Chap001 Solution Manual

# Income statement for year ended revenues 58000

• Notes
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Income Statement For Year Ended December 31, 2011 Revenues .................................................. \$58,000 Expenses ................................................. 30,000 Net income ................................................... \$28,000 Problem 1-5B (15 minutes) ComEx Statement of Owner’s Equity For Year Ended December 31, 2011 C. Tex, Capital, Dec. 31, 2010 ...................... \$ 49,000 Add: Investments by owner .............................. 0 Net income .................................................... 6,000 55,000 Less: Withdrawals by owner ........................ (8,000 ) C. Tex, Capital, Dec. 31, 2011 ....................... \$47,000 Problem 1-6B (15 minutes) BuyRight Co. Statement of Cash Flows For Year Ended December 31, 2011 Cash used by operating activities ...................... \$(4,000) Cash from investing activities ............................. 2,600 Cash from financing activities ............................. 2,800 Net increase in cash ............................................. \$ 1,400 Cash, December 31, 2010 .................................... 1,300 Cash, December 31, 2011 .................................... \$ 2,700 1-43

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Chapter 01 - Accounting in Business Problem 1-7B (60 minutes) Parts 1 and 2 Assets = Liabilities + Equity Cash + Accounts Receivable + Office Supplies + Office Equipment + Building = Accounts Payable + Notes Payable + T.Moore, Capital - T.Moore, Withdrawals + Reve- nues - Expen- ses a. + \$95,000 + \$20,000 + \$115,000 b. - 20,000 + \$120,000 + \$100,000 Bal. 75,000 + 20,000 + 120,000 = 100,000 + 115,000 c. - 20,000 + 20,000 Bal. 55,000 + 40,000 + 120,000 = 100,000 + 115,000 d. + \$1,400 + 3,000 + \$4,400 Bal. 55,000 1,400 + 43,000 + 120,000 = 4,400 + 100,000 + 115,000 e. - 400 - \$ 400 Bal. 54,600 + 1,400 + 43,000 + 120,000 = 4,400 + 100,000 + 115,000 - 400 f. + \$1,800 + \$1,800 Bal. 54,600 + 1,800 + 1,400 + 43,000 + 120,000 = 4,400 + 100,000 + 115,000 + 1,800 - 400 g. + 2,000 + 2,000 Bal. 56,600 + 1,800 + 1,400 + 43,000 + 120,000 = 4,400 + 100,000 + 115,000 + 3,800 - 400 h - 5,000 - \$5,000 Bal. 51,600 + 1,800 + 1,400 + 43,000 + 120,000 = 4,400 + 100,000 + 115,000 - 5,000 + 3,800 - 400 i + 1,800 - 1,800 Bal. 53,400 + 0 + 1,400 + 43,000 + 120,000 = 4,400 + 100,000 + 115,000 - 5,000 + 3,800 - 400 j - 2,000 - 2,000 Bal. 51,400 + 0 + 1,400 + 43,000 + 120,000 = 2,400 + 100,000 + 115,000 - 5,000 + 3,800 - 400 k - 2,000 - 2,000 Bal. \$49,400 + \$ 0 + \$1,400 + \$43,000 + \$120,000 = \$2,400 + \$100,00 0 + \$115,000 - \$5,000 + \$3,800 - \$2,400 3. Tiana’s Solutions’ net income = \$3,800 - \$2,400 = \$1,400 1-44
Chapter 01 - Accounting in Business Problem 1-8B (60 minutes) Parts 1 and 2 Assets = Liabilities + Equity Date Cash + Accounts Receivable + Equipment = Accounts Payable + K. Stone, Capital K. Stone, Withdrawals + Revenues Expenses June 1 +\$120,000 = + \$120,000 2 4,500 = \$4,500 4 + \$2,400 = + \$2,400 6 1,125 = 1,125 8 + 750 = + \$ 750 14 + \$6,300 = + 6,300 16 – 900 = 900 20 + 6,300 – 6,300 = 21 + 3,500 = + 3,500 24 + 825 = + 825 25 + 3,500 – 3,500 = 26 – 2,400 = - 2,400 28 – 900 = 900 29 – 2,000 = - \$2,000 30 – 120 = 120 30 – 525 = 525 \$118,080 + \$ 825 + \$2,400 = \$ 0 + \$120,000 - \$2,000 + \$11,375 \$8,070 1-45

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Chapter 01 - Accounting in Business Problem 1-8B (Continued) Part 3 KEN’S MAINTENANCE CO. Income Statement For Month Ended June 30 Revenues: Maintenance services revenue .......... \$11,375 Expenses: Rent expense ..................................... \$4,500 Salaries expense ................................ 1,800 Advertising expense .......................... 1,125 Utilities expense ................................. 525 Telephone expense ............................ 120 Total expenses ................................... 8,070 Net income .............................................. \$ 3,305 KEN’S MAINTENANCE CO. Statement of Owner’s Equity For Month Ended June 30 K. Stone, Capital, June 1 ................................. \$ 0 Plus: Investment by owner ............................ 120,000 Net income ............................................ 3,305 123,305 Less: Owner withdrawals ................................ (2,000 ) K. Stone, Capital, June 30 ............................... \$121,305 1-46
Chapter 01 - Accounting in Business Problem 1-8B (Concluded) KEN’S MAINTENANCE CO. Balance Sheet June 30 Assets Liabilities Cash \$118,080 Accounts payable ............... \$ 0 Accounts receivable... 825 Equity Equipment ................... 2,400 K. Stone, Capital .................. 121,305 Total assets ................ \$121,305 Total liabilities and equity ... \$121,305 KEN’S MAINTENANCE CO. Statement of Cash Flows For Month Ended June 30 Cash flows from operating activities: Cash received from customers .................................. \$ 10,550 Cash paid for rent ....................................................... (4,500) Cash paid for advertising ........................................... (1,125) Cash paid for telephone ............................................. (120) Cash paid for utilities ................................................. (525) Cash paid to employees ............................................. (1,800) Net cash provided by operating activities ................. \$ 2,480 Cash flows from investing activities: Purchase of equipment .............................................. (2,400) Net cash used by investing activities ........................ (2,400) Cash flows from financing activities: Cash investment by owner ......................................... 120,000 Cash withdrawal by owner ......................................... (2,000) Net cash provided by financing activities ................. 118,000 Net increase in cash ................................................... \$118,080 Cash balance, June 1 ................................................. 0

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