3aSM08EXAM1_ALL

3aSM08EXAM1_ALL - #26 We are Econ3a, Inc. We purchase stuff...

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#26 We are Econ3a, Inc. . We purchase stuff and sell it for a profit. Here is our trial balance at 1/1/2007: DR/ (CR) Cash 50,000 Accounts receivable 12,000 Inventory 5,000 Prepaid expenses 500 Fixed assets 10,000 Accounts payable (11,000) Debt (55,000) Common stock (11,000) Retained earnings (500) - (1) (2) Purchased $50,000 of inventory, on credit (3) Sold goods for $70,000 on credit which cost $25,000 (4) Made one $1,000 payment of principle on the debt. (5) Made one $600 payment for interest on the debt. (6) Collected $45,000 of accounts receivable from customers. (7) Paid $48,000 for payables to vendors. (8) (9) (10) (11) BASED ON ALL OF THE ABOVE i. II. FOR THE INCOME STATEMENT, CHOOSE FROM THE FOLLOWING ACCOUNT TITLES Revenues Salaries expense Advertising expense Cost of Goods Sold (or COGS) Interest expense Consultant expenses Rent expense We had the following activity during January: On the last day of the month, paid $24,000 for consulting services ALREADY COMPLETED. Paid $12,000 for payroll. NOTE: ALL OF THE BALANCE SHEET ACCOUNT TITLES YOU MAY NEED ARE LISTED IN THE ABOVE TRIAL BALANCE. FOR EACH NUMBER (1-11) ABOVE, RECORD THE JOURNAL ENTY OR STATE NO ENTRY IF THERE IS NONE. TRACK ACTVITY IN WHATEVER MANNER YOU PREFER, AND SHOW THE BALANCE SHEET AS OF THE END OF THE MONTH. Made no new bank borrowings, but the debt already on the trial balance above matures at $1,000/ month. Paid February rent of $1,000 in advance. Paid $2,000 for advertising to be provided in 3 months.
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ACCOUNT DEBIT CREDIT (1) NO ENTRY (2) Inventory 50,000 Accounts payable 50,000 (3) Accounts receivable 70,000 Sales 70,000 (3a) COGS 25,000 Inventory 25,000 (4) Debt 1,000 Cash 1,000 (5) Interest expense 600 Cash 600 (6) Cash 45,000 Accounts receivable 45,000 (7) Accounts payable 48,000 Cash 48,000 (8) Consultant expenses 24,000 Cash 24,000 (9) Salaries expense 12,000 Cash 12,000 (10) Prepaid expenses 2,000 Cash 2,000 (11) Prepaid expenses 1,000 Cash 1,000 -
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50,000 12,000 5,000 500 10,000 1,000 70,000 50,000 2,000 600 45,000 25,000 1,000 45,000 48,000 24,000 12,000 2,000 1,000 6,400 37,000 30,000 3,500 10,000 11,000 55,000 11,000 500 50,000 1,000 8,400 48,000 13,000 - 54,000 11,000 8,900 70,000 25,000 600 12,000 70,000 25,000 600 12,000 NET INCOME 8,400 24,000 - - 24,000 Rent Expense Advertising Exp. Common Stock Retained Earnings Accounts payable Revenues Cash Accounts Receiv. Inventory Fixed Assets Consult. Exp. Prepaid Expenses COGS Interest exp. Debt Salaries expense
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Assets Sales 70,000 Current assets COGS 25,000 Cash 6,400 Gross Profit 45,000 Accounts receivable 37,000 Inventory 30,000 Interest expense 600 Prepaid expenses 3,500 Salaries expense 12,000 Total Current assets 76,900 Rent expense - Consulting expense 24,000 Fixed assets 10,000 Operating expenses 36,600 Total Asstes 86,900 Net income 8,400 INCOME STATEMENT NOT REQUIRED Current liabilities Current portion of notes payable 12,000 Accounts payable 13,000 Accrued payroll - Total current liabilities
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3aSM08EXAM1_ALL - #26 We are Econ3a, Inc. We purchase stuff...

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