Chapter 3 Homework Solutions

Chapter 3 Homework Solutions - Chapter 3 Homework Solutions...

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Chapter 3 Homework Solutions M3–8. Balance Sheet Income Statement Assets Liabilities Stockholders’ Equity Revenues Expenses Net Income e. –2,000 NE –2,000 NE +2,000 –2,000 f. –2,000 –2,000 NE NE NE NE g. –4,000 NE –4,000 NE +4,000 –4,000 h. –1,200/+800 NE –400 NE +400 –400 i. –1,000 NE –1,000 NE +1,000 –1,000 j. NE +2,200 –2,200 NE +2,200 –2,200 Transaction (h) results in an increase in an asset (prepaid expenses) and a decrease in an asset (cash). Therefore, the net effect on assets is - 400.
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E3–3. Activity Revenue Account Affected Amount of Revenue Earned in September a. Sales revenue $25,000 b. Sales revenue $21,000 c. None No transaction has occurred; exchange of promises only. d. Sales revenue $18,000 (= 1,000 shirts x $18 per shirt); revenue earned when goods are delivered. e. None Payment related to revenue recorded previously in (d) above. f. None No revenue earned in September; earnings process is not yet complete. g. None No revenue is earned; the issuance of stock is a financing activity. h. None No revenue earned in September; earnings process is not yet complete. i. Ticket sales revenue $4,000,000 (= $20,000,000 ÷ 5 games) j. None No revenue earned in September; earnings process is not yet complete. k. Interest revenue $1,000 (= $100,000 x 12% ÷ 12 months) l. None No revenue earned in September; earnings process is not yet complete. m. Sales revenue $100
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E3–4. Activity Expense Account Affected Amount of Expense Incurred in January a. Salary expense $45,000 incurred in January.
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