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Cash Accounts receivable

__________________________ __________________________

6/1 Bal. 65,000 6/1 Bal. 43,000

4. 180,000 40,000 2. 3. 200,000 180,000 4.

145,000 5.

_______________ _______________

6/30 Bal. 60,000 6/30 Bal. 63,000

 

Inventory Accounts payable

__________________________ __________________________

6/1 Bal. 0 6/1 Bal. 22,000

1. 165,000 120,000 3. 5. 145,000 165,000 1.

_______________ _______________

6/30 Bal. 45,000 6/30 Bal. 42,000

 

InCOME STATEMENT Accounts

Sales revenue Cost of goods sold

__________________________ __________________________

0 6/1 Bal. 6/1 Bal. 0

200,000 3. 3. 120,000

_______________ _______________

200,000 6/30 Bal. 6/30 Bal. 120,000

 

Salaries expense

__________________________

6/1 Bal. 0

2. 40,000

_______________

6/30 Bal. 40,000

 

1. Prepaid insurance........................................................... 12,000

Cash ............................................................................... 12,000

2.Note receivable .............................................................. 10,000

Cash ............................................................................... 10,000

3. Equipment ..................................................................... 60,000

Cash ............................................................................... 60,000

 

1. Insurance expense ($12,000x 3/12)....................................... 3,000

Prepaid insurance ........................................................... 3,000

2.Interest receivable ($10,000 x 6% x 6/12)............................ 300

Interest revenue............................................................... 300

3. Depreciation expense...................................................... 12,000

Accumulated depreciation - equipment........................... 12,000

 

 

Net income would be higher by $14,700 ($3,000 - 300 + 12,000).

 

1.Service revenue ................................................................ 4,000

Unearned service revenue ............................................... 4,000

2. Advertising expense ($2,000x 1/2)....................................... 1,000

Prepaid advertising ........................................................ 1,000

3.Salaries expense.............................................................. 16,000

Salaries payable.............................................................. 16,000

4. Interest expense ($60,000 x 8% x 4/12)................................... 1,600

Interest payable............................................................... 1,600

 

Assets would be higher by $1,000, the amount of prepaid advertising that expired during the month. Liabilities would be lower by $21,600 ($4,000 + 16,000 + 1,600). Shareholders’ equity (and net income for the period) would be higher by $22,600.

 

     
BOWLER CORPORATION
Income Statement
For the Year Ended December 31, 2011
     
Sales revenue ..........................................   $325,000
Cost of goods sold ..................................   168,000
Gross profit ............................................   157,000
     
Operating expenses:    
Salaries ................................................. $45,000  
Rent ...................................................... 20,000  
Depreciation ......................................... 30,000  
Miscellaneous ....................................... 12,000  
Total operating expenses .........   107,000
Net income ..............................................   $ 50,000
     
         

 



       
BOWLER CORPORATION
Balance Sheet
At December 31, 2011
       
Assets      
Current assets:      
Cash .....................................................   $ 5,000  
Accounts receivable .............................. 10,000  
Inventory ..............................................   16,000  
Total current assets ..........................   31,000  
       
Property and equipment:      
Machinery and Equipment ................... 100,000    
Less: Accumulated depreciation ........... (40,000) 60,000  
Total assets ...................................   $91,000  
       
Liabilities and Shareholders' Equity
       
Current liabilities:      
Accounts payable .................................   $ 20,000  
Salaries payable ....................................   12,000  
Total current liabilities .....................   32,000  
       
Shareholders’ equity:      
Common stock ..................................... $50,000    
Retained earnings ................................. 9,000    
Total shareholders’ equity ...............   59,000  
Total liabilities and shareholders’ equity   $91,000  
       

 

Sales revenue............................................................. 850,000

Income summary................................................... 850,000

 

Income summary....................................................... 815,000

Cost of goods sold................................................. 580,000

Salaries expense.................................................... 180,000

Rent expense......................................................... 40,000

Interest expense..................................................... 15,000

 

Income summary ($850,000 - 815,000)........................... 35,000

Retained earnings ................................................. 35,000

 

Revenues $428,000*  
Expenses:    
Salaries (240,000)  
Utilities (33,000)**  
Advertising (12,000)  
Net Income $143,000  

 

*$420,000 cash received plus $8,000 increase ($60,000 – 52,000) in amount due from customers:

Cash ............................................................................ 420,000

Accounts receivable (increase in account)......................... 8,000

Sales revenue (to balance)............................................... 428,000

 

** $35,000 cash paid less $2,000 decrease in amount owed to utility company:

Utilities expense (to balance) ......................................... 33,000

Utilities expense payable (decrease in account)................ 2,000

Cash ............................................................................... 35,000

Exercises

Assets = Liabilities + Paid-in Capital + Retained Earnings

1. + 300,000 (cash) + 300,000 (common stock)

2. - 10,000 (cash)

+ 40,000 (equipment) + 30,000 (note payable)

3. + 90,000 (inventory) + 90,000 (accounts payable)

4. + 120,000 (accounts receivable) + 120,000 (revenue)

- 70,000 (inventory) - 70,000 (expense)

5. - 5,000 (cash) - 5,000 (expense)

6. - 6,000 (cash)

+ 6,000 (prepaid insurance)

7. - 70,000 (cash) - 70,000 (accounts payable)

8. + 55,000 (cash)

- 55,000 (accounts receivable)

9. - 1,000 (accumulated depreciation) - 1,000 (expense)

Exercise 2-2

1. Cash.............................................................................. 300,000

Common stock................................................................ 300,000

2.Equipment...................................................................... 40,000

Note payable................................................................... 30,000

Cash ............................................................................... 10,000

3. Inventory........................................................................ 90,000

Accounts payable............................................................ 90,000

4. Accounts receivable...................................................... 120,000

Sales revenue.................................................................. 120,000

Cost of goods sold.......................................................... 70,000

Inventory........................................................................ 70,000

5. Rent expense..................................................................... 5,000

Cash................................................................................ 5,000

6. Prepaid insurance............................................................. 6,000

Cash................................................................................ 6,000

7. Accounts payable........................................................... 70,000

Cash................................................................................ 70,000

8. Cash................................................................................ 55,000

Accounts receivable........................................................ 55,000

9. Depreciation expense........................................................ 1,000

Accumulated depreciation............................................... 1,000

Cash Accounts receivable

__________________________ __________________________

3/1 Bal. 0 3/1 Bal. 0

1. 300,000 10,000 2. 4. 120,000 55,000 8.

8. 55,000 5,000 5.

6,000 6.

70,000 7.

_______________ _______________

3/31 Bal. 264,000 3/31 Bal. 65,000

 


Date: 2015-12-11; view: 592


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