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ch3solutions

# ch3solutions - EXERCISE32A a b c d e f g h i j accrual...

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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- 1

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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
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- 3

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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.
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ch3solutions - EXERCISE32A a b c d e f g h i j accrual...

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