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GBA 5205 Survey of Accounting Fifth Edition by Edmonds (ISBN 9781307078473) Problem 2-32 Recording events in...

GBA 5205

Survey of Accounting Fifth Edition by Edmonds (ISBN 9781307078473)

Problem 2-32

Recording events in a horizontal statements model

The following events pertain to Super Cleaning Company:

1. Acquired $10,000 cash from the issue of common stock.

2. Provided $15,000 of services on account.

3. Provided services for $5,000 cash.

4. Received $2,800 cash in advance for services to be performed in the future.

5. Collected $12,200 cash from the account receivable created in Event 2.

6. Paid $1,900 for cash expenses.

7. Performed $1,400 of the services agreed to in Event 4.

8. Incurred $3,600 of expenses on account.

9. Paid $4,800 cash in advance for one-year contract to rent office space.

10. Paid $2,800 cash on the account payable created in Event 8.

11. Paid a $1,500 cash dividend to the stockholders.

12. Recognized rent expense for nine months’ use of office space acquired in Event 9

Required

Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flows column, use the letters OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. Use NA to indicate accounts not affected by the event. The first event is recorded as an example.

PROBLEM 2-32

Super Cleaning Company

Effect of Events on the Financial Statements

Balance Sheet

Income Statement

Stmt. of

Assets

=

Liabilities

+

Stockholders’ Equity

Rev.

-

Exp.

=

Net Inc.

Cash Flows

Event

No.

Cash

+

Accts Rec.

+

Pp. Rent

=

Accts. Pay.

+

Unearn Rev.

+

Com. Stock

+

Ret. Earn.

1.

10,000

+

NA

+

NA

=

NA

+

NA

+

10,000

+

NA

NA

-

NA

=

NA

10,000   FA

2.

+

+

=

+

+

+

-

=

3.

+

+

=

+

+

+

-

=

4.

+

+

=

+

+

+

-

=

5.

+

+

=

+

+

+

-

=

6.

+

+

=

+

+

+

-

=

7.

+

+

=

+

+

+

-

=

8.

+

+

=

+

+

+

-

=

9.

+

+

=

+

+

+

-

=

10.

+

+

=

+

+

+

-

=

11.

+

+

=

+

+

+

-

=

12.

+

+

                  *

=

+

+

+

-

=

Bal.

$                 

+

$             

=

$             

+

$             

+

$             

$             

-

$             

$             

$             

=

*$          x    /12 = $

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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