Economic concepts are the a conventions used in the

20
Economic concepts are the:
a conventions used in the preparation of accounting reports
b regulations enforced by the government in the preparation of accounting reports
c ideas that guide preparation of accounting reports
d rules that apply to the preparation of accounting reports

Sales of merchandise to customers on credit $329,900
Sales of merchandise to customers for cash 95,750
Cost of merchandise sold on credit 215,000
Cost of merchandise sold for cash 62,400
Purchases of merchandise from suppliers on credit 248,700
Purchases of merchandise from suppliers for cash 53,100
Collections from customers on accounts receivable 343,500
Cash payments to suppliers on accounts payable 308,600
Operating expenses (all paid in cash) 93,500
Required
a. Prepare the income statement of DSE for the fiscal year just completed.
b. Estimate the changes to balance sheet accounts of DSE at the end of the fiscal year just completed
indirect method.
c. Prepare the statement of cash flows of DSE for for the fiscal year just completed utilizing the
Problem 2 (20 points, DSE Indirect) For the fiscal year just completed, Dollar Sine Enterprises had the
following summary information available concerning operating activities. DSE had no investing or
financing activities this year. DSE has no long-term assets or liabilities.

Problem 3 (20 Points, Mega) The following events occurred for Mega Co. during January 2020, its first
month of business:
Jan 3 Owners contributed $40,000 to the business.
Jan 5 Mega received $25,000 from a bank in exchange for a note payable with maturity 3 years. The
note carries an interest of 3.65% per year, payable on Jan 5 of each year, starting Jan 5 2021.
Jan 8 Mega paid $35,000 for equipment with a useful life of 2 years.
Jan 10 Mega paid $20,000 for merchandise (inventory).
Jan 11 Mega paid $2,000 for supplies used in January.
Jan 15 Mega received $12,000 from customers for the sale of merchandise. The merchandise cost
is $8,000.
Jan 22 Mega received $9,000 from customers for the sale of merchandise. The merchandise cost is
$6,000.
Jan 31 Mega paid $3,000 to employees for wages earned in January.
Jan 31 The company paid $800 for utilities used in January.
Required
a. Prepare journal entries for the preceding transactions and any necessary adjustments.
b. Post the journal entries to T-accounts.
c. Prepare January 2020 income statement for Mega Co.
d. Prepare the January 31, 2020 (end of day) balance sheet for Mega Co.