PFIN 5th Edition by Randall Billingsley,Lawrence Gitman,Michael Joehnk

Exercise 5

Preparing financial statements. Harrison Purvis is preparing his balance sheet and income and expense statement for the year ending December 31, 2016. He is having difficulty classifying six items and asks for your help. Which, if any, of the following transactions are assets, liabilities, income, or expense items?
a. Harrison rents a house for $1,350 a month.
b. On June 21, 2016, Harrison bought diamond earrings for his wife and charged them using his MasterCard. The earrings cost $900, but he hasn't yet received the bill.
c. Harrison borrowed $3,500 from his parents last fall, but so far, he has made no payments to them.
d. Harrison makes monthly payments of $225 on an installment loan; about half of it is interest, and the balance is repayment of principal. He has 20 payments left, totaling $4,500.
e. Harrison paid $3,800 in taxes during the year and is due a tax refund of $650, which he hasn't yet received.
f. Harrison invested $2,300 in some common stock.
g. Harrison's Aunt June gave him a birthday gift of $300.