![Page 1: Problem Solving - Chapter 1 ©Gayle M. Richardson, CPA](https://reader036.vdocuments.us/reader036/viewer/2022070400/56649f125503460f94c26581/html5/thumbnails/1.jpg)
Problem Solving - Chapter 1
©Gayle M. Richardson, CPA
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The Information Given to You:
Advertising expense $2,500 Accounts Payable 1,000 Accounts Receivable 4,000 Cash 12,000 Supplies ? Fees Earned 13,000 Rent Expense 3,000 Rent Payable 1,000 I Do, Capital 1/1/9 11,000 I Do, Capital 12/31/98 ? I Do, Withdrawals 4,000
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The Information Given to You:
Advertising expense $2,500 Accounts Payable 1,000 Accounts Receivable 4,000 Cash 12,000 Supplies ? Fees Earned 13,000 Rent Expense 3,000 Rent Payable 1,000 I Do, Capital 1/1/9 11,000 I Do, Capital 12/31/98 ? I Do, Withdrawals 4,000
These balances represent the ending balances in the accounts after all of the transactions have been posted.
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Think!
What is the ultimate goal? The question asks for Total Assets,
Supplies, Net income and Capital at the end of the year.
How can I get these answers and be certain my answers are correct?
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If you think of all of the reports you have prepared, are there any that could be used as a template that would help you solve this problem?
YES --- the basic financial statementsIncome statementStatement of owner’s equityBalance Sheet
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The Basic TemplatesIncome Statement
Revenue
Less Expenses
Net Income
Balance Sheet
Assets = L + OE
Assets Liabilities
_____
Total Liabil,
OE:
Cap, EB Total Assets Total L+ OE
Stmnt of OE
BBAdd cont ___________Sub-totalNI ___________ Sub-totalLess W/D___________EB
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Now What?
Look back at the information given and put each number on the template in its proper place.
![Page 8: Problem Solving - Chapter 1 ©Gayle M. Richardson, CPA](https://reader036.vdocuments.us/reader036/viewer/2022070400/56649f125503460f94c26581/html5/thumbnails/8.jpg)
The Information Given to You:
Advertising expense $2,500 Accounts Payable 1,000 Accounts Receivable 4,000 Cash 12,000 Supplies ? Fees Earned 13,000 Rent Expense 3,000 Rent Payable 1,000 I Do, Capital 1/1/9 11,000 I Do, Capital 12/31/98 ? I Do, Withdrawals 4,000
![Page 9: Problem Solving - Chapter 1 ©Gayle M. Richardson, CPA](https://reader036.vdocuments.us/reader036/viewer/2022070400/56649f125503460f94c26581/html5/thumbnails/9.jpg)
The Basic TemplatesIncome Statement
Revenue
Less Expenses
Net Income
Balance Sheet
Assets = L + OE
Assets Liabilities
_____
Total Liabil,
OE:
Cap, EB Total Assets Total L+ OE
Stmnt of OE
BBAdd cont ___________Sub-totalNI ___________ Sub-totalLess W/D___________EB
Advertising Expense 2,500
![Page 10: Problem Solving - Chapter 1 ©Gayle M. Richardson, CPA](https://reader036.vdocuments.us/reader036/viewer/2022070400/56649f125503460f94c26581/html5/thumbnails/10.jpg)
The Information Given to You:
Advertising expense $2,500 Accounts Payable 1,000 Accounts Receivable 4,000 Cash 12,000 Supplies ? Fees Earned 13,000 Rent Expense 3,000 Rent Payable 1,000 I Do, Capital 1/1/9 11,000 I Do, Capital 12/31/98 ? I Do, Withdrawals 4,000
Now- Check it off the list!
![Page 11: Problem Solving - Chapter 1 ©Gayle M. Richardson, CPA](https://reader036.vdocuments.us/reader036/viewer/2022070400/56649f125503460f94c26581/html5/thumbnails/11.jpg)
The Information Given to You:
Advertising expense $2,500 Accounts Payable 1,000 Accounts Receivable 4,000 Cash 12,000 Supplies ? Fees Earned 13,000 Rent Expense 3,000 Rent Payable 1,000 I Do, Capital 1/1/9 11,000 I Do, Capital 12/31/98 ? I Do, Withdrawals 4,000
Next - Accounts Payable -- Where does it belong?
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The Basic TemplatesIncome Statement
Revenue
Less Expenses Advertising Expense 2,500
Net Income
Balance Sheet
Assets = L + OE
Assets Liabilities
_____
Total Liabil,
OE:
Cap, EB Total Assets Total L+ OE
Stmnt of OE
BBAdd cont ___________Sub-totalNI ___________ Sub-totalLess W/D___________EB
Accounts Payable 1,000
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The Information Given to You:
Advertising expense $2,500 Accounts Payable 1,000 Accounts Receivable 4,000 Cash 12,000 Supplies ? Fees Earned 13,000 Rent Expense 3,000 Rent Payable 1,000 I Do, Capital 1/1/9 11,000 I Do, Capital 12/31/98 ? I Do, Withdrawals 4,000
Now- Check it off the list!
![Page 14: Problem Solving - Chapter 1 ©Gayle M. Richardson, CPA](https://reader036.vdocuments.us/reader036/viewer/2022070400/56649f125503460f94c26581/html5/thumbnails/14.jpg)
The Information Given to You:
Advertising expense $2,500 Accounts Payable 1,000 Accounts Receivable 4,000 Cash 12,000 Supplies ? Fees Earned 13,000 Rent Expense 3,000 Rent Payable 1,000 I Do, Capital 1/1/9 11,000 I Do, Capital 12/31/98 ? I Do, Withdrawals 4,000
Next - Accounts Receivable- What is it?
An Asset---Yes! The Balance Sheet is where it belongs!
![Page 15: Problem Solving - Chapter 1 ©Gayle M. Richardson, CPA](https://reader036.vdocuments.us/reader036/viewer/2022070400/56649f125503460f94c26581/html5/thumbnails/15.jpg)
The Basic TemplatesIncome Statement
Revenue
Less ExpensesAdvertising Exp 2,500
Net Income
Balance Sheet
Assets = L + OE
Assets Liabilities
Accounts Pay 1,000
OE:
Cap, EB Total Assets Total L+ OE
Stmnt of OE
BBAdd cont ___________Sub-totalNI ___________ Sub-totalLess W/D___________EB
Accounts Rec 4,000
![Page 16: Problem Solving - Chapter 1 ©Gayle M. Richardson, CPA](https://reader036.vdocuments.us/reader036/viewer/2022070400/56649f125503460f94c26581/html5/thumbnails/16.jpg)
The Information Given to You:
Advertising expense $2,500 Accounts Payable 1,000 Accounts Receivable 4,000 Cash 12,000 Supplies ? Fees Earned 13,000 Rent Expense 3,000 Rent Payable 1,000 I Do, Capital 1/1/9 11,000 I Do, Capital 12/31/98 ? I Do, Withdrawals 4,000
Now- Check it off the list!
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What next?
Repeat the process -- until you have checked off all of the items on the list!
Accounting is very systematic and methodical-----Step by Step!
Don’t worry --- once you have learned the basics you will be able to move at a quicker pace
Thank Goodness for Computers!!!!!
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The Basic TemplatesIncome Statement
Revenue
Less ExpensesAdvertising Exp 2,500
Net Income
Balance Sheet
Assets = L + OE
Assets Liabilities
Accounts Pay 1,000
OE:
Cap, EB Total Assets Total L+ OE
Stmnt of OE
BBAdd cont ___________Sub-totalNI ___________ Sub-totalLess W/D___________EB
Accounts Rec 4,000
Cash 12,000
Fees Earned 13,000
Supplies ?
Rent expense 3,000
Remt Payable 1,000
11,000
?
4,000Now we have all of the numbers from the test in their places!
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The Information Given to You:
Advertising expense $2,500 Accounts Payable 1,000 Accounts Receivable 4,000 Cash 12,000 Supplies ? Fees Earned 13,000 Rent Expense 3,000 Rent Payable 1,000 I Do, Capital 1/1/9 11,000 I Do, Capital 12/31/98 ? I Do, Withdrawals 4,000
And ---your list should look like this!
Notice that we transferred the Question marks too!
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Now for the Bais Math!Income Statement
Revenue Fees Earned $ 13,000
Less ExpensesAdvertising Expense 2,500Rent Expense 3,000
Net Income
Balance Sheet
Assets = L + OE
Assets Liabilities
Cash $12,000 Accounts Payable $1,000 Accounts Rec. 4,000 Rent Payable 1,000
Supplies ?
OE:
Cap, EB Total Assets Total L+OE
Stmnt of OE
BB 11,000 Add cont ___________Sub-totalNI ___________ Sub-totalLess W/D______ 4,000EB ?
Now add & subtract!Start with the Income Statement--then SOE and, last, the Balance Sheet!
Total expenses 5,500
$ 7,500 ====
7 ,500
-0-
11,000
18,500
$14,500
14,500
__________ 2,000
$16,500$16,500
500
16,500--12,000-4,000 = 500
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Now for the Bais Math!Income Statement
Revenue Fees Earned $ 13,000
Less ExpensesAdvertising Expense 2,500Rent Expense 3,000
Net Income
Balance Sheet
Assets = L + OE
Assets Liabilities
Cash $12,000 Accounts Payable $1,000 Accounts Rec. 4,000 Rent Payable 1,000
Supplies ?
OE:
Cap, EB Total Assets Total L+OE
Stmnt of OE
BB 11,000 Add cont ___________Sub-totalNI ___________ Sub-totalLess W/D______ 4,000EB ?
Now add & subtract! Circle the answers!
Total expenses 5,500
$ 7,500 ====
7 ,500
-0-
11,000
18,500
$14,500
14,500
__________ 2,000
$16,500$16,500
500
16,500--12,000-4,000 = 500
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The Answers:
Total Assets = $16,500 Supplies = $500 Net Income = $7,500 Capital at year end = $14,500
Click on the hand held in the air to receive your applause!
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