NBJ11e_RESol_ch03

NBJ11e_RESol_ch03 - SOLUTIONSTOREVIEWEXERCISES RE31 1...

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SOLUTIONS TO REVIEW EXERCISES RE3-1 May    1 Inventory 40,000   Accounts Payable 40,000 15 Accounts Receivable 25,000 Sales Revenue 25,000 15 Cost of Goods Sold 10,000 Inventory 10,000 RE3-2 Jan.   1 Building 85,000   Cash 85,000 Dec. 31 Depreciation Expense   2,000* Accumulated Depreciation   2,000 *($85,000 - $5,000)  ÷  40 RE3-3 July   1 Prepaid Insurance   5,400   Cash   5,400 Dec. 31 Insurance Expense      900* Prepaid Insurance     900 *($5,400  ÷  3) x 6/12 RE3-4 Net income = Revenues – Expenses = $250,000 - $225,000 = $25,000 Ending retained earnings =  Beginning retained earnings + Net income – Dividends = $95,000 + $25,000 - $11,000 = $109,000
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Stockholders’ equity = Contributed capital + Ending retained earnings = $56,000 + $109,000 = $165,000 Assets= Liabilities + Stockholders’ Equity $237,500 = Liabilities + $165,000 Liabilities  = $72,500 RE3-5 Oct.   1 Note Receivable 35,000  
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NBJ11e_RESol_ch03 - SOLUTIONSTOREVIEWEXERCISES RE31 1...

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