Second+Life+HW+Solutions

SL1 solution
media type="custom" key="8176838"

(this is an example of what I was looking for):

toc The accounting equation consists o Assets = Liabilities + Equity. Equity is composed of two parts, Paid in Capital and Retained Earnings, Retained Earnings is composed of 3 parts, Revenue, Expenses and Dividends. You add revenue and subtract dividends and expenses to determine your retained earnings. The accounting equation is affected by debits and credits. Debits make Assets increase but they make Liabilities and Equity decrease. Credits on the other hand make Liabilities and Equity increase and Assets decrease.

Here are a couple 10/10 responses from past semesters:

The accounting equation is Assets = Liabilities [Stockholder's] Equity.,Equity = Paid in Capital Retained Earnings.,Retained Earnings = Revenue - Expenses - Dividends.,So that means...Assets = Liabilities Paid in Capital Revenue - Expenses - Dividends.,With all this in mind, numbers could be added and subtracted where chosen and significant changes would occur to the equation.,As I played around with the 3-D model, I gained some knowledge about how the equation works.,The equation is split into two parts: debit and credit.,The left side, or assets, are debits.,The right side, or liabilities and equity, are credits.,As I added to the left side of the equation with debit, assets grew positively but when I added with credit, assets fell negatively.,The same thing occured on the right side of the equation.,If I added to the right side, with credit, liabilities and/or equity grew positively but when I added with debit, liabilities and/or equity fell negatively.

The accounting equation Assets=Liabilities Equity is the key to all accounting.,Assets are identified as economic resources that are expected to produce a benefit in the future.,Some examples are investments, accounts receivable, and cash.,Liabilities are defined as the economic obligations of a business. ,Liabilities are also known as the "outsider claims"., Some examples are accounts payable, and accrued expenses.,Equity is also known as â€œinsidersâ€™ claimsâ€.,Stockholder's equity is divided into two parts: Paid in Capital and Retained Earnings.,Paid in Capital is known as the amount that investors have given to the corporation.,Retained Earnings is defined as the amount of earnings that companies have earned or lost over time minus dividends paid.,For this equation to work, the assets of a company have to equal the liabilities plus the stockholders equity.,Retained earnings are broken up into two sections: Revenues and Expenses.,Revenues will increase retained earnings by delivering goods to costumers and are calculated by a subsequent increase in assets received in payments.,Expenses decrease retained earnings which use up assets.,Expenses are identified as the costs of providing goods to costumers.,Consequently the expanded accounting equation is assets=liabilities paid in capital -dividends revenue - expenses.,This equation is the essential foundation for accounting.,

SL2 solution
100 dr 23000 300 cr 23000 This transaction increases the //asset// account //cash// and also increases the //equity// account //common stock//.

100 dr 1000 200 cr 1000 This transaction increases the asset account supplies and also increases the liability account accounts payable.

100 dr 15000 100 cr 15000 This transaction increases the asset account Land and also decreases the asset account cash for the amount paid for the Land.

100 dr 4500 300 cr 4500 This transaction increases the asset account cash and also increases the equity account service revenue.

200 dr 750 100 cr 750 This transaction decreases the liability accounts payable and also decreases the asset account cash.

100 dr 6500 300 cr 6500 This transaction increases the asset account accounts receivable and also increases equity, by increasing the revenue account service revenue.

100 dr 5000 100 cr 5000 This transaction increases the asset account cash and also decreases another asset account accounts receivable.

April 20th: 300 dr 1300 300 dr 2000 100 cr 3300 This transaction decreases two equity accounts (by increasing two expense accounts, rent and salary), and also decreases the asset account cash.

Please note the descriptions are shown here to facilitate the explanation of the answer but your notecard should NOT have included them.

SL3 Solution
100 dr 25000 100 cr 25000

This transaction increases assets (for the purchase of the Short-term investment) and decreases assets (for the use of cash)

100 dr 250 300 cr 250

This transaction increases assets (Cash) for the dividend that was received and also increases equity by increasing revenue (Dividend revenue) for the dividend.

300 dr 4000 100 cr 4000

This transaction decreases equity by increasing expense (Unrealized Loss on Sale of ST Investment) and decreases assets (to decrease the value of the ST Investment to its Market Value: 25,000 - 21,000).

100 dr 26500 100 cr 21000 300cr 5500

When sold this transaction increases assets (Cash) for the amount the short-term investments were sold for ($26,500), and decreases assets (for the balance in the short-term investment account, to reduce it to 0 - $21,000), and increases equity by increasing revenues (for the Gain on sale of Investment since the investment was sold for more then its adjusted balance: 26,500 - 21,000 = $5,500).

Please note the dates and descriptions are shown here to facilitate the explanation of the answer but your notecard should NOT have included them