Question

Hanna's Stuff Transaction Analysis

Hanna owns a pottery store named Hanna's Stuff. The following transactions take place in February. Hanna's Stuff prepares monthly financial statements.

Suggest the account(s) likely to be impacted (see example below). If you use Retained Earnings, further state dividend, or name a revenue account, or name an expense account. The exact title is not always critical. For example, I used "Repair Expense" below, someone else may call it "Maintenance Expense." The key thing is the expense designation. Management really determines the level of detail they prefer in the accounting records

E.) Please add a sentence or two of explanation, so we can understand your logic (see example below).

Answer in this format:

Example:

#Ex. Hanna's paid $175 to have a machine repaired.

A: -175 Cash

L: NE [this means no effect]

E: -175 Retained Earnings for Repair Expense

Explanation: Transaction indicated item was "paid" which would mean cash goes down. This is a small repair so it would likely be immediately expensed.

1. Hanna's buys (pays and receives) $6,000 of inventory for an upcoming tradeshow.
2. The employee Hanna's Stuff gave a loan to back in Q18 pays back $1,000
3. The customer from Q12 and Q30 came by the store and was given their $200 back.
4. Hanna's Stuff sells 20 of the clay figurines purchased back in Q7. This is a new customer that Hanna's Stuff is trying to develop a relationship with so they sell the inventory at cost. (Hint - See Q10. Do this in 2 rounds of entries again.)
5. Hanna reviews the inventory purchased in Q31 and finds some items are damaged. She returns $1,000 dollars worth and receives store credit.

Answer 1

Example:	Hanna's Buy (pay and receive) $ 6,000 of inventory for an upcoming tradeshows.
A:	- $ 6,000 Cash
E:	- $ 6,000 Retained Earning for Inventory as recived.
Explanation:	Transaction indicated that cash goes out for inventory purchase.
	So cash increased and Retained Earning reduce.
Example:	The employee Hanna's Stuff gave a loan to back in Q18 pays back $1,000
A:	+$ 1,000 Cash
E:	- $ 1,000 Loans & Advances
Explanation:	Transaction indicate which loan was earlier given returned by staff.4
	So Cash increased and Loand & Advances got reduced.
Example:	The customer from Q12 and Q30 came by the store and was given their $200 back.
A:	-$ 200 Cash
E:	-$ 200 Trade Receivable
Explanation:	Transaction indicate amount returned to customer which was received.
	So Cash reduced and trade receivable also.
Example:	Hanna's Stuff sells 20 of the clay figurines purchased back in Q7. This is a new customer that
	Hanna's Stuff is trying to develop a relationship with so they sell the inventory at cost.
A:	+$ 6,000 Cash
E:	+$ Retained Earning
Explanation:	It is assumed 20 of clay figuriness purchase is the same as purchase of inventory in first entry.
	So $1,000 cash and retained earning increased.
Example:	Hanna reviews the inventory purchased in Q31 and finds some items are damaged. She returns
	dollars worth and receives store credit.
A:	+ $ 1,000 Cash
E:	+ $ 1,000 Retained Earning
Explanation:	Goods return and credit note received assumed cash also received as CN accepted. So Cash
	and Retained Earning shall be enhanced.
Note: As reference given for Q18, Q12, Q30, Q7 and Q31 could not relate. So required assumption done.