1,500
Bal.
$7,395
$1,000
$ 6,250
$ 50
$6,300
$4,000
$4,395
6/30
–90
–90
Bal.
$7,305
$1,000
$ 6,250
$ 50
$6,300
$4,000
$4,305
6/30
–6,250
–6,250
Bal.
$
1,055
$
1,000
$
6,250
$
50
$
50
$
4,000
$
4,305
TOTAL ASSETS:
$8,355
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY:
$8,355
2.
BEACHWAY ENTERPRISES
INCOME STATEMENT
FOR THE MONTH ENDED JUNE 30, 2007
Rental fee revenue
$ 4,500*
Expenses:
Registration fee
$ 35
Advertising
70
Salaries and wages
90
195
Net income
$
4,305
*$1,000 + $2,000 + $1,500
3-93
3-94
Financial Accounting Solutions Manual
CHAPTER 3
PROCESSING ACCOUNTING INFORMATION
PROBLEM 3-2A (Concluded)
3.
BEACHWAY ENTERPRISES
BALANCE SHEET
JUNE 30, 2007
Assets
Current assets:
Cash
$ 1,055
Accounts receivable
1,000
Supplies
50
Total current assets
$ 2,105
Property, plant, and equipment:
Equipment
6,250
Total assets
$
8,355
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
50
Capital stock
$ 4,000
Retained earnings
4,305
Total stockholders’ equity
8,305
Total liabilities and stockholders’ equity
$
8,355
3-95
3-96
Financial Accounting Solutions Manual
LO 3
PROBLEM 3-3A TRANSACTION ANALYSIS AND
FINANCIAL STATEMENTS
1.
DYNAMIC SERVICES INC.
TRANSACTIONS FOR THE MONTH OF MARCH, 2007
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts
Accounts
Notes
Capital
Retained
Date
Cash
Receivable
Computer
Supplies
Payable
Payable
Stock
Earnings
3/2
$20,000
$20,000
3/7
7,500
$
7,500
Bal.
$27,500
$7,500
$20,000
3/12
$
350
$
350
Bal.
$27,500
$350
$350
$7,500
$20,000
3/19
$
2,000
$
2,000
Bal.
$27,500
$2,000
$350
$350
$7,500
$20,000
$ 2,000
3/20
–650
–650
Bal.
$26,850
$2,000
$350
$350
$7,500
$20,000
$ 1,350
3/22
500
–500
Bal.
$27,350
$1,500
$350
$350
$7,500
$20,000
$ 1,350
3/26
1,400
1,400
Bal.
$28,750
$1,500
$350
$350
$7,500
$20,000
$ 2,750
3/29
–4,000
$
4,000
Bal.
$24,750
$1,500
$4,000
$350
$350
$7,500
$20,000
$ 2,750
3/30
–1,650
–1,650
Bal.
$23,100
$1,500
$4,000
$350
$350
$7,500
$20,000
$ 1,100
3/31
–700
–700
Bal.
$
22,400
$
1,500
$
4,000
$
350
$
350
$
7,500
$
20,000
$
400
TOTAL ASSETS: $28,250
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY: $28,250
CHAPTER 3
PROCESSING ACCOUNTING INFORMATION
PROBLEM 3-3A (Concluded)
2.
DYNAMIC SERVICES INC.
INCOME STATEMENT
FOR THE MONTH ENDED MARCH 31, 2007
Tax preparation revenue
$ 3,400*
Expenses:
Advertising
$
650
Salaries and wages
1,650
Gas, electricity, and water
700
3,000
Net income
$
400
*$2,000 + $1,400
3.
DYNAMIC SERVICES INC.
BALANCE SHEET
MARCH 31, 2007
Assets
Current assets:
Cash
$22,400
Accounts receivable
1,500
Supplies
350
Total current assets
$24,250
Property, plant, and equipment:
Equipment—computer system
4,000
Total assets
$
28,250
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
350
Long-term debt:
Notes payable
7,500
Total liabilities
$
7,850
Capital stock
$20,000
Retained earnings
400
Total stockholders’ equity
20,400
Total liabilities and stockholders’ equity
$
28,250
4.
Trade accounts often have a 30-day collection or payment period. For example,
cash should be received from the accounts receivable and cash paid for the ac-
counts payable during the month of April.
3-97
3-98
Financial Accounting Solutions Manual
LO 3
PROBLEM 3-4A TRANSACTIONS RECONSTRUCTED FROM FI-
NANCIAL STATEMENTS
•
Sales on credit
•
Collected cash from customers
•
Purchase of equipment, furniture, and land
•
Incurrence of salary and wage expense; $6,000 remains unpaid
•
Received deposits from customers (unearned revenue)
•
Capital stock issued
•
Dividends paid (net income for the first month is more than the ending balance in
retained earnings)
•
Borrowed money on a promissory note
•
Incurred rent expense
•
Incurred utility expense
ALTERNATE MULTI-CONCEPT PROBLEMS
LO 1,2
PROBLEM 3-5A IDENTIFICATION OF EVENTS WITH
SOURCE DOCUMENTS
a.
