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Unformatted text preview: M2-19 B for Balance Sheet, I for Income Statement a. Net Income b. Retained Earnings c. Depreciation Expense d. Accumulated Depreciation e. Wages Expense f. Wages Payable g. Interest Expense h. Interest Payable i. Sales M2-21 Penno Corp Recorded service revenues of $100,000 in 2009, of which $70,000 were on credit and $30,000 in cash. Penno collected in 2009 $20,000 Cash of the $70,000 for 2009. Penno also paid $25,000 cash for 2009 Wages. Its employees also earned another $15,000 in Wages for 2009, but they were Not paid by 2009 year-end. (a) Compute the firm’s 2009 Net Income Revenue (record when earned) - Wage Expense (record when incurred) Net Income $100,000 40,000 $60,000 (b) How much Net Cash Inflow or Outflow did Penno Generate in 2009? Cash Inflow from Services Rendered: $30,000 Cash Sales + $20,000 Credit Sales Collected = Cash Outflow for Wages Paid Net Cash Inflow $50,000 (25,000) $25,000 M2-25 Wasley Corp. provided services and billed its customers for $350,000 in 2009. It only collected $280,000 cash in 2009, and the remaining $70,000 in 2010. Its Employees earned $200,000 in 2009 Wages that were NOT Paid until the first week of 2010. How much Net Income did Wasley Report in 2009 and in 2010?
2009 201 0 Revenues Expenses Net income $350,000 $ 0 200,000 0 $150,000 $ 0 Explanation: All of the revenue is reported in 2009 when it is earned—per the revenue recognition principle. Likewise, the wages expense is reported in 2009 when it is incurred—per the matching principle. The receipt or payment of cash does not affect the recording of revenues, expenses, and net income. There are no revenues or expenses in 2010. ...
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- Spring '10
- Revenue, Net Income, Generally Accepted Accounting Principles, net cash inflow, Penno, Wasley Corp.