Chapter 3 HW

Steps in accounting cycle

1) Use source documents to identify accounts affected by external transactions. 2) Analyze the impact of the transaction on the accounting equation. 3) Assess whether the transaction results in a debit or a credit to the account balance. 4) Record the transaction. 5) Post the transaction to the T-account in the general ledger. 6) Prepare a trial balance. 7) Record and post adjusting entries. 8) Prepare financial statements (income statement, statement of stockholders' equity, balance sheet, and statement of cash flows). 9) Record and post-closing entries.

Accrual v Cash Revenue and Expenses 10. Pay for advertising to appear in the current month, $450.

ACCRUAL EXPENSE CASH EXPENSE

Accrual v Cash Revenue and Expenses 6. Receive cash from customers at the time of service, $1,700.

ACCRUAL REVENUE CASH REVENUE

Accrual v Cash Revenue and Expenses 5. Incur costs for employee salaries in the current month but do not pay, $1,000.

ACCRUAL EXPENSE

Accrual v Cash Revenue and Expenses 4. Pay workers' salaries for the current month, $800.

ACCRUAL/CASH EXPENSE

Assign accounts to financial statements For each of the following accounts, indicate whether the account is shown in the income statement or the balance sheet: Assign accounts to financial statements Service Revenue

Account Financial Statement 1. Accounts Receivable Balance Sheet 2. Deferred Revenue Balance Sheet 3. Supplies Expense Income Statement 4. Salaries Payable Balance Sheet 5. Depreciation Expense Income Statement 6. Service Revenue Income Statement

Determine revenues to be recognized a) Receive $1,200 cash from customers for services to be provided next month. b) Perform $900 of services during the month and bill customers. Customers are expected to pay next month. c) Perform $2,300 of services during the month and receive full cash payment from customers at the time of service.

Brief Exercise 3-1 (a) $0; Cash received in advance is recorded as Deferred revenue (liability). (b) $900. (c) $2,300.

Accrual v Cash Revenue and Expenses 2. Pay utilities bill for the previous month, $150.

CASH EXPENSE

Accrual v Cash Revenue and Expenses 9. Receive cash from customers for services performed last month, $750.

CASH REVENUE

Accrual v Cash Revenue and Expenses 1. Receive cash from customers in advance, $600.

CASH REVEUE

Accrual v Cash Revenue and Expenses 3. Pay for insurance one year in advance, $2,000.

CASH EXPENSE

STATEMENT OF STOCKHOLDERS EQUITY FROM BELOW Prepare financial statements from an adjusted trial balance when net income is positive P3-5A Boilermaker Unlimited specializes in building new homes and remodeling existing homes. Remodeling projects include adding game rooms, changing kitchen cabinets and countertops, and updating bathrooms. Below is the year-end adjusted trial balance of Boilermaker Unlimited. Prepare financial statements from an adjusted trial balance when net income is positive Prepare an income statement, statement of stockholders' equity, and classified balance sheet. In preparing the statement of stockholders' equity, note that during the year the company issued additional common stock for $30,000. This amount is included in the amount for Common Stock in the adjusted trial balance.

NET INCOME COMES FROM INCOME STATEMENT 200-30 (FROM THE COMMON STOCK) = 170 THEN 170 + RE = TOTAL STOCKHOLDERS EQUITY WRITTEN

Accrual v Cash Revenue and Expenses 7. Purchase office supplies on account, $330.

NONE

Accrual v Cash Revenue and Expenses 8. Borrow cash from the bank, $4,000.

NONE

Calculate the balance of RETAINED EARNINGS

RETAINED EARNINGS = preceding year retained earnings + current year net income (loss)

Accrual v Cash Revenue and Expenses

Revenue - Accrual: when accrued (NO RECEIPT) Cash: Revenue only (RECEIPT) Expenses - Accrual: only record expenses when accrued Cash: PAYMENT based

BE3-3 Hoya Corporation reports the following amounts: Assets = $18,000; Liabilities = $3,000; Stockholders' equity = $15,000; Dividends = $3,000; Revenues = $17,000; and Expenses = $12,000. What amount is reported for net income? Calculate net income

Revenues − Expenses = Net Income $17,000 − $12,000 = $5,000

E3-7 - ANSWER - ADJUSTING ENTRIES

SUPPLIES NOV 2000 + during Dec 4500 = 6500 end of Dec: 3500 6500 - x = 3500 x: ADJUSTMENT x: 3000 INSURANCE the answer is what is STATED SALARIES PAYABLE answer is the amount due (STATED) DEFERRED REVENUE amount rent given divided by months 4,500/3 = 1,500 ANSWER

guide on income statement stockholder's equity balance sheet

https://quizlet.com/explanations/questions/boilermaker-unlimited-specializes-in-building-new-homes-and-remodeling-existing-homes-remodeling-projects-include-adding-game-rooms-changing-ebeb6e7c-e39f0ed0-1bcc-4c57-a374-332d9a6ed615