Phillips Chap 2 Class Slides

Phillips Chap 2 Class Slides - 2-1The Basic Accounting...

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Unformatted text preview: 2-1The Basic Accounting Equation2-2Business Activities and Common Balance Sheet Accounts(in U.S. dollars)Explanation of ItemsCurrent AssetsCash10,000$ Cash in company's bank accountSupplies630Shampoo and other hair gunk to be used on customersTotal Current Assets10,630Furnishings & Equipment60,000Cost of store renovations, furniture, and equipmentTotal Assets70,630$ Total must equal total liabilities and stockholders' equity belowCurrent LiabilitiesAccounts Payable630$ Amounts owed to supplier for purchases of supplies on accountTotal Current Liabilities630Notes Payable20,000Amount owed to bank for loan (under formal agreement)Total Liabilities20,630Contributed Capital50,000Amount contributed by stockholders (you and your parents)Retained Earnings-No operations yet, so no earnings to report as retainedTotal Stockholders' Equity50,000Total Liabilities and Stockholders' Equity70,630$ Total must equal total assets aboveSUPERCUTS SUPER SALONBalance SheetAt August 31, 2005AssetsLiabilitiesStockholders' EquityHow did you do identifying the accounts?Notice that this balance sheet classifies some assets and liabilities as current. This is called a classified balance sheet.2-3Business Activities and Common Balance Sheet Accounts(in U.S. dollars)Explanation of ItemsCurrent AssetsCash10,000$ Cash in company's bank accountSupplies630Shampoo and other hair gunk to be used on customersTotal Current Assets10,630Furnishings & Equipment60,000Cost of store renovations, furniture, and equipmentTotal Assets70,630$ Total must equal total liabilities and stockholders' equity belowCurrent LiabilitiesAccounts Payable630$ Amounts owed to supplier for purchases of supplies on accountTotal Current Liabilities630Notes Payable20,000Amount owed to bank for loan (under formal agreement)Total Liabilities20,630Contributed Capital50,000Amount contributed by stockholders (you and your parents)Retained Earnings-No operations yet, so no earnings to report as retainedTotal Stockholders' Equity50,000Total Liabilities and Stockholders' Equity70,630$ Total must equal total assets aboveSUPERCUTS SUPER SALONBalance SheetAt August 31, 2005AssetsLiabilitiesStockholders' EquityHow did you do identifying the accounts?Current assets will be used up or converted into cash within the next 12 months.Long-term assets include resources that will be used or turned into cash more than 12 months after the balance sheet date.2-4Business Activities and Common Balance Sheet Accounts(in U.S. dollars)Explanation of ItemsCurrent AssetsCash10,000$ Cash in company's bank accountSupplies630Shampoo and other hair gunk to be used on customersTotal Current Assets10,630Furnishings & Equipment60,000Cost of store renovations, furniture, and equipmentTotal Assets70,630$ Total must equal total liabilities and stockholders' equity belowCurrent LiabilitiesAccounts Payable630$ Amounts owed to supplier for purchases of supplies on accountTotal Current Liabilities630Notes Payable20,000Amount owed to bank for loan (under formal agreement)...
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Phillips Chap 2 Class Slides - 2-1The Basic Accounting...

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