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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: 1098
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