Cash balance 80 1 47 chapter 01 accounting in

Info icon This preview shows pages 47–52. Sign up to view the full content.

Cash balance, June 30 ............................................... $118,080 1-47
Image of page 47

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Chapter 01 - Accounting in Business Problem 1-9B (60 minutes) Parts 1 and 2 Assets = Liabilities + Equity Date Cash + Accounts Receivable + Office Supplies + Office Equipment + Excavating Equipment = Accounts Payable + P.Swender, Capital - P.Swender, Withdrawals + Reve- nues - Expen- ses July 1 + $60,000 = + $60,000 2 - 500 - $500 Bal. 59,500 = 60,000 - 500 3 - 800 + $4,000 + $3,200 Bal. 58,700 + 4,000 = 3,200 + 60,000 - 500 6 - 500 + $ 500 Bal. 58,200 + 500 + 4,000 = 3,200 + 60,000 - 500 8 + 2,200 + $2,200 Bal. 60,400 + 500 + 4,000 = 3,200 + 60,000 + 2,200 - 500 10 + $3,800 + 3,800 Bal. 60,400 + 500 + 3,800 + 4,000 = 7,000 + 60,000 + 2,200 - 500 15 + $2,400 + 2,400 Bal. 60,400 + 2,400 + 500 + 3,800 + 4,000 = 7,000 + 60,000 + 4,600 - 500 17 + 1,920 + 1,920 Bal. 60,400 + 2,400 + 2,420 + 3,800 + 4,000 = 8,920 + 60,000 + 4,600 - 500 23 - 3,800 - 3,800 Bal. 56,600 + 2,400 + 2,420 + 3,800 + 4,000 = 5,120 + 60,000 + 4,600 - 500 25 5,000 + 5,000 Bal. 56,600 + 7,400 + 2,420 + 3,800 + 4,000 = 5,120 + 60,000 + 9,600 - 500 28 + 2,400 - 2,400 Bal. 59,000 + 5,000 + 2,420 + 3,800 + 4,000 = 5,120 + 60,000 + 9,600 - 500 30 - 1,260 - 1,260 Bal. 57,740 + 5,000 + 2,420 + 3,800 + 4,000 = 5,120 + 60,000 + 9,600 - 1,760 31 - 260 - 260 Bal. 57,480 + 5,000 + 2,420 + 3,800 + 4,000 = 5,120 + 60,000 + 9,600 - 2,020 31 - 1,200 - $1,200 Bal. $56,280 + $ 5,000 + $2,420 + $3,800 + $4,000 = $5,120 + $60,000 - $1,200 + $9,600 - $2,020 1-48
Image of page 48
Chapter 01 - Accounting in Business Problem 1-9B- continued Part 3 SWENDER EXCAVATING CO. Income Statement For Month Ended July 31 Revenues: Excavating fees earned ............................ $9,600 Expenses: Rent expense ............................................. $ 500 Salaries expense ....................................... 1,260 Utilities expense ....................................... 260 Total expenses .......................................... 2,020 Net income ......................................................... $7,580 SWENDER EXCAVATING CO. Statement of Owner’s Equity For Month Ended July 31 P. Swender, Capital, July 1 ....................... $ 0 Plus: Investment by owner………………. 60,000 Net income ...................................... 7,580 67,580 Less: Owner withdrawals ......................... 1,200 P. Swender, Capital, July 31 ..................... $66,380 SWENDER EXCAVATING CO. Balance Sheet July 31 Assets Liabilities Cash ............... $56,280Accounts payable .................................. $ 5,120 Accounts receivable ............. 5,000 Office supplies ...................... 2,420 Equity Office equipment .................. 3,800 Excavating equipment .......... 4,000 P. Swender, Capital ........... 66,380 Total assets ........................... $71,500 Total liabilities & equity .... $71,500 1-49
Image of page 49

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Chapter 01 - Accounting in Business Problem 1-9B (Concluded) Part 3—continued SWENDER EXCAVATING CO. Statement of Cash Flows For Month Ended July 31 Cash flows from operating activities: Cash received from customers .................................. $4,600 Cash paid for rent ....................................................... (500) Cash paid for supplies ............................................... (500) Cash paid for utilities ................................................. (260) Cash paid to employees ............................................. (1,260 ) Net cash provided by operating activities ................. $2,080 Cash flows from investing activities: Purchase of excavating equipment ........................... (800) Purchase of office equipment .................................... (3,800) Net cash used by investing activities ........................ (4,600) Cash flows from financing activities: Cash invested by owner ............................................. 60,000 Cash withdrawal by owner ......................................... (1,200) Net cash provided by financing activities ................. 58,800 Net increase in cash ................................................... $56,280 Cash balance, July 1 ................................................... 0 Cash balance, July 31 ................................................. $56,280 Part 4 If the $4,000 purchase on July 1 had been acquired through an additional owner investment of cash, then: (a) total assets would be larger by $800, (b) total liabilities would be $3,200 smaller, and (c) equity would be $4,000 larger. 1-50
Image of page 50
Chapter 01 - Accounting in Business Problem 1-10B (20 minutes) 1. Return on assets is net income divided by average total assets (the average amount invested). For Aspen Company this return is computed as: $100,000 / $2,000,000 = 0.05 or 5% . 2. Return on assets does not seem satisfactory for the risk involved in the manufacturing, marketing, and selling of snowmobile equipment. Aspen Company’s 5% return is about one-half of the 9.5% return earned by its competitors. 3. We know that sales less expenses equal net income. Taking the sales and net income numbers for Aspen Company we obtain: $1,200,000 - Expenses = $100,000 Expenses must equal $1,100,000 .
Image of page 51

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 52
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern