Question

In: Accounting

Assets Cash                                        &nb

Assets

Cash                                                                                          $500,000

Accounts Receivable                                                                  700,000                             

Inventory                                                                                     300,000

Property, Plant & Equipment                                                       900,000

Accumulated Depreciation                                                    (100,000)            

Total Assets                                                                           $2,300,000

Liabilities & Equity

Accounts Payable                                                                       $300,000

Notes Payable                                                                            1,000,000

Common Stock                                                                             500,000

Retained Earnings                                                                        500,000

Total Liabilities & Equity                                                      $2,300,000

Journal Entries for January 2013

Transaction 1: Sales Return

The buyer returns merchandise to the seller.

Journal Entry:                                                                                   Dr.                              Cr.

Sales Returns & Allowances                                                      22,000

Accounts Receivable                                                                                           22,000

Transaction 2: Sales Discounts

Description: Recorded collection within 2/10, n/30 period.

Journal Entry:                                                                                    Dr.                              Cr.

Cash                                                                                                24,500

  Sales Discounts                                                                                    500

                  Accounts Receivable                                                                                           25,000

Journal Entry:                                                                                       Dr.                             Cr.

Cash                                                                                                 155,000

Sales Revenue                                                                                                      155,000

Transaction 4: Cost Flow Assumption

Recorded cost of goods sold under one of the cost flow assumptions.

Journal Entry:                                                                                     Dr.                             Cr.

Cost of Goods Sold                                                                           45,000

                Inventory                                                                                                              45,000                                                                                              

Transaction 5: Recording Estimated Uncollectible

Description: The credit manager estimates that $16,000 of sales will be uncollectible.

Journal Entry:                                                                                      Dr.                             Cr.

Bad Debts Expense                                                                         16,000

                Allowance for Doubtful Accounts                                                                        16,000

Transaction 6: Write-off of an uncollectible account

Description: The credit manager authorizes a write-off of a $5,500 balance owed by a customer.

Journal Entry:                                                                                      Dr.                             Cr.

Allowance for Doubtful Accounts                                                   5,500

                Accounts Receivable                                                                                             5,500

Transaction 7: Depreciation Expense

Recorded depreciation expense under one of the depreciation methods.

Journal Entry:                                                                                    Dr.                               Cr.

Depreciation Expense                                                                    12,000

Accumulated Depreciation                                                                                  12,000

                  Transaction 8: Investment by Stockholders
                  Description: Invested $55,000 cash in the business in exchange for common stock.
                  Journal Entry:                                                                                      Dr.                               Cr.

                  Cash                                                                                                  55,000

                                    Common Stock                                                                                                     55,000

                  Transaction 9: Dividends

                  Description: The corporation pays a dividend of $4,700 in cash to the stockholders.

                  Journal Entry:                                                                                      Dr.                              Cr.

                  Dividends                                                                                            4,700

                                    Cash                                                                                                                      4,700

                  Transaction 10: Purchase of Equipment

                  Description: Purchases computer equipment for $7,800 cash.

                  Journal Entry:                                                                                     Dr.                             Cr.

                  Equipment                                                                                           7,800

                                    Cash                                                                                                                      7,800

                Transaction 11: Purchase of Supplies on Credit

                Description: Purchases $4,800 of inventory on credit.

                Journal Entry:                                                                                       Dr.                              Cr.

                Inventory                                                                                              4,800

                                     Accounts Payable                                                                                                 4,800

9. What is the net increase in cash for the period?

A.   $222,000

B.   $225,000

C.   $300,000

D. $325,000

10. What is the net cash provided by operating activities?

A. $179,500

B.   $186,500

C.   $183,400

D.   $178,300

11. What is the net cash used by investing activities?

A. $(7,200)

B.   $(9,200)

C.   $(8,900)

D. $(7,800)

12. What is the net cash provided by financing activities?

A.   $40,300

B.   $50,500

C.   $50,300

D.   $40,200

Solutions

Expert Solution

9. Answer is A.

10. Answer is A.

11. Aswer is D.

12. Answer is C.

Working:

Net Income 81500
Depreciation 12000
Accounts Receivable 63000
Inventory 18200
Accounts Payable 4800
Cash flow from operating activities 179500
Cash flow from investing activities
Purchase of equipment -7800
Cash flow from financing activities
Issue of common stock 55000
Payment of dividend -4700
Cash flow from financing activities 50300
Net Cash Flow 222000
ASSETS LIABILITIES STOCKHOLDERS' EQUITY
Transaction Cash + A/R + Inventory + Other assets = All.for + A/P + Notes Payable + Paid in capital + Earned Capital
D.Ac/s
Beg.Balance 500000 + 700000 + 300000 + 800000 = + 300000 + 1000000 + 500000 + 500000
Transaction 1 + -22000 + + = + + + + -22000 Returns from A/R
Transaction 2 24500 + -25000 + + = + + + + -500 Collection from A/R
Transaction 3 155000 + + + = + + + + 155000 Sales
Transaction 4 + + -45000 + = + + + + -45000 Cost of goods
Transaction 5 + + + = 16000 + + + + -16000 Bad Debts
Transaction 6 + -5500 + + = -5500 + + + + A/R   w/off
Transaction 7 + + + -12000 = + + + + -12000 Depreciation
Transaction 8 55000 + + + = + + + 55000 + Issue of common stock
Transaction 9 -4700 + + + = + + + + -4700 Dividends
Transaction 10 -7800 + + + 7800 = + + + + Equipment
Transaction 11 + + 4800 + = + 4800 + + + Purchase of inventory
Ending Balance 722000 + 647500 + 259800 + 795800 = 10500 + 304800 + 1000000 + 555000 + 554800
Transactions 222000 + -52500 + -40200 + -4200 = 10500 + 4800 + 0 + 55000 + 54800

ekkarill92 answered 1 year ago
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