Question

[URGENT PLEASE] Basic Financial accounting question

1.1)   Bramkin Inc. is a Danish firm located in Copenhagen. You were hired as the firm's accounting manager. There were following events of Bramkin Inc. during 2019:

Jan       8        The investors invested $ 10,000 cash in exchange for common stock.

Jan       25        The firm purchased assets costing $ 6,000

Dec      30        The firm recorded 2019 revenues for $ 4,000

Dec      30        The firm recorded 2019 expenses for $ 3,250

On December 31, 2019, the firm reported $ 4,750 net income.

1.1.a)    Evaluate the accounting errors that the firm committed in 2019.

1.1.b)    Prepare the firm’s corrected journal entries.

1.1.c)    Prepare the firm’s corrected income statement.




1.2)

John Furthon is the sales manager of Bramkin Inc. He wants the firm's credit department to be less restrictive in granting credit. He argues that it would be difficult to improve the firm's sales if the credit department tends to reject the credit application. Discuss the pros and cons of easy credit. What are the accounting implications? Explain.



1.3)
Laura Cooper is an accounting manager of Bramkin Inc. Her boss notes that an income statement is an important financial statement used by individuals interested in a business enterprise's operations. However, her boss needs further explanations on how the time period assumption and the revenue and expense recognition principles guide accountants in preparing an income statement. Explain.

Answer 1

Answer:

question 1.1

a.) The company calculated mistakely as follows:

Jan-08	Cash	$           10,000
Jan-25	Asset	$           -6,000
Dec-30	Cash (revenues)	$             4,000
Dec-30	Cash (expense)	$           -3,250
	Net Income	$             4,750

Here the company wrongly treated the capital commencement of $10,000 as income and the asset purchase of $6,000 as expense. it leads to the wrong income of $4,750.

.

b.)

Date	General Journal	Debit ($)	Credit ($)
Jan-08	Cash	$                 10,000
	Common stock		$           10,000
	(Bought capital by share holders)
Jan-25	Asset	$                   6,000
	Cash		$             6,000
	(Purchased Assets)
Dec-30	Cash	$                   4,000
	Sales revenue		$             4,000
	(Received Revenues)
Dec-30	Cash	$                   3,250
	Expense		$             3,250
	(Incurred expense)

.

C.)

Bramkin Inc.
Income Statement
For the year ended December 2019
Revenues	$                   4,000
Less: Expenses	$                   3,250
Net Income	$                       750

.

Note: Kindly please give the remaining two questions as a seperate question. because the maximum limit of answers per question has been reached.