Accounting Lecture1
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Ch01PE 1–1A$345,000. Under the cost concept, the land should be recorded at the costto Integrity Repair Service.PE 1–3A(2) Asset (Cash) decreases by $3,750;Liability (Accounts Payable) decreases by $3,750.(3) Asset (Accounts Receivable) increases by $22,400;Revenue (Delivery Service Fees) increases by $22,400.(4) Asset (Cash) increases by $11,300;Asset (Accounts Receivable) decreases by $11,300.(5) Asset (Cash) decreases by $6,000;Asset (Gates Deeter, Drawing) increases by $6,000.PE 1–4ASUNSET TRAVEL SERVICEIncome StatementFor the Year Ended April 30, 2014Fees earned $1,673,000Expenses:Wages expense $660,000Office expense 488,000Miscellaneous expense 34,000Total expenses 1,182,000Net income $ 491,000 ========PE 1–5ASUNSET TRAVEL SERVICEStatement of Owner’s EquityFor the Year Ended April 30, 2014Craig Daws, capital, May 1, 2013 $300,000Additional investment by owner during year $ 75,000Net income for the year 491,000
$566,000Less withdrawals 66,000Increase in owner’s equity 500,000Craig Daws, capital, April 30, 2014 $800,000 =======PE 1–6ASUNSET TRAVEL SERVICEBalance SheetApril 30, 2014Cash $274,000 Accounts payable $ 61,000Accounts receivable 124,000Supplies 13,000Land 450,000 Craig Daws, capital 800,000Total liabilities andTotal assets $861,000 owner’s equity $861,000 ======== ========Ex. 1–13a. (1) Provided catering services for cash, $33,000.(2) Purchase of land for cash, $20,000.(3) Payment of cash for expenses, $24,000.(4) Purchase of supplies on account, $1,000.(5) Withdrawal of cash by owner, $3,000.(6) Payment of cash to creditors, $6,000.(7) Recognition of cost of supplies used, $1,800.b. – $20,000 ($10,000 – $30,000)c. $4,200 (–$3,000 + $33,000 – $25,800)d. $7,200 ($33,000 – $25,800)e. $4,200 ($7,200 – $3,000)Ex. 1–14No. It would be incorrect to say that the business had incurred a net loss of$8,000. The excess of the withdrawals over the net income for the period is a