Mgmt_200_Spring_2008_solutions_2-4-08(2,4)

Mgmt_200_Spring_2008_solutions_2-4-08(2,4) - NE 1,500 b...

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Management 200 – Introductory Financial Accounting– Spring 2008 Krannert School of Management - Purdue University Solutions to class assignment for February 4, 2008 E4-11. Selected Balance Sheet Amounts at December 31, 2007 Assets: Equipment (recorded at cost per cost principle) $12,000 Accumulated depreciation (for one year, as given) (1,200 ) Carrying value of equipment (difference) 10,800 Office supplies (on hand, as given) 400 Prepaid insurance (remaining coverage, $400 x 18/24 months) 300 Selected Income Statement Amounts for the Year Ended December 31, 2007 Expenses: Depreciation expense (for one year, as given) $ 1,200 Office supplies expense (used, $1,400 - $400 on hand) 1,000 Insurance expense (for 6 months, $400 x 6/24 months) 100 E4–12. Balance Sheet Income Statement Date Assets Liabilities Stockholders’ Equity Revenues Expenses Net Income Note 1: April 1, 2008 +20,000/ –20,000 NE NE NE NE NE December 31, 2008 a + 1,500 NE + 1,500 + 1,500
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Unformatted text preview: NE + 1,500 March 31, 2009 b +22,000/ –21,500 NE + 500 +500 NE + 500 Note 2: August 1, 2008 + 20,000 + 20,000 NE NE NE NE December 31, 2008 c NE + 1,000- 1,000 NE + 1,000- 1,000 January 31, 2009 d- 21,200- 21,000- 200 NE + 200- 200 (a) $20,000 principal x .10 annual interest rate x 9/12 of a year = $1,500 (b) Additional interest revenue in 2009: $20,000 x .10 x 3/12 = $500. Cash received was $22,000 ($20,000 principal + $2,000 interest for 12 months); receivables decreased by the $20,000 note receivable and $1,500 interest receivable accrued in 2008. (c) $20,000 principal x .12 annual interest rate x 5/12 of a year = $1,000 (d) Additional interest expense in 2009: $20,000 x .12 x 1/12 = $200. Cash paid was $21,200 ($20,000 principal + $1,200 interest for 6 months); payables decreased by the $20,000 note payable and $1,000 interest payable accrued in 2008....
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