work_at_home_soultions_ch8[1]

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SOLUTIONS TO EXERCISES - CHAPTER 8 EXERCISE 8-1 Transactions Cash Acquired from Owner $80,000 Revenues 50,000 Expenses 22,400 Withdrawals 5,000 Derek Hughes Sole Proprietorship Financial Statements For the Year Ended December 31, 2010 Income Statement Revenues $50,000 Expenses (22,400) Net Income $27,600 Capital Statement Beginning Capital Balance $       -0- Plus: Capital Acquired from Owner 80,000 Plus: Net Income 27,600 Less: Withdrawal by Owner (5,000) Ending Capital Balance $102,600 8-1
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8-2
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EXERCISE 8-1 (cont.) Derek Hughes Sole Proprietorship Financial Statements Balance Sheet As of December 31, 2010 Assets Cash $102,600 Total Assets $102,600 Liabilities $        -0- Equity Hughes, Capital 102,600 Total Liabilities and Equity $102,600 Statement of Cash Flows For the Year Ended December 31, 2010 Cash Flows From Operating Activities: Inflow from Revenues $50,000 Outflow for Expenses (22,400) Net Cash Flow from Operating Activities $27,600 Cash Flows From Investing Activities  -0- Cash Flows From Financing Activities: Inflow from Owner 80,000 Outflow for Owner Withdrawals (5,000) 8-3
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Net Cash Flow from Financing Activities 75,000 Net Change in Cash 102,600 Plus: Beginning Cash Balance -0- Ending Cash Balance $102,600 8-4
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EXERCISE 8-2 Transactions: Cash Contributions W. Poole $ 60,000 40% R. King 90,000 60% Total $150,000 100% Revenues $ 56,000 Expenses 32,000 Poole Withdrawal 2,000 King Withdrawal 3,000 PK Partnership Financial Statements For the Year Ended December 31, 2010 Income Statement Revenues $56,000 Expenses (32,000) Net Income $24,000 Capital Statement Beginning Capital Balance $        -0- Plus: Capital Acquired from Owners 150,000 Plus: Net Income 24,000 Less: Withdrawals by Owners (5,000) 8-5
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Ending Capital Balance $169,000 8-6
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EXERCISE 8-2 (cont.) Prepared for the instructor’s use: Analysis of Capital  Accounts: Poole King Total Beginning Capital Balance $       -0- $       -0- $         -0- Investments 60,000 90,000 150,000 Net Income 24,000 W. Poole 40% 9,600 R. King 60% 14,400 Withdrawals (2,000) (3,000) (5,000) Ending Capital Balances $67,600 $101,400 $169,000 8-7
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EXERCISE 8-2 (cont.) PK Partnership Financial Statements Balance Sheet As of December 31, 2010 Assets Cash $169,000 Total Assets $169,000 Liabilities $        -0- Equity W. Poole, Capital $ 67,600 R. King, Capital 101,400 Total Equity 169,000 Total Liabilities and Equity $169,000 Statement of Cash Flows For the Year Ended December 31, 2010 Cash Flows From Operating Activities: Inflow from Revenues $56,000 Outflow for Expenses (32,000) Net Cash Flow from Operating Activities $24,000 Cash Flows From Investing Activities  -0- Cash Flows From Financing Activities: Inflow from Partners 150,000 8-8
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