KIMMEL_Acct_2e_ProblemCSolutions_ch03

Accounting: Tools for Business Decision Making

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Unformatted text preview: 3-1PROBLEM3-1CSOLUTIONS TO PROBLEMPROBLEM 3-1C (Continued)(b)Service Revenue........................................................$6,000ExpensesSalaries Expense................................................$3,400Rent Expense.....................................................1,400Advertising Expense.........................................5005,300Net income..................................................$ 700ORIncrease in retained earnings ($600 – $0)...............$600Add: Dividends.........................................................100Net income..................................................................$7003-2TAKAHASHI CONSULTING INC.(a)AssetsLiabilitiesStockholders’ EquityDateCash+Accounts Receivable+Supplies+OfficeEquipment=Notes Payable+Accounts Payable+Common Stock+Retained EarningsNovember 1$15,000 $15,0002–1,000 –$1,000 Rent Expense3$750$ 7505–400 –400 Advertising Expense9800 800 Service Revenue12–100 –100 Dividends15$4,400 4,400 Service Revenue17–2,100 –2,100 Salaries Expense20–750 –750231,800 –1,800 268,000 $8,00029–200 $3,5003,300 30–220 –220 Utilities Expense$20,830 +$2,600 +$750+$3,500=$8,000+$3,300 +$15,000+$1,380 $27,680$27,680PROBLEM 3-2C3-3PROBLEM 3-2C (Continued)(b)TAKAHASHI CONSULTING INC.Income StatementFor the Month Ended November 30, 2007RevenuesService revenue ($800 + $4,400)....................$5,200ExpensesSalaries expense.............................................$2,100Rent expense...................................................1,000Advertising expense.......................................400Utilities expense..............................................220Total expenses........................................3,720Net income...............................................................$1,480(c)TAKAHASHI CONSULTING INC.Balance SheetNovember 30, 2007AssetsCurrent assetsCash.........................................................................$20,830Accounts receivable...............................................2,600Supplies...................................................................750Total current assets........................................$24,180Office equipment....................................................3,500Total assets.....................................................$27,680Liabilities and Stockholders’ EquityCurrent liabilitiesNotes payable.........................................................$ 8,000Accounts payable...................................................3,300Total current liabilities....................................$11,300Stockholders’ EquityCommon stock........................................................15,000Retained earnings ($0 + $1,480 – $100)................1,38016,380Total liabilities and stockholders’equity............................................................$27,6803-4(a)DIN LIU INC....
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