ch3solutions - Chapter03AccountingforDeferrals EXERCISE32A...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 03 Accounting for Deferrals EXERCISE 3-2A a. accrual b. accrual c. neither d. deferral e. deferral f. accrual g. accrual h. deferral i. neither j. deferral 3-
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 03 Accounting for Deferrals  EXERCISE 3-5A a.   Howard Consulting Services Effect of Events on the Accounting Equation  Assets = Stockholders’ Equity Event Cash Prepaid Rent = Com. Stock Retained  Earnings 1. Acq. Stock 30,000 30,000 2. Prepaid Rent (12,000) 12,000 3.   Provided  Service 23,000 23,000 4. Used Rent (8,000)* (8,000) Totals 41,000 4,000 = 30,000 15,000 *$12,000 x 8/12 = $8,000 b. Howard Consulting Services Income Statement For the Year Ended December 31, 2009 Revenue $23,000 Expense (8,000) Net Income $15,000 2
Background image of page 2
Chapter 03 Accounting for Deferrals EXERCISE 3-5A b. (cont.) Howard Consulting Services Statement of Cash Flows For the Year Ended December 31, 2009 Cash Flows From Operating Activities: Cash Receipt from Revenue $23,000 Cash Payment for Rent (12,000) Net Cash Flow from Operating Activities $11,000 Cash Flows From Investing Activities       -0- Cash Flows From Financing Activities: Cash from Issue of Stock 30,000 Net Cash Flow from Financing Activities 30,000 Net Change in Cash 41,000 Plus: Beginning Cash Balance -0- Ending Cash Balance $41,000 c.  The difference of $4,000 ($15,000 - $11,000) is attributed to  recognizing rent expense of $8,000 in the income statement, whereas  the cash payment for rent is $12,000. 3-
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
EXERCISE 3-6A a. Kim’s Copy Service Effect of Events on Financial Statements for 2009 Assets Liab. + Stockholders’  Equity Income Statement Even No. Cash Suppli es = Accts. Pay. + Com. Stock Retained  Earnings Rev. - Exp. = Net  Inco me Cash  Flows Beg.  Bal. 9,000 -0- -0- 6,000 3,000 -0- -0- -0- -0- 1. NA 11,500 11,500 NA NA NA NA NA NA 2. 31,000 NA NA NA 31,000 31,00 0 NA 31,00 0 31,000 OA 3. (9,000) NA (9,000) NA NA NA NA NA (9,000) OA 4. NA (8,500 ) NA NA (8,500) NA 8,500 (8,50 0) NA Total s 31,000 3,000 = 2,500 + 6,000 25,500 31,00 0 - 8,500 = 22,50 0 22,000 NC
Background image of page 4
b. The difference in net income and cash flow from operating activities of $500 ($22,500 
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/05/2009 for the course COB 241 taught by Professor Manktalow during the Fall '08 term at James Madison University.

Page1 / 21

ch3solutions - Chapter03AccountingforDeferrals EXERCISE32A...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online