fav3chp8-9 - 74 CHAPTER8 Problem81 1.Salesonaccount

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74  CHAPTER  8 Problem 8-1 1. Sales on account    850,000     Add: Accounts receivable, January 1    250,000     Total 1,100,000     Less: Accounts receivable, December 31    400,000     Collections on credit sales    700,000     Cash sales 2,500,000     Total sales – cash basis 3,200,000     Sales on account      850,000     Cash sales 2,500,000     Total sales – accrual 3,350,000 2. Purchases on account    400,000     Add: Accounts payable, January 1    150,000     Total    550,000     Less: Accounts payable, December 31    200,000     Cash payments to creditors    350,000     Add: Cash purchases 1,700,000     Purchases – cash basis 2,050,000     Purchases on account    400,000     Cash purchases 1,700,000     Total purchases - accrual 2,100,000 3. Depreciation – on beginning balance (800,000 / 10 years) 80,000 on July 1 acquisition (200,000 / 10 years x 1/2)          10,000           Total          90,000 4. Expenses paid – cash basis    750,000     Add: Accrued expenses, December 31          20,000
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    Total         770,000     Less: Prepaid expenses, December 31           30,000              Expenses – accrual         740,000 5. Interest received – cash basis      40,000     Less: Accrued interest receivable, January 1      10,000     Interest income – accrual      30,000       75     Cash  Accrual Sales 3,200,000 3,350,000 Cost of sales: Inventory – January 1    500,000    500,000 Purchases 2,050,000 2,100,000 Goods available for sale 2,550,000 2,600,000 Less: Inventory – December 31    600,000    600,000 Cost of sales 1,950,000 2,000,000 Gross income 1,250,000 1,350,000 Interest income      40,000      30,000 Total income 1,290,000 1,380,000 Expenses: Depreciation 90,000 90,000 Expenses    750,000    740,000 Total    840,000    830,000 Net income    450,000    550,000 Problem 8-2 Aris Marval Income Statement Year ended December 31, 2008
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Professional fees 5,250,000 Expenses: Rent 1,300,000 Supplies    850,000 Depreciation    250,000 Other expenses    750,000 Interest expense      90,000 3,240,000 Net income 2,010,000        76 Aris Marval Balance Sheet December 31, 2008 Assets Current Assets     Cash 1,500,000     Accounts receivable    750,000     Office supplies unused    250,000 2,500,000 Noncurrent assets:     Furniture and equipment 2,500,000     Less: Accumulated depreciation    375,000 2,125,000 Total assets 4,625,000 Liabilities and Equity Current liabilities:     Note payable 1,000,000
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    Accrued interest payable 90,000     Accrued rent payable    100,000 1,190,000 Equity:     Capital, January 1 2,275,000     Add: Net income 2,010,000     Total 4,285,000     Less: Withdrawals    850,000 3,435,000 Total liabilities and equity 4,625,000 Adjusting entries: 1. Depreciation (2,500,000 / 10 years)    250,000     Capital (1/2 x 250,000)    125,000         Accumulated depreciation    375,000 2. Interest expense (1,000,000 x 12% x 9/12) 90,000    Accrued interest payable 90,000 3. Accounts receivable    750,000    Professional fees    750,000     Professional fees    500,000    Capital    500,000         77 4. Rent
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fav3chp8-9 - 74 CHAPTER8 Problem81 1.Salesonaccount

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