Section 2 Lab Exercise Solutions

Section 2 Lab - Sept 7 Paid advertising $100 Sept 20 Paid salaries $300 Sept 22 Paid a total of $420 on the note to the bank $20 of this amount was

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Section 2 – The Cash Basis of Accounting SOLUTION 1. Assuming the cash basis of accounting, put the following steps in the correct order beginning with what should be done first in the accounting cycle. ___ 5 ___ Prepare a balance sheet. ___ 2 ___ Compute account balances. ___ 3 ___ Prepare an income statement. ___ 4 ___ Prepare a statement of retained earnings. ___ 1 ___ Enter transactions in chronological order in the accounting system in such a way that A = L + OE. 2. Using the cash basis of accounting, enter the following transactions in the transaction analysis worksheet below: Sept 1 The Wolfpack Company was started by the owners investing $10,000 cash in the business. Sept 3 Borrowed $8,000 from the bank. Sept 4 Purchased land costing $3,000. Sept 5 Received cash from fees earned totaling $800.
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Unformatted text preview: Sept 7 Paid advertising, $100. Sept 20 Paid salaries, $300. Sept 22 Paid a total of $420 on the note to the bank. $20 of this amount was interest. Sept 25 Paid dividends, $100. ASSETS LIABILITIES OWNER’S EQUITY Cash Land Note Payable Capital Stock Retained Earnings Rev. Exp. Divid. Sept 1 +10,000 +10,000 Sept 3 +8,000 +8,000 Sept 4 (3,000) 3,000 Sept 5 800 800 800 Sept 7 (100) (100) 100 Sept 20 (300) (300) 300 Sept 22 (420) (400) (20) 20 Sept 25 (100) (100) 100 Balances 14,880 3,000 7,600 10,000 280 800 420 100 3. After entering the above transactions, calculate the following: net income, total assets, total liabilities, and total owner’s equity. Net income = $380, Total Assets = $17,880, Total Liabilities = $7,600, Total Owner’s Equity = $10,280...
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This note was uploaded on 11/22/2010 for the course ACC 200 taught by Professor Buckless during the Spring '08 term at N.C. State.

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