- Been Given A List Of 10 Transactions That Occurred The Owners Have Asked You To Provide Them With Financial Statements 1 (141.58 KiB) Viewed 53 times
- Been Given A List Of 10 Transactions That Occurred The Owners Have Asked You To Provide Them With Financial Statements 2 (126.37 KiB) Viewed 53 times
been given a list of 10 transactions that occurred. The owners have asked you to provide them with Financial Statements. Now, we need to determine the effect of the 10 transactions and create Financial Statements that accurately represent the financial position of the
company, Part 1: In the table below, analyze the impact of the transactions on the Accounting Equation. Instructions: Consider the effect of each of the below transactions on the Accounting Equation. Under the appropriate category, list the amount of increase or decrease of each transactions and to which account it will be recorded. The first transaction is shown for you as an example. Notes Prepaid rent is a contra account." It is a contra asset account. Because the rent has been prepaid, there is a cash flow. However, the rent expense has not yet been accrued. Therefore, the cash in effect sits in this asset account until later when the rent expense is accrued. (Ch 3 Topic When a
company earn money for selling its product or for providing services it is called "revenue" or "sales revenue Revenue is a component of Net income, which becomes a component of Retained Earnings (Net Income equals Revenue minus Expenses. Therefore, revenue affects Ownes Equity A Receiving payment from a customer in advance for a service not yet performed is called "deferred revenue Even though the term revenue appears in the account title for deferred revenue, this is NOT revenue account. Deferred indicates that the
company has yet to provide services even though it has collected the customer's cash. The
company owes the customer a service, which creates a ability 1 2 Part 2: Before we create the financial statements, lets check what the balances are in each account Telow is a Trial Balance. For the trial balance, we want to show what the ending balance is in each account, so that we can then put that account and its corresponding balance in the appropriate financial
statement InstructionsBased on the transactions in Part 1, now calculate the balance in each account and list it , below in the Trial balance Accounts Balance 3 Assets = Liabilities + Owner Equity Sell shares of Cash increase Common Stock Increase common stock for $25,000 $25,000 $25,000 Borrow $10,000 from Cash Increase Bank Loan increase bank (bank loan) $10,000 $10,000 Purchase equipment Equipment for $24,000 cash Increase $24,000 $ Cash Decrease $24,000 Pay one year of rent Prepaid Rent in advance. $6,000 Increase $6,000 ($500 per month Cash Decrease $6,000 Purchase supplies on Supplies Increase Account Payable account, $2,300 $2,300 Increase $2,300 4 5 Cash Accounts Receivable Supplies Prepaid Rent Equipment Accounts Payable Deferred Revenue Notes Payable Common Stock Dividends Service Revenue 6 Service Revenue increases $4.300 7 Service Revenue Increase $2,000 Provide cricket Cash Increase training to customers $4,300 for cash, $4.300.A Provide cricket Account training to customers Receivable on account. $2,000 Increase $2,000 Receive cash in Cash Increase advance for training $600 sessions to be given in the future. $600 AM Pay salaries to Cash Decrease employees, $2,800 $2,800 solve this 8 Customers Advances Increases $600 Salaries Expense 9 Expenses Decreases $2,800 10 Pay cash dividends of Cash Decreases $200 to shareholders. $200 Retained Earnings Decreases $200 Part 3 Finally, we want to make the following Financial Statements -Income
Statement,
Statement of :- Stockholder Equity, Balance Sheet, and
Statement of Cash Flows. Instructions Below, fill in the appropriate accounts in the correct Financial Statements. Also, fill in the corresponding values to show what the financial position is for the cricket
company. 1. The Income
Statement Crazy for Cricket Inc. Income
Statement for the year ending 12/31/XX Service Revenue Less: Expenses Net Income Solve this Balance Sheet Crazy for Cricket Inc. Balance Sheet as of 12/31/XX / Assets Cash Account Receivable Supplies Prepaid Rent Equipment Total Assets Liabilities Accounts Payable Deferred Revenue Notes Payable Total Liabilities Stockholder Equity Common Stock Retained Earnings Total Stockholder Equity Liabilities + Stockholder Equity Solve this 2.
Statement of Stockholder Equity Crazy for Cricket Inc.
Statement of Stockholder Equity for the year ending 12/31/XX Retained Earnings (RE) Beginning balance RE $0 Add: Net Income Subtract: Dividends Ending balance RE Add: Common Stock Total Stockholder Equity
+ Assets = Liabilities Cash increase $25,000 Owner Equity Common Stock increase $25,000 1 Sell shares of common stock for $25,000 2 2 Borrow $10,000 from bank (bank loan) Part 2: Before we create the financial statements, lets check what the balances are in each account Below is a Trial Balance. For the trial balance, we want to show what the ending balance is in each account, so that we can then put that account and its corresponding balance in the appropriate financial
statement Cash Increase $10,000 Bank Loan Increase $10,000 Instructions. Based on the transactions in Part 1, now calculate the balance in each account and list it below in the Trial balance Accounts Balance 3 Purchase equipment for $24,000 cash, Cash 4 Pay one year of rent in advance, $6,000 ($500 per month Equipment Increase $24,000 Cash Decrease $24,000 Prepaid Rent Increase $6,000 $ Cash Decrease $6,000 Supplies Increase $2,300 Accounts Receivable Supplies Prepaid Rent Equipment 5 Purchase supplies on account, $2,300. Account Payable Increase $2,300 6 Cash Increase $4,300 Service Revenue Increases $4,300 Accounts Payable Deferred Revenue Notes Payable Common Stock 7 Service Revenue Increase $2,000 Provide cricket training to customers for cash, $4,300 MA Provide cricket training to customers on account, $2,000. Receive cash in advance for training sessions to be given in the future, S600 AAA Pay salaries to employees, $2,800. $ Account Receivable Increase $2,000 Cash Increase $600 8 Customers Advances Increases $600 Dividends Service Revenue Salaries Expense 9 Cash Decrease $2,800 Expenses Decreases $2,800 10 Pay cash dividends of Cash Decreases $200 to shareholders. $200 $ Retained Earnings Decreases $200 Balance Sheet Part 3: Finally, we want to make the following Financial Statements -Income
Statement,
Statement of Stockholder Equity, Balance Sheet, and
Statement of Cash Flows Instructions: Below, fill in the appropriate accounts in the correct Financial Statements. Also, fill in the corresponding values to show what the financial position is for the cricket
company. Crazy for Cricket Inc. Balance Sheet as of 12/31/XX Assets 1. The Income
Statement Cash Crazy for Cricket Inc. Income
Statement for the year ending 12/31/XX / Service Revenue Less: Expenses Account Receivable Net Income Supplies Prepaid Rent Equipment Total Assets 2.
Statement of Stockholder Equity Crazy for Cricket Inc.
Statement of Stockholder Equity for the year ending 12/31/XX Retained Earnings (RE) Beginning balance RE $0 Liabilities Accounts Payable Deferred Revenue Add: Net Income Subtract: Dividends Ending balance RE Notes Payable Total Liabilities Stockholder Equity Add: Common Stock 1 Total Stockholder Equity Common Stock 2 Retained Earnings Total Stockholder Equity Liabilities + Stockholder Equity >