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Question: What is the net increase in cash for the period? Assets Cash                              &nbs

Question: What is the net increase in cash for the period?

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

Solutions

Expert Solution

  • All working forms part of the answer
  • Working for Transactions affecting cash balance. Figures in “()” represents payment or decrease in cash

Beginning Cash balance

$ 5,00,000.00

Transaction 1

$                     -  

Transaction 2

$      24,500.00

Transaction 3

$ 1,55,000.00

Transaction 4

$                     -  

Transaction 5

$                     -  

Transaction 6

$                     -  

Transaction 7

$                     -  

Transaction 8

$      55,000.00

Transaction 9

$      (4,700.00)

Transaction 10

$      (7,800.00)

Transaction 11

$                     -  

Ending Cash Balance

$ 7,22,000.00

  • Answer

Ending Cash Balance

$ 7,22,000.00

(-) Beginning Cash Balance

$ 5,00,000.00

Net Increase in Cash for the period

$ 2,22,000.00

ekkarill92 answered 1 year ago
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