Smokey Enterprises began operations by receiving $100,000 cash from its sole owner Jessica Jones. During its first year of operations, the business earned $20,000 in cash from operations and paid $15,000 in cash expenses.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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I need a full indepth explanation on how to plug in the accounting formula so i can pratice it! below is the question

Smokey Enterprises began operations by receiving $100,000 cash from its sole owner Jessica Jones. During its first year of operations, the business earned $20,000 in cash from operations and paid $15,000 in cash expenses. What is Smokey Enterprises’ net income for its first year of operations?

Business Events for Year 1:
1. Rustic Campsites (RCS) was formed at the beginning of Year 1 when it acquired
$120,000 cash from issuing common stock to its owners.
2. RCS borrowed $400,000 cash from a creditor.
3. RCS paid $500,000 cash to purchase land.
4. RCS obtained $85,000 cash from leasing camp sites to customers.
5. RCS paid $50,000 cash for expenses.
6.
RCS paid dividends of $4,000 cash to its owners.
7. The land that RCS paid $500,000 to purchase had an appraised market value of
$525,000 at the end of Year 1.
Beg. Bal.
1.
2.
3.
4.
5.
6.
7.
End Bal.
Cash
Assets
Land
Accounting Equation
Liab.
Note
Payable
+
Equity
Com. Stk.
Ret. Earn
Other
Account
Titles
Transcribed Image Text:Business Events for Year 1: 1. Rustic Campsites (RCS) was formed at the beginning of Year 1 when it acquired $120,000 cash from issuing common stock to its owners. 2. RCS borrowed $400,000 cash from a creditor. 3. RCS paid $500,000 cash to purchase land. 4. RCS obtained $85,000 cash from leasing camp sites to customers. 5. RCS paid $50,000 cash for expenses. 6. RCS paid dividends of $4,000 cash to its owners. 7. The land that RCS paid $500,000 to purchase had an appraised market value of $525,000 at the end of Year 1. Beg. Bal. 1. 2. 3. 4. 5. 6. 7. End Bal. Cash Assets Land Accounting Equation Liab. Note Payable + Equity Com. Stk. Ret. Earn Other Account Titles
$5,000
$15,000
$105,000
$20,000
Transcribed Image Text:$5,000 $15,000 $105,000 $20,000
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