solution to practice session 2 - april 2015
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accountingTRANSCRIPT
Solution to practice question 1
Here Comes the TigersBalance Sheet
30-Jun-12
Assets
Cash $24,450.00Accounts receivable $22,000.00notes receivables $8,200.00Costumes $17,000.00Props and equipment $92,000.00Animals $200,000.00Cages $20,000.00Tents $43,000.00Trucks and wagons $110,240.00
$536,890.00
Here Comes the TigersBalance Sheet
30-Jun-12
Liabilities and Owners' EquityLiabilities Accounts payable $4,100.00Salaries payable $8,090.00notes payable $120,000.00
$132,190.00Owners' equity
Capital Stock $350,000.00Retained Earning $54,700.00
$404,700.00$536,890.00
Solution to practice question 2
The Town BakeryBalance Sheet
1-Aug-02
Assets Liabilities and Owners' EquityLiabilities
Cash $3,200.00 Accounts payableAccounts receivable $10,100.00 Salaries payableSupplies $6,200.00 notes payableEquipment $22,000.00Building $80,000.00 Owners' equityLand $40,000.00
Capital StockRetained Earning
$161,500.00
Aug-02 Cash will increase by $ 20,000 and also Capital Stock will increase by the same amount.Cash balance will become $23,200 from which $6,300 will be paid for accounts payable.
Aug-03 Equipment and Accounts payable will increase by $5,000. Supplies will increase by $1,100and Cash will decrease by the same amount.
The Town BakeryBalance Sheet
3-Aug-02
Assets Liabilities and Owners' EquityLiabilities
Cash $15,800.00 Accounts payableAccounts receivable $10,100.00 Salaries payableSupplies $7,300.00 notes payableEquipment $27,000.00Building $80,000.00 Owners' equityLand $40,000.00
Capital StockRetained Earning
$180,200.00
The Town BakeryBalance Sheet
1-Aug-02
Liabilities and Owners' Equity
$6,300.00$4,200.00
$50,000.00$60,500.00
$90,000.00$11,000.00
$101,000.00$161,500.00
Cash will increase by $ 20,000 and also Capital Stock will increase by the same amount.Cash balance will become $23,200 from which $6,300 will be paid for accounts payable.
Equipment and Accounts payable will increase by $5,000. Supplies will increase by $1,100
The Town BakeryBalance Sheet
3-Aug-02
Liabilities and Owners' Equity
$5,000.00$4,200.00
$50,000.00$59,200.00
$110,000.00$11,000.00
$121,000.00$180,200.00
The Town Bakery
Statement of Cash Flows
For the period 01 to 03 August 2002
Cash Flows from Operating Activities
Cash payment for Supplies $ (1,100)
Cash Payments for accounts payable (6,300)
Net Cash Flow from Operating Activities
Cash Flows for Investing Activities
Net cash Flow from Investing Activities
Cash Flows from Financing Activities
Cash Receipts from Borrowing Funds -
Cash Receipts from Issuing Common Stock 20,000
Cash Payments for Dividends -
Net Cash Flow from Financing Activities
Net Increase in Cash
Plus Beginning Cash Balance
Ending Cash Balance
The Town Bakery
Statement of Cash Flows
For the period 01 to 03 August 2002
$ (7,400)
-
20,000
12,600
3,200.00
$ 15,800
Practice question 3
New City PlayhouseBalance Sheet
As on 30 September 2002
Assets Liabilities and Owners' EquityLiabilities
Cash $18,200.00 Accounts payableAccounts receivable $140,100.00 Salaries payableProps and constumes $2,000.00 notes payableTheater Building $27,000.00Lighting equipment $9,100.00 Owners' equityAutomobile $16,000.00
Capital Stock
$212,400.00
Practice question 3
New City Playhouse
As on 30 September 2002
Assets Liabilities and Owners' EquityLiabilities
Cash $17,100.00 Accounts payableAccounts receivable $8,000.00 Salaries payableProps and constumes $19,000.00 notes payable
Lighting equipment $9,100.00 Owners' equity
Capital Stock
$53,200.00
1 Personal cash of the owner will not be reported in the business balance sheet - Entity Concept2 Accounts receivables are claims for the sales already made. 3 Under Accrual basis of Accounting transactions are recorded irrespective of whether cash is paid or received.4 The building is a rented property, not something under the full control or ownership of the business,
(Corrected) Balance Sheet
so it cannot be classified as an asset of the business. 5 The equipment has to be reported at its original cost6 the automobile is a personal property not owned by the business, so will not be reported on balance sheet - Business Entity concept7 Personal liabilities will not be included - Business Entity concept.8 Salary expense as payable will only be recognised for the expenses actually incurred during the period - Matching principle9 Common Stock or Share Capital has to be reported at the amount actually invested by the Owners.
New City PlayhouseBalance Sheet
As on 30 September 2002
Liabilities and Owners' Equity
$5,000.00$31,200.00
$0.00$36,200.00
$176,200.00$176,200.00
$212,400.00
New City Playhouse
As on 30 September 2002
Liabilities and Owners' Equity
$4,000.00$3,200.00
$16,000.00$23,200.00
$30,000.00$30,000.00
$53,200.00
Personal cash of the owner will not be reported in the business balance sheet - Entity Concept
Under Accrual basis of Accounting transactions are recorded irrespective of whether cash is paid or received.The building is a rented property, not something under the full control or ownership of the business,
Balance Sheet
the automobile is a personal property not owned by the business, so will not be reported on balance sheet - Business Entity concept
Salary expense as payable will only be recognised for the expenses actually incurred during the period - Matching principleCommon Stock or Share Capital has to be reported at the amount actually invested by the Owners.
Practice question 4
Revenue
Aug-01Aug-04Aug-09Aug-16Aug-21Aug-24 $2,500.0Aug-27Aug-28Aug-31
$2,500.0
Dr. Dentist
Income Statement
For the Month Ended August 31, 2014
Service revenue
Operating Expenses
Advertising expense -500Salary expense -2700
Net Income / (Loss)
Dr. Dentist
Statement of changes in Equity
For the month Ended August 31, 2014
Beginning Common Stock $ -
Plus: Investment by shareholders 250,000
Ending Common Stock
Beginning Retained Earnings $ -
Less: net loss (700)
Ending Retained Earnings
Total Stockholders' Equity
Dr. Dentist
Statement of Cash Flows
For the Month Ended August 31, 2004
Cash Flows from Operating Activities
Cash received from service revenue $ 1,200
Cash collected from accounts receivable $ 400
Cash Payments for Salary Expenses (2,700)
Net Cash Flow from Operating Activities
Cash Flows for Investing Activities
Cash Payments to Purchase Land and Building (100,000)
Cash payments to purchase medical instruments (62,000)
Cash payments to purchase office equipment (5,000)
Cash payments to purchase Supplies (3,500)
Net Cash Flow from Investing Activities
Cash Flows from Financing Activities
Cash Receipts from Issuing Common Stock 250,000
Net Cash Flow from Financing Activities
Net Increase in Cash
Plus Beginning Cash Balance
Ending Cash Balance
Dr. Dentist
Balance Sheet
As of August 31, 2014
Assets
Cash $ 78,400
Accounts receivable $ 900
Office Supplies $ 3,500
Office Equipment $ 30,000
Medical Instruments $ 62,000
Building $ 235,000
Land 85,000
Total Assets
Liabilities
Accounts Payable $ 25,500
Notes Payable $ 220,000
Stockholders' Equity
Commn Stock $ 250,000
Retained Earnings (700)
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
Expense Net income Asset Cash Accounts receivable
$250,000.0-$100,000.0
-$62,000.0-$5,000.0-$3,500.0$1,200.0 $1,300.0
$500.0$400.0 -$400.0
$2,700.0 -$2,700.0$3,200.0 -$700.0 $78,400.0 $900.0
Total Assets=
Dr. Dentist
Income Statement
For the Month Ended August 31, 2014
$ 2,500
(3,200)
$ (700)
Dr. Dentist
Statement of changes in Equity
For the month Ended August 31, 2014
$ 250,000
(700)
$ 249,300
Dr. Dentist
Statement of Cash Flows
For the Month Ended August 31, 2004
$ (1,100)
(170,500)
250,000
78,400
-
$ 78,400
Dr. Dentist
Balance Sheet
As of August 31, 2014
$ 494,800
245,500.00
249,300
$ 494,800
Asset Land Building Medical Ins Office Equip Office Supplies
$85,000.0 $235,000.0$62,000.0
$30,000.0$3,500.0
$85,000.0 $235,000.0 $62,000.0 $30,000.0 $3,500.0
Total Liabilities$494,800.0
Liabilities Owners' EquityNotes payable Accounts Payable Share captial Retained Earning
$250,000.0$220,000.0
$25,000.0
$500.0
$220,000.0 $25,500.0 $250,000.0 -$700.0
$245,500.0 Total Equity= $249,300.0$494,800.0