CHAPTER 02 SOLUTIONS 2011 FALL

CHAPTER 02 SOLUTIONS 2011 FALL - CHAPTER 02 SOLUTIONS PRE...

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CHAPTER 02 SOLUTIONS PRE CLASS PROBLEMS 2-15 a. Cash Basis: Cash sales $115,000 Cash collections on credit sales 30,000 Less: Payments to suppliers (75,000) Wages paid (32,500) Insurance premiums paid ( 1,000) Net receipts over disbursements $ 36,500 b. Accrual Basis: Cash sales $115,000 Credit sales 35,000 Less: Cost of Goods Sold (85,000) Wages expense (35,000) Insurance expense ( 500) Net Earnings $ 29,500 2-19 a. Increase assets (cash) and increase shareholders’ equity (common shares) b. Decrease assets (cash) and increase assets (land) c. Increase assets (accounts receivable) and increase shareholders' equity (sales revenue increases, which increases retained earnings) d. Increase assets (cash) and decrease assets (accounts receivable) e. Decrease assets (cash) and decrease shareholders’ equity (retained earnings) f. Increase assets (cash) and increase liabilities (bank loan) g. Decrease assets (cash) and decrease shareholders’ equity (interest expense increases, which decreases retained earnings) h. Increase assets (inventory) and increase liabilities (accounts payable) i. Decrease assets (cash) and decrease liabilities (accounts 1
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payable) j. Decrease assets (cash) and decrease shareholders’ equity (delivery expense increases, which decreases retained earnings) k. Decrease assets (cash) and increase in assets (prepaid insurance) when payment is made. Once insurance is used decrease in assets (prepaid insurance) and a decrease shareholders’ equity (insurance expense increases, which
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This note was uploaded on 09/18/2011 for the course MGCR 2049 taught by Professor Edwardbierbrier during the Fall '10 term at McGill.

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CHAPTER 02 SOLUTIONS 2011 FALL - CHAPTER 02 SOLUTIONS PRE...

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