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Financial class 02

# Financial class 02 - Chapter 1 Reporting About...

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Chapter 1: Reporting About Resources (continued) Borrowing resources : The company buys \$700 supplies on August 9, agreeing to pay for the supplies later in August or September. Show how this event affects the company’s resources and sources of resources. Resources = Sources of Resources Resources = Sources of Resources \$8,000 = \$8,000 + \$700 Supplies = + \$700 Borrowed from suppliers \$8,700 = \$8,700

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Total Resources = Sources of Borrowed Resources + Sources of Owner Invested Resources + Sources of Management Generated Resources Total Resources = Sources of Borrowed Resources + Sources of Owner Invested Resources + Sources of Management Generated Resources Cash + Supplies = Accounts Payable + Common Stock + Retained Earnings \$7,800 + \$200 = \$7,000 + \$1,000 + \$700 = + \$700 \$7,800 + \$900 = \$700 + \$7,000 + \$1,000 Use the information in the above accounting system to answer the following four questions about the Guitar Lessons Corporation. Question 1: What are the company's resources on August 9?
\$8,700: \$7,800 cash + \$900 supplies. Question 2: Where did the company get its August 9 resources?

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\$700 were borrowed, \$7,000 were invested by the owner, and \$1,000 were generated by management. Question 3: What did management do with the company's resources in August? Management used the company's resources to generate an additional \$1,000 of resources. Question 4: What did the company do with the resources generated by management in August?
The company kept the \$1,000 of resources in the company for management to use in the future to generate more resources. Paying for borrowed resources : On August 12, the company pays \$250 owed on the supplies purchased on August 9. Show how this event affects the company’s resources and sources of resources. Resources = Sources of Resources

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Resources = Sources of Resources \$8,700 = \$8,700 - \$250 Cash = - \$250 Paid to suppliers \$8,450 = \$8,450 Total Resources = Sources of Borrowed Resources + Sources of Owner Invested Resources + Sources of Management Generated Resources Total Resources = Sources of + Sources of + Sources of
Borrowed Resources Owner Invested Resources Management Generated Resources Cash + Supplies = Accounts Payable + Common Stock + Retained Earnings \$7,800 + \$900 = \$700 + \$7,000 + \$1,000 - \$250 = - \$250 \$7,550 + \$900 = \$450 + \$7,000 + \$1,000 Use the information in the above accounting system to answer the following four questions about the Guitar Lessons Corporation.

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Financial class 02 - Chapter 1 Reporting About...

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