expect that the second investment will result in a larger overall earnings increase? Given the goal of the firm, what issues will you consider before making a final decision?"
Marion Cassidy operates a service business called Cassidy Company. Cassidy Company uses the accounts shown in the following accounting equation. Use the form to complete this problem.
- Paid cash for rent, $400.00.
- Received cash from owner as an investment,$500.00.
- Paid cash for telephone bill, $50.00.
- Received cash from sales,$1,025.00.
- Bought supplies on account from Delta Company, $450.00.
- Sold services on account to Ana Santiago,$730.00.
- Paid cash for advertising, $660.00.
- Paid cash for supplies,$150.00.
- Received cash on account from Ana Santiago, $400.00.
- Paid cash on account to Delta Company,$1,500.00.
- Paid cash for one month of insurance, $100.00.
- Received cash from sales,$1,230.00.
- Paid cash to owner for personal use, $1,200.00. Instructions: For each transaction, complete the following. Transaction 1 is given as an example. a. Analyze the transaction to determine which accounts in the accounting equation are affected. b. Write the amount in the appropriate columns, using a plus (+) if the account increases or a minus (-) if the account decreases. c. For transactions that change owner’s equity, write in parentheses a description of the transaction to the right of the amount. d. Calculate the new balance for each account in the accounting equation. e. Before going on to the next transaction, determine that the accounting equation is still in balance.