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Chap003 Probs - Chapter 03 Operating Decisions and the...

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Chapter 03 - Operating Decisions and the Income Statement Chapter 03 E3–3. Activity Revenue Account Affected Amount of Revenue Earned in September a. None No revenue earned in September; earnings process is not yet complete. b. Interest revenue $12 (= $1,200 x 12% x 1month/12 months) c. Sales revenue $18,050 d. None No transaction has occurred; exchange of promises only. e. Sales revenue $15,000 (= 1,000 shirts x $15 per shirt); revenue earned when goods are delivered. f. None Payment related to revenue recorded previously in (e) above. g. None No revenue earned in September; earnings process is not yet complete. h. None No revenue is earned; the issuance of stock is a financing activity. i. None No revenue earned in September; earnings process is not yet complete. j. Ticket sales revenue $3,660,000 (= $18,300,000 ÷ 5 games) k. None No revenue earned in September; earnings process is not yet complete. l. Sales revenue $18,400 m. Sales revenue $100 3-1
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Chapter 03 - Operating Decisions and the Income Statement E3–6. Balance Sheet Income Statement Assets Liabilities Stockholders’ Equity Revenues Expenses Net Income a. +7,047 NE +7,047 NE NE NE b. +765,472 +765,472 NE NE NE NE c. +59,500 +59,500 NE NE NE NE d. +1,220,568 –734,547 NE NE +1,220,568 –734,547 +1,220,568 NE NE +734,547 +1,220,568 –734,547 e. –20,758 NE –20,758 NE NE NE f. +/–24,126 NE NE NE NE NE g. –258,887 +86,296 –345,183 NE +345,183 –345,183 h. +1,757 NE +1,757 +1,757 NE +1,757 i. NE +2,850 –2,850 NE +2,850 –2,850 Transaction (f) results in an increase in an asset (property, plant, and equipment) and a decrease in an asset (cash). Therefore, there is no net effect on assets. E3–7. (in thousands) a. Plant and equipment (+A) ..................................................... 515 Cash ( - A) .......................................................................... 515 Debits equal credits. Assets increase and decrease by the same amount. b. Cash (+A) ............................................................................. 758 Short-term notes payable (+L) ........................................ 758 Debits equal credits. Assets and liabilities increase by the same amount. c. Cash (+A) ............................................................................. Accounts receivable (+A) ..................................................... 10,272 27,250 Service revenue (+R, +SE) .............................................. 37,522 Debits equal credits. Revenue increases retained earnings (part of stockholders' equity). Stockholders' equity and assets increase by the same amount. 3-2
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Chapter 03 - Operating Decisions and the Income Statement E3–7. (continued) d. Accounts payable ( - L) .......................................................... 4,300 Cash ( - A) .......................................................................... 4,300 Debits equal credits. Assets and liabilities decrease by the same amount. e. Inventory (+A) ....................................................................... 30,449 Accounts payable (+L) ...................................................... 30,449 Debits equal credits. Assets and liabilities increase by the same amount.
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