Slide 2-1 Chapter 2 The Recording Process Financial Accounting, IFRS Edition Weygandt Kimmel Kieso.
Accounting Principles 10th Edition Weygandt & Kimmel Chapter 1 - Solutions for Chapter 1 -...
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Transcript of Accounting Principles 10th Edition Weygandt & Kimmel Chapter 1 - Solutions for Chapter 1 -...
Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23 Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23
Assets = Liabilities + Owner's Equity
Assets = Liabilities + Owner's EquityAccounts Accounts Owner's
Cash Receivable Supplies Equipment Payable Capital1) $ 15,000 $ 15,000 2) (7,000) 7,000 3) 1,600 1,600 4) 1,200
5) 250 6) 1,500 2,000 7) (1,700)
5, 8) (250) (250)6, 9) 600 (600)
10) (1,300)
$ 8,050 $ 1,400 $ 1,600 $ 7,000 $ 1,600 $ 15,000 $ 18,050
summation of assets summation of liabilities owner's cap/draw & owner's equity $ 13,700
$ 18,050 $ 18,050 summation of owner's equity
$ 18,050 $ 16,450
Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23 Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23
Income Statement Balance Sheetmonth ending September 30, 2012 month ending September 30, 2012
Revenues Assets Service Revenues $ 4,700 Cash
Accounts Receivable
Expenses Supplies Salaries & Wages Expense (900) Equipment Rent Expense (600) Total Assets Advertising Expense (250) Utilities Expense (200) Liabilities & Owner's Equity Total Expenses (1,950) Liabilities
Accounts PayableNet Income $ 2,750 Owner's Equity
Owner's CapitalTotal Liabilities & Owner's Equity
Owner's Equity Statementmonth ending September 30, 2012
Statement of CashFlowsOwner's Capital, September 1 0 month ending September 30, 2012Add: Investments $ 15,000 Add: Net Income $ 2,750 Cash Flows from Operating Activities
17,750 cash receipts from revenues
Less: Drawings $ (1,300) cash payments for expensesOwner's Capital, September 30 16,450 Net Cash Provided by Operating Activities
Cash Flow from Investing Activities Purchase of Equipment
Cash Flow from Financing Activities Investment by Owners Drawings by Owners
net change in cash
cash at beginning of periodcash at end of period
Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23
Owner's Equity-Owner's
Drawings Revenues -ExpensesInitial InvestmentEquipment on cashSupplies on Credit
1,200 Service Revenue
(250) Advertising Expense 3,500 Service Revenue
(900) Salaries & Wage Expense (600) Rent Expense (200) Utilities Expense
(1,300)
$ (1,300) $ 4,700 $ (1,950) $ 18,050
owner's cap/draw net income $ 2,750
summation of owner's equity $ 16,450
Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23
Balance Sheetmonth ending September 30, 2012
$ 8,050 Accounts Receivable 1,400
1,600 7,000
Total Assets $ 18,050
Liabilities & Owner's Equity
Accounts Payable $ 1,600 Owner's Equity Owner's Capital 16,450 Total Liabilities & Owner's Equity $ 18,050
Statement of CashFlowsmonth ending September 30, 2012
Cash Flows from Operating Activities cash receipts from revenues $ 3,300
cash payments for expenses (1,950)Net Cash Provided by Operating Activities $ 1,350
Cash Flow from Investing Activities Purchase of Equipment $ (7,000) paid cash so put it here
Cash Flow from Financing Activities Investment by Owners 15,000 Drawings by Owners (1,300)
$ 13,700
net change in cash $ 8,050
cash at beginning of period $ - cash at end of period $ 8,050
Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23
Transactions
3) purchase of supplies on $1,600 credit, assets and liabilities increase
4) services provided for $1,200 cash, revenue increases owner's equity
decreased owner's equity (expense)
6) services provided for $1,500 cash and $2,000 creditequal increase in assets and owners equity
7) payment of $1,700 expenses equal decrease in assets and expensesequal decrease in assets and owner's equity
8) payment of accounts payable (from #5) payment of $250 bill in cashequal decrease in cash and accounts payable
9) receipt of cash on account (from #6) received $600 in cashcomposition of assets changed
10) withdrawl of $1,300 in cash by ownerequal decrease in assets and owner's equity
1) initial investment by owner, $15,000 cash, equal increase in assets and owner's equity
2) purchase of equipment for $7,000 cash, equal increases and decrease
5) purchased advertising on $250 credit, increased liabilities and
paid cash so put it here
Chapter 1, Transaction Analysis & Financial Statements, pages 21
Assets = Liabilities + Owner's Equity
Assets = Liabilities + Owner's EquityAccounts Accounts Owner's
Cash Receivable Supplies Equipment Payable Capital
1) $ 25,000 $ 25,000 2) 7,000 7,000 3) 8,000 4) (850)5) (1,000)
$ 31,150 $ - $ - $ 7,000 $ 7,000 $ 25,000
summation of assets summation of liabilities owner's cap/draw & owner's equity $ 24,000
$ 38,150 $ 38,150 summation of owner's equity
$ 38,150 $ 31,150
Chapter 1, Transaction Analysis & Financial Statements, pages 21 Chapter 1, Transaction Analysis & Financial Statements, pages 21
Income Statement Balance Sheetmonth ending August 31, 2012 month ending August 31, 2012
Revenues Assets Service Revenues $ 8,000 Cash
Accounts Receivable
Expenses Supplies Salaries & Wages Expense - Equipment Rent Expense (850) Total Assets Advertising Expense - Utilities Expense - Liabilities & Owner's EquityTotal Expenses (850) Liabilities
Accounts PayableNet Income $ 7,150 Owner's Equity
Owner's CapitalTotal Liabilities & Owner's Equity
Owner's Equity Statementmonth ending August 31, 2012
Statement of CashFlowsOwner's Capital, September 1 0 month ending August 31, 2012Add: Investments 25,000 Add: Net Income 7,150 Cash Flows from Operating Activities
32,150 cash receipts from revenuesLess: Drawings (1,000) cash payments for expensesOwner's Capital, September 30 $ 31,150 Net Cash Provided by Operating Activities
Cash Flow from Investing Activities Purchase of Equipment
Cash Flow from Financing Activities Investment by Owners Drawings by Owners
net change in cash
cash at beginning of periodcash at end of period
Owner's Equity-Owner'sDrawings Revenues -Expenses
cashequpment on credit
8,000 service provided (850) rent expense
(1,000) cash withdrawal
$ (1,000) $ 8,000 $ (850)
owner's cap/draw net income $ 7,150
summation of owner's equity $ 31,150
Chapter 1, Transaction Analysis & Financial Statements, pages 21
Balance Sheetmonth ending August 31, 2012
$ 31,150 Accounts Receivable -
- 7,000
Total Assets $ 38,150
Liabilities & Owner's Equity
Accounts Payable $ 7,000 Owner's Equity Owner's Capital 31,150 Total Liabilities & Owner's Equity $ 38,150
Statement of CashFlowsmonth ending August 31, 2012
Cash Flows from Operating Activities cash receipts from revenues $ 8,000 cash payments for expenses (850)Net Cash Provided by Operating Activities $ 7,150
Cash Flow from Investing Activities Purchase of Equipment $ -
Cash Flow from Financing Activities Investment by Owners 25,000 Drawings by Owners (1,000)
$ 24,000
net change in cash $ 31,150
cash at beginning of period $ - cash at end of period $ 31,150
Chapter 1, - pages 21
Transactions
1) Initial Investment by Owner, $25,000 Cash Equal Increase in Assets and Owner's Equity
2) Purchase of Equipment for $7,000 CreditEqual Increase in Total Assets and Total Liabilities
3) Services provided for $8,000 CashTotal Assets, Cash increasedRevenue Increases Owner's Equity
4) Payment of $850 Rent Expenses, CashEqual Decrease in Assets and ExpensesEqual Decrease in Assets and Owner's Equity
5) WithDrawl of $1,000 in cash by OwnerEqual Decrease in Assets and Owner's Equity
Equipment paid on credit so it is zero
we start with zero
Chapter 1, Transaction Analysis & Financial Statements, pages 25
Income Statement Flannagan Companymonth ending December 31, 2012
Revenues Service Revenues $ 36,000
Expenses
Rent Expense (11,000) Salaries & Wages Expense (7,000) Utilities Expense (4,000)Total Expenses (22,000)
Net Income $ 14,000
Balance Sheet Flannagan Companymonth ending December 31, 2012
Assets Cash $ 8,000 Accounts Receivable 9,000 Supplies - Equipment 10,000 Total Assets $ 27,000
- Liabilities & Owner's EquityLiabilities Accounts Payable $ 2,000 Note Payble 16,500
Owner's Equity $ 18,500 Owner's Capital 8,500Total Liabilities & Owner's Equity $ 27,000
Presented below is selected information related to Flanagan Company at December31, 2012. Flanagan reports fi nancial information monthly.Equipment $10,000 Utilities Expense $ 4,000Cash 8,000 Accounts Receivable 9,000Service Revenue 36,000 Salaries and Wages Expense 7,000
Rent Expense 11,000 Notes Payable 16,500Accounts Payable 2,000 Owner’s Drawings 5,000(a) Determine the total assets of Flanagan Company at December 31, 2012.(b) Determine the net income that Flanagan Company reported for December 2012(c) Determine the owner’s equity of Flanagan Company at December 31, 2012
Chapter 1, Transaction Analysis & Financial Statements, pages 26-27
Assets = Liabilities + Owner's Equity
Assets = Liabilities +Accounts Notes Accounts
Cash Receivable Supplies Equipment Payable Payable
1) $ 11,000 2) (800)3) 3,000 3,000 4) 1,500 5) 700 700 6) 2,000 7) (500)
(300) (100)
8 (1,000)
$ 10,500 $ 2,000 $ - $ 3,000 $ 700 $ 3,000 Total Assets $ 15,500 Total liabili $ 3,700
summation of assets summation of liabilities & owner's equity
$ 15,500 $ 15,500
$ 15,500
Chapter 1, Transaction Analysis & Financial Statements, pages 26-27
Income Statementmonth ending July 31, 2012
Revenues Service Revenues $ 3,500
ExpensesRent Expense (800) Salaries & Wages Expense (500)Utilities Expense (300)Supplies Expense (100)Total Expenses (1,700)
Net Income $ 1,800
Owner's Equity StatementOwner's Capital July 1st, 2012
Owner's Capital, September 1 $0 Add: Investments 11,000 Add: Net Income 1,800
12,800 Less: Drawings (1,000)Owner's Capital, July 31 $ 11,800
Chapter 1, Transaction Analysis & Financial Statements, pages 26-27
Owner's EquityOwner's -Owner'sCapital Drawings Revenues -Expenses
$ 11,000 (800) Rent Expense
Equipment on credit 1,500 Service Revenue
borrowed cash 2,000 Service Revenue
(500) expense (300) expense (100) expense
(1,000)
$ 11,000 $ (1,000) $ 3,500 $ (1,700) $ 11,800
owner's cap/draw net income $ 10,000 $ 1,800
summation of owner's equity $ 11,800 $ 11,800
Chapter 1, Transaction Analysis & Financial Statements, pages 26-27
Balance Sheetmonth ending July 31, 2012
Assets Cash $ 10,500 Accounts Receivable 2,000 Supplies - Equipment 3,000 Total Assets $ 15,500
Liabilities & Owner's EquityLiabilitiesNotes Payable $ 700
Accounts Payable $ 3,000 Total Liabilities 3,700 Owner's EquityOwner's Capital 11,800 Total Liabilities & Owner's Equity $ 15,500
Statement of CashFlowsmonth ending July 31, 2012
Cash Flows from Operating Activities cash receipts from revenues $ 1,500 cash payments for expenses (1,700)Net Cash Provided by Operating Activities $ (200)
Cash Flow from Investing Activities Purchase of Equipment $ -
Cash Flow from Financing Activities Investment by Owners 11,000 Proceeds from debt $ 700 Drawings by Owners (1,000)
$ 10,700
net change in cash $ 10,500
cash at beginning of period $ - cash at end of period $ 10,500
Chapter 1, - pages 26 - 27
1) Initial Investment by Owner, $11,000 Cash Equal Increase in Assets and Owner's Equity
2) Payment of $800 Rent Expense (July 2012)Equal Decrease in Assets and ExpensesEqual Decrease in Assets and Owner's Equity
3) Purchase of Equipment on $3,000 CreditAssets and Liabilities Increase
4) Legal Services provided for $1,500 CashRevenue Increases Owner's Equity
5) Borrowed $700 Cash from Bank on Note Payable6) Legal Services provided for $2,000 CreditAccounts Receivable IncreasesRevenue Increases Owner's Equity
7) Payment of $900 Expense (July 2012)Equal Decrease in Assets and ExpensesEqual Decrease in Assets and Owner's Equity
8) WithDrawl of $1,000 in cash by OwnerEqual Decrease in Assets and Owner's Equity
Transactions (July 2012)
Chapter 1, Transaction Analysis & Financial Statements, pages 37
Assets = Liabilities + Owner's Equity
Assets = Liabilities +Accounts Accounts
Cash Receivable Supplies Equipment Payable
1) $ 15,000 2) (2,000) 5,000 $3,000 3) (750) 750 4) 4,600 3,900 5) (1,500) (1,500)
6) (2,000)
7) (650)8 450 (450)9 (4,800)
10 500 $ 8,350 $ 3,450 $ 750 $ 5,000 $ 2,000
summation of assets summation of liabilities & owner's equity
$ 17,550 $ 17,550
$ 17,550
Chapter 1, Transaction Analysis & Financial Statements, pages 37
Income Statementmonth ending August 31, 2012
Revenues Service Revenues $ 8,500
Expensesrent Expense (650)salary Expense (4,800)utilities Expense (500)
Total Expenses (5,950)
Net Income $ 2,550
Owner's Equity Statementmonth ending August 31, 2012
Owner's Capital, September 1 0Add: Investments 15,000 Add: Net Income 2,550
17,550 Less: Drawings (2,000)Owner's Capital, September 30 $ 15,550
Chapter 1, Transaction Analysis & Financial Statements, pages 37
Owner's EquityOwner's -Owner's
Capital Drawings Revenues -Expenses
$ 15,000
supplies 8,500 Service Revenue
(2,000) Ownerss drawing
(650) rent Expenseaccounts receivable
(4,800) salaries expense (500) Utilities expense
$ 15,000 $ (2,000) $ 8,500 $ (5,950) $ 15,550
owner's cap/draw net income $ 13,000 $ 2,550
summation of owner's equity $ 15,550 $ 15,550
Chapter 1, Transaction Analysis & Financial Statements, pages 37
Balance Sheetmonth ending August 31, 2012
Assets Cash $ 8,350 Accounts Receivable 3,450 Supplies 750 Equipment 5,000 Total Assets $ 17,550
Liabilities & Owner's EquityLiabilities Accounts Payable $ 2,000 Owner's Equity Owner's Capital 15,550 Total Liabilities & Owner's Equity $ 17,550
Statement of CashFlowsmonth ending August 31, 2012
Cash Flows from Operating Activities cash receipts from revenues $ 5,050 cash payments for expenses (7,700)Net Cash Provided by Operating Activities $ (2,650)
Cash Flow from Investing Activities Purchase of Equipment $ (2,000)
Cash Flow from Financing Activities Investment by Owners 15,000 Drawings by Owners (2,000)
$ 13,000
net change in cash $ 8,350
cash at beginning of period $ - cash at end of period $ 8,350
Chapter 1, Transaction Analysis & Financial Statements, pages 37
1) Initial Investment by Owner, $15,000 Cash Equal Increase in Assets and Owner's Equity
2) Purchase of Equipment on $5,000 ($2,000 Cash, $3,000 Credit)Assets and Liabilities Increase
3) Purchase of supplies on $750 CashAssets increased and decreased
4) Revenues of $8,500 earned $4,600 Cash ans $3,900 Credit
Revenue Increases Owner's EquityCash and Accounts Receivable Increases
5) Paid $1,500 Cash on Accounts PayableEqual Decrease in Assets and Owner's Equity
7) Payment of $650 Rent Expense (August 2012)Equal Decrease in Assets and ExpensesEqual Decrease in Assets and Owner's Equity
8) Received / Collected $450 Cash on AccountAssets increased and decreased
9) Payment of $4,800 Expenses (August 2012)Equal Decrease in Assets and ExpensesEqual Decrease in Assets and Owner's Equity
10) Incurred $500 of Utilities Expenses on AccountLiabilities Increased, Equity / Expenses Decreased
Transactions (August 2012)
Problem Set P1 - A1 Chapter 1, Transaction Analysis & Financial Statements, page 39 Chapter 1, Transaction Analysis & Financial Statements, page 39
Assets = Liabilities + Owner's Equity
a) Assets = Liabilities + Owner's EquityAccounts Accounts Owner's
Cash Receivable Supplies Equipment Payable Capital
1) $ 10,000 $ 10,000 2) (5,000) 5,000 3) (400)4) (500) 500
5) 250 6) 6,100 7) (1,000)8) (2,000)
9) (170)10) 750
10,11) 120 (120)
$ 7,150 $ 630 $ 500 $ 5,000 $ 250 $ 10,000
summation of assets = summation of liabilities owner's cap/draw & owner's equity $ 9,000
$ 13,280 $ 13,280 summation of owner's equity
$ 13,280 $ 13,030 b) Net Income is $4,030
Chapter 1, Transaction Analysis & Financial Statements, page 39 Chapter 1, Transaction Analysis & Financial Statements, page 39
Income Statement Balance Sheetmonth ending May 31, 2012 month ending May 31, 2012
Revenues Assets Service Revenues $ 6,850 Cash
Accounts ReceivableExpenses Supplies Salaries & Wages Expense (2,000) Equipment Rent Expense (400) Total Assets
Advertising Expense (250) Utilities Expense (170) Liabilities & Owner's EquityTotal Expenses (2,820) Liabilities
Accounts PayableNet Income $ 4,030 Owner's Equity
Owner's CapitalTotal Liabilities & Owner's Equity
Owner's Equity Statementmonth ending May 31, 2012
Statement of CashFlowsOwner's Capital, May 1 0 month ending May 31, 2012Add: Investments $ 10,000 Add: Net Income $ 4,030 Cash Flows from Operating Activities
$ 14,030 cash receipts from revenuesLess: Drawings $ (1,000) cash payments for expensesOwner's Capital, May 31 $ 13,030 Net Cash Provided by Operating Activities
Cash Flow from Investing Activities Purchase of Equipment
Cash Flow from Financing Activities Investment by Owners Drawings by Owners
net change in cash
cash at beginning of periodcash at end of period
Chapter 1, Transaction Analysis & Financial Statements, page 39
Owner's Equity-Owner's
Drawings Revenues -Expenses
Initial Investment Equipment cash
(400) Rent Expense cashSupplies cash
(250) Advertising Expense on account 6,100 Service Revenue cash
(1,000) Owners Drawing (2,000) Salaries & Wage Expense cash
(170) Utilities Expense cash 750 Service Revenue
received cash $120 from $750
$ (1,000) $ 6,850 $ (2,820)
owner's cap/draw net income $ 4,030
summation of owner's equity $ 13,030
Chapter 1, Transaction Analysis & Financial Statements, page 39
Balance Sheetmonth ending May 31, 2012
$ 7,150 Accounts Receivable 630
500 5,000
Total Assets $ 13,280
Liabilities & Owner's Equity
Accounts Payable $ 250 Owner's Equity Owner's Capital 13,030 Total Liabilities & Owner's Equity $ 13,280
Statement of CashFlowsmonth ending May 31, 2012
Cash Flows from Operating Activities cash receipts from revenues $ 6,220 cash payments for expenses (3,070)Net Cash Provided by Operating Activities $ 3,150
Cash Flow from Investing Activities Purchase of Equipment $ (5,000)
Cash Flow from Financing Activities Investment by Owners 10,000 Drawings by Owners (1,000)
$ 9,000
net change in cash $ 7,150
cash at beginning of period 0cash at end of period $ 7,150
Problems: Set A – assignments
Transactions
A summary of May transactions is presented below.
1. Invested $10,000 cash to start the repair shop.
2. Purchased equipment for $5,000 cash.
3. Paid $400 cash for May office rent.
4. Paid $500 cash for supplies.
6. Received $6,100 in cash from customers for repair service.
7. Withdrew $1,000 cash for personal use.
8. Paid part-time employee salaries $2,000.
9. Paid utility bills $170.
10. Provided repair service on account to customers $750.
11. Collected cash of $120 for services billed in transaction (10).
Instructions(a) Prepare a tabular analysis of the transactions, using the following column headings: Cash, Accounts Receivable,Supplies, Equipment, Accounts Payable, Owner’s Capital, Owner’s Drawings, Revenues, and Expenses(b) From an analysis of the owner’s equity columns, compute the net income or net loss for May.Ans - Net income = $4030
P1-1A Threet’s Repair Shop was started on May 1 by Erica Threet.
5. Incurred $250 of advertising costs in the Beacon News on account.
Problem Set P1 - 1BChapter 1, Transaction Analysis & Financial Statements, page 41 Chapter 1, Transaction Analysis & Financial Statements, page 41
Assets = Liabilities + Owner's Equity
a) Assets = Liabilities + Owner's EquityAccounts Accounts Owner's
Cash Receivable Supplies Equipment Payable Capital
1) $ 15,000 $ 15,000 2) (600)3) (3,000) 3,000 4) 700
5) (800) 800 6) 3,000 7,000 7) (500)
4, 8) (500) (500)
9) (2,500)6, 10) 4,000 (4,000)
$ 14,100 $ 3,000 $ 800 $ 3,000 $ 200 $ 15,000
summation of assets = summation of liabilities owner's cap/draw & owner's equity $ 14,500
$ 20,900 $ 20,900 summation of owner's equity
$ 20,900 $ 20,700
Chapter 1, Transaction Analysis & Financial Statements, page 41 Chapter 1, Transaction Analysis & Financial Statements, page 41
Income Statement Balance Sheetmonth ending April 30, 2012 month ending April 30, 2012
Revenues Assets Service Revenues $ 10,000 Cash
Accounts ReceivableExpenses Supplies Salaries & Wages Expense (2,500) Equipment Rent Expense (600) Total Assets Advertising Expense (700)
Liabilities & Owner's Equity
Total Expenses (3,800) Liabilities Accounts Payable
Net Income $ 6,200 Owner's Equity Owner's CapitalTotal Liabilities & Owner's Equity
Owner's Equity Statementmonth ending April 30, 2012
Statement of CashFlowsOwner's Capital, April 1 0 month ending April 30, 2012Add: Investments $ 15,000 Add: Net Income $ 6,200 Cash Flows from Operating Activities
$ 21,200 cash receipts from revenuesLess: Drawings $ (500) cash payments for expensesOwner's Capital, April 1 $ 20,700 Net Cash Provided by Operating Activities
Cash Flow from Investing Activities Purchase of Equipment
Cash Flow from Financing Activities Investment by Owners Drawings by Owners
net change in cash
cash at beginning of periodcash at end of period
Chapter 1, Transaction Analysis & Financial Statements, page 41
Owner's Equity-Owner's
Drawings Revenues -Expenses
Initial Investment (600) Rent Expense cash
Equipment (700) Advertising Expense on account
Supplies 10,000 Service Revenue cash+Credit
(500) Owners DrawingAdvertising expense
(2,500) Salaries & Wage Expense cash Service Revenue
$ (500) $ 10,000 $ (3,800)
owner's cap/draw net income $ 6,200
summation of owner's equity $ 20,700
Chapter 1, Transaction Analysis & Financial Statements, page 41
Balance Sheetmonth ending April 30, 2012
Accounts Receivable 3,000 800 3,000
Total Assets $ 6,800
Liabilities & Owner's Equity
Accounts Payable $ 200 Owner's Equity Owner's Capital 20,700 Total Liabilities & Owner's Equity $ 20,900
Statement of CashFlowsmonth ending April 30, 2012
Cash Flows from Operating Activities cash receipts from revenues $ 7,000 cash payments for expenses (4,400)Net Cash Provided by Operating Activities $ 2,600
Cash Flow from Investing Activities Purchase of Equipment $ (3,000)
Cash Flow from Financing Activities Investment by Owners 15,000 Drawings by Owners (500)
$ 14,500
net change in cash $ 14,100
cash at beginning of period 0cash at end of period $ 14,100
Problems: Set A – assignments
Transactions
P1-1B
P1-1B On April 1, Vince Morelli established Vince’s Travel Agency. The following transactions
were completed during the month.
1. Invested $15,000 cash to start the agency.
2. Paid $600 cash for April offi ce rent.
3. Purchased offi ce equipment for $3,000 cash.
4. Incurred $700 of advertising costs in the Chicago Tribune, on account.
5. Paid $800 cash for offi ce supplies.
6. Earned $10,000 for services rendered: $3,000 cash is received from customers, and the balance
of $7,000 is billed to customers on account.
7. Withdrew $500 cash for personal use.
8. Paid Chicago Tribune $500 of the amount due in transaction (4).
9. Paid employees’ salaries $2,500.
10. Received $4,000 in cash from customers who have previously been billed in transaction (6).Instructions(a) Prepare a tabular analysis of the transactions using the following column headings: Cash,
Accounts Receivable, Supplies, Equipment, Accounts Payable, Owner’s Capital, Owner’sDrawings, Revenues, and Expenses.(b) From an analysis of the owner’s equity columns, compute the net income or net loss for April.
Problem Set P1 -2AChapter 1, Transaction Analysis & Financial Statements, page 39
Assets = Liabilities + Owner's Equity
Assets = LiabilitiesAccounts Notes Accounts
Cash Receivable Supplies Equipment Payable PayableBalance 9,000 1,700 600 6,000 3,600
1) $ (2,900) $ (2,900)2) 1,300 (1,300)3) (800) 2,100 1,300 4) 2,500 5,300
5) (1,100)6) (1,700)
(900) (450)
7 170 8 10,000 10,000
$ 14,950 $ 5,700 $ 600 $ 8,100 $ 10,000 $ 2,170
summation of assets = summation of liabilities & owner's equity
$ 29,350 $ 29,350
Chapter 1, Transaction Analysis & Financial Statements, page 39
Income Statementmonth ending April 30, 2012
Revenues Service Revenues $ 7,800
Expenses Salaries & Wages Expense (1,700) Rent Expense (900) Advertising Expense (450)Utilities expense (170)
Total Expenses (3,220)
Net Income $ 4,580
Owner's Equity Statementmonth ending April 30, 2012
Owner's Capital, April 1 0Add: Investments $ 13,700 Add: Net Income $ 4,580
$ 18,280 Less: Drawings $ (1,100)Owner's Capital, April 1 $ 17,180
Chapter 1, Transaction Analysis & Financial Statements, page 39
+ Owner's EquityOwner's -Owner'sCapital Drawings Revenues -Expenses
13,700 Balance forward
Equipment 7,800 Service revenue
(1,100) Owners drawing (1,700) Salaries (900) Rent (450) Advertising
(170) Utilities
$ 13,700 $ (1,100) $ 7,800 $ (3,220)
owner's cap/draw net income $ 12,600 $ 4,580
summation of owner's equity $ 17,180 $ 17,180
Chapter 1, Transaction Analysis & Financial Statements, page 39
Balance Sheetmonth ending April 30, 2012
Assets Cash $ 14,950 Accounts Receivable 5,700 Supplies 600 Equipment 8,100 Total Assets $ 29,350
Liabilities & Owner's Equity
Liabilities Accounts Payable $ 2,170 Notes Payable $ 10,000 Owner's Equity Owner's Capital 17,180 Total Liabilities & Owner's Equity $ 29,350
Statement of CashFlowsmonth ending April 30, 2012
Cash Flows from Operating Activities cash receipts from revenues $ 2,500 cash payments for expenses 9,750 Net Cash Provided by Operating Activities $ 12,250
Cash Flow from Investing Activities Purchase of Equipment $ (800)
Cash Flow from Financing Activities Investment by Owners (2,900) Drawings by Owners (900)
$ (3,800)
net change in cash $ 7,650
cash at beginning of period 0cash at end of period $ 7,650
Problems: Set A – assignments
Transactions
P1-2A
P1-2A Ramona Castro opened a veterinary business in Nashville, Tennessee, on August 1. On
August 31, the balance sheet showed Cash $9,000, Accounts Receivable $1,700, Supplies $600,
Equipment $6,000, Accounts Payable $3,600, and Owner’s Capital $13,700. During September,
the following transactions occurred.
1. Paid $2,900 cash on accounts payable.
2. Collected $1,300 of accounts receivable.
3. Purchased additional offi ce equipment for $2,100, paying $800 in cash and the balance on
account.
4. Earned revenue of $7,800, of which $2,500 is received in cash and the balance is due in October.
5. Withdrew $1,100 cash for personal use.
6. Paid salaries $1,700, rent for September $900, and advertising expense $450.
7. Incurred utilities expense for month on account $170.
8. Received $10,000 from Capital Bank (money borrowed on a note payable).
(a) Total assets $29,350(b) Net income $4,580Ending capital $17,180