Financial class 02

Financial class 02 - Chapter 1: Reporting About Resources...

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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?
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$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?
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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
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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. Question 1: What are the company's resources on August 12?
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This note was uploaded on 10/09/2011 for the course ACCT 60.201 taught by Professor Monty during the Spring '11 term at UMass Lowell.

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Financial class 02 - Chapter 1: Reporting About Resources...

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