PS_03_Solution_(APSCW_-_F2009)

PS_03_Solution_(APSCW_-_F2009) - FINANCIALACCOUNTING...

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BUSI W3013 Solution to Problem Set 03 | Page 1 F INANCIAL A CCOUNTING BUSI W3013 | F ALL 2009 S OLUTION TO P ROBLEM S ET 03 PROFESSOR ANDREW SCHMIDT I. Accounting for Business Transactions 1. Purchased merchandise for $200 cash and $100 on account. Income Statement: NOFX Statement of Shareholders’ Equity: NOFX Balance Sheet: CA (Cash -$200; Inventory +$300 ) +$100; CL (AP) +$100 Cash Flow Statement: OCF (Increase in Inventory -$300; Increase in AP +$100) -$200 2. Sold merchandise costing $220 for $370 cash. Income Statement: Revenue +$370; Expense (COGS) +$220 Statement of Shareholders’ Equity: NI +$150 Balance Sheet: CA (Cash +$370; Inventory -$220) +$150; RE +$150 Cash Flow Statement: OCF (NI +$150; Decrease in Inventory +$220) +$370 3. At the beginning of the year, paid $240 rent for two years, effective immediately. Income Statement: Expense (Insurance) +$120 Statement of Shareholders’ Equity: NI-$120 Balance Sheet: CA (Cash -$240; PPD Insurance +$120) -$120; RE-$120 Cash Flow Statement: OCF (NI -$120; Increase in PPD Insurance -$120) -$240 4. Declared dividends of $200 but paid only $100. Income Statement: NOFX Statement of Shareholders’ Equity: Dividends +$200 Balance Sheet: CA (Cash) -$100; CL(Dividends Pybl) +$100; RE -$200 Cash Flow Statement: FCF -$100 5. Incurred $500 in payroll of salesmen, but paid only $400. Income Statement: Expense (Salaries) +$500 Statement of Shareholders’ Equity: NI -$500 Balance Sheet: CA (Cash) -$400; CL (Salaries Pybl) +$100; RE -$500 Cash Flow Statement: OCF (NI -$500; Increase in Salaries Pyble +$100) -$400
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BUSI W3013 Solution to Problem Set 03 | Page 2 6. One the first day of the year, the firm sold a machine with a net book value of $220 for $200 cash. Income Statement: Loss on Sale of Equipment -$20 Statement of Shareholders’ Equity: NI -$20 Balance Sheet: CA (Cash) +$200; Net PP&E (-$220); -$20; RE -$20 Cash Flow Statement: OCF (NI -$20; Add LOS +$20) NOFX; ICF +$200 7.
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This note was uploaded on 02/27/2011 for the course BUSINESS 101 taught by Professor S during the Spring '10 term at Columbia College.

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PS_03_Solution_(APSCW_-_F2009) - FINANCIALACCOUNTING...

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