Demonstration Problem 2 HMWK Manager

Demonstration Problem 2 HMWK Manager - Demonstration...

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Demonstration Problem 2-4 Accruals Part A Smith Company experienced the following accounting events during 2007: 1. Smith Company was started when it issued common stock for $2,000 cash. 2. Smith invested $1,000 cash in a certificate of deposit. 3. During the year, the company recognized $1,500 of consulting revenue on account. 4. The company collected $1,200 cash from accounts receivable. 5. Accrued salary expense during the year of $900. 6. Paid $700 of the salaries payable liability. 7. Paid dividends of $100 to the stockholders. 8. Smith adjusted the books to recognize accrued interest on the certificate of deposit. The certificate was purchased on September 1, 2007. It had a 6 percent annual interest rate and a one-year term. The company closes its books on December 31 of each year. Part B Smith Company experienced the following accounting events during 2008: 1. Smith Company issued additional common stock for $3,000 cash. 2. During the period there was $2,700 of consulting revenue recognized on account. 3. Collected $2,800 cash from accounts receivable. 4. Accrued salary expenses of $1,500. 5. Paid $1,350 of the salaries payable liability. 6. Paid dividends of $300 to the stockholders. 7. Smith borrowed $2,000 cash from the State Bank. 8. On August 31 Smith accrued the remaining interest on the certificate of deposit, collected the cash due from interest receivable, and received the return of principal. 9.
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This note was uploaded on 04/19/2008 for the course ACCT 209 taught by Professor Lusher during the Fall '07 term at Slippery Rock.

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Demonstration Problem 2 HMWK Manager - Demonstration...

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