2.27 - Today's Topic Financial Accounting Information...

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Today’s Topic PLEASE TURN OFF CELL PHONES Financial Accounting Information System This class will complete the example from last class, then   Statement of Cash Flow effect
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Second Accounting Cycle - 2005 Event 1 Acquired additional $5,000 cash from issuing common stock. Event 2 Paid $400 cash for supplies Event 3 Paid $1,200 cash for an insurance policy that provided coverage for one year beginning February 1, 2005. Event 4 Recognized revenue for $108,000 of services provided on account. Event 5 Collected $89,000 of the receivables due from customers. Event 6 Recognized $32,000 of operating expenses purchased on account. These are expenses in addition to supplies and insurance and are classified as other operating expenses. Event 7 Paid suppliers $28,000 of the amount owed on accounts payable. Event 8 Paid a $70,000 cash dividend to stockholders. Event 9 Purchased land for $3,000. Event 10 Recognized the remainder of the unearned revenue. All services had been provided by February 28, 2005, as specified in the orpginal contract with Westberry. Event 11 Recognized 2005 depreciation expense. Event 12 Recognized supplies expense; $150 of supplies were on hand at the close Event 13 Recognized insurance expense for 11 months. Adjusting Entries MMI experienced the following transactions during 2005:
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= + Bal. 11,000 Bal. - Bal. - Bal. 1,000 (1) 5,000 (3) 1,200 (6) 32,000 (1) 5,000 (2) (400) (13) (1,100) (7) (28,000) Bal. 6,000 (3) (1,200) Bal. 100 Bal. 4,000 (5) 89,000 (7) (28,000) Bal. 7,500 (8) (70,000) (4) 12,000 Bal. 12,000 (9) (3,000) (10) (12,000) Bal. 2,400 Bal. - (4) 108,000 Bal. (2,500) (10) 12,000 (11) (2,500) Bal. 120,000 Bal. - Bal. (5,000) (4) 108,000 (5) (89,000) (6) (32,000) Bal. 19,000 Bal. - (9) 3,000 Bal. 3,000 (11) (2,500) Bal. - (2) 400 (12) (250) (12) (250) Bal. 150 (13) (1,100) (8) (70,000) Liabilities Cash Accounts Payable Common Stock Assets Dividends Supplies Prepaid Insurance Retained Earnings Accounts Receivable Other Operating Exp. Depreciation Exp. Computer Equipment Accumulated Depr. Land Unearned Revenue Supplies Expense Insurance Exp. Stockholders' Equity Service Revenue
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Service Revenue 120,000 $ Operating Expenses 32,000 $ Depreciation Expense 2,500 Supplies Expense 250 Insurance Expense 1,100 Total Expenses (35,850) Net Income 84,150 $ Beginning Common Stock 1,000 $ Plus: Common Stock Issued 5,000 Ending Common Stock 6,000 $ Beginning Retained Earnings 7,500 $ Plus: Net Income 84,150 Less: Dividends (70,000) Ending Retained Earnings 21,650 Total Stockholders' Equity 27,650 $ MARKETING MAGIC, INC. Income Statement
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2.27 - Today's Topic Financial Accounting Information...

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