b Determine the net income that Flanagan reported for December 2017 c Determine

B determine the net income that flanagan reported for

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(b) Determine the net income that Flanagan reported for December 2017. (c) Determine the equity of Flanagan at December 31, 2017.
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1-46 LO 8 Information related to Flanagan Group plc at December 31, 2017. Equipment £10,000 Utilities Expense £ 4,000 Cash 8,000 Accounts Receivable 9,000 Service Revenue 36,000 Salaries and Wages Expense 7,000 Rent Expense 11,000 Notes Payable 16,500 Accounts Payable 2,000 Dividends 5,000 (a) Determine the total assets of Flanagan at December 31, 2017. Equipment £10,000 Cash 8,000 Accounts Receivable 9,000 Total assets £27,000
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1-47 LO 8 Information related to Flanagan Group plc at December 31, 2017. Equipment £10,000 Utilities Expense £ 4,000 Cash 8,000 Accounts Receivable 9,000 Service Revenue 36,000 Salaries and Wages Expense 7,000 Rent Expense 11,000 Notes Payable 16,500 Accounts Payable 2,000 Dividends 5,000 (b) Determine the net income reported for December 2017. Revenues Service revenue £36,000 Expenses Rent expense £11,000 Salaries and wages expense 7,000 Utilities expense 4,000 Total expenses 22,000 Net income £14,000
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1-48 LO 8 Information related to Flanagan Group plc at December 31, 2017. Equipment £10,000 Utilities Expense £ 4,000 Cash 8,000 Accounts Receivable 9,000 Service Revenue 36,000 Salaries and Wages Expense 7,000 Rent Expense 11,000 Notes Payable 16,500 Accounts Payable 2,000 Dividends 5,000 (c) Determine the equity of Flanagan at December 31, 2017. Total assets [as computed in (a)] £27,000 Less: Liabilities Notes payable £16,500 Accounts payable 2,000 18,500 Equity £ 8,500
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1-49 Review Questions
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1-50 Review Question Which of the following is not a step in the accounting process? a. Identification. b. Recording. c. Economic entity. d. Communication Assumptions LO 1
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1-51 Solution: 1. 2. 3. 4. 5. Indicate whether the following statements are true or false . 1. The three steps in the accounting process are identification, recording, and communication. 2. Bookkeeping encompasses all steps in the accounting process. 3. Accountants prepare, but do not interpret, financial reports. 4. The two most common types of external users are investors and company officers. 5. Managerial accounting activities focus on reports for internal users. LO 2 True False False False True > DO IT!
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1-52 Review Question The historical cost principle states that: a. assets should be initially recorded at cost and adjusted when the fair value changes. b. activities of an entity are to be kept separate and distinct from its owner. c. assets should be recorded at their cost. d. only transaction data capable of being expressed in terms of money be included in the accounting records. Assumptions LO 5
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1-53 Indicate whether each of the following statements presented below is true or false . 1. Convergence refers to efforts to reduce differences between IFRS and U.S. GAAP. 2. The primary accounting standard-setting body headquartered in London is the International Accounting Standards Board (IASB). 3. The historical cost principle dictates that companies record assets at their cost. In later periods, however, the fair value of the asset must be used if fair value is higher than its cost.
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