# M3-7 Determining the Financial Statement Effects of Operating Activities Involving Revenues### LO3-4The following transactions are July activities of Bennett’s Bowling, Inc., which operates several bowling centers, offering customers lanes for games and merchandise for sale. For each of the following transactions, complete the tabulation, indicating the amount and effect (+ for increase and – for decrease) of each transaction. (Remember that **A = L + SE; R – E = NI;** and NI affects SE through Retained Earnings.) Write NE if there is no effect. The first transaction is provided as an example.| Transaction | BALANCE SHEET | INCOME STATEMENT ||-------------|---------------|------------------|| | Assets | Liabilities | Stockholders’ Equity | Revenues | Expenses | Net Income || a. Bennett’s collected $15,000 from customers for games played in July. | +15,000 | NE | +15,000 | +15,000 | NE | +15,000 || b. Bennett’s sold bowling merchandise inventory from its pro shop for $800; received $300 in cash and customers owed the rest on account. (Consider only the effect on revenue here. The cost of goods sold [expense] for this sale will be analyzed in M3-8[e].) || c. Bennett’s received $400 from customers who purchased merchandise in June on account. || d. The men’s and ladies’ bowling leagues gave Bennett’s a deposit of $2,500 for the upcoming fall season. |### Instructions for Completing the Table:1. **Transaction a:** Collection of cash from customers increases both assets and revenues, positively affecting net income and stockholders’ equity. 2. **Transaction b:** The sale of merchandise increases revenue. Consider only the revenue effect here, as expenses will be analyzed separately. 3. **Transaction c:** Collection of cash from previous sales increases assets but does not affect revenues since revenue was recognized when the merchandise was sold in June.4. **Transaction d:** Receiving a deposit increases liabilities and assets, as it represents unearned revenue.This exercise helps understand how specific financial transactions affect a company’s financial statements, focusing on balance sheets and income statements.

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Description: # M3-7 Determining the Financial Statement Effects of Operating Activities Involving Revenues### LO3-4The following transactions are July activities of Bennett’s Bowling, Inc., which operates several bowling centers, offering customers lanes for gam

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The following transactions are July activities of Bennett's Bowling, Inc., which operates several bowling centers, offering customers lanes for games and merchandise for sale. For each of the following transactions, complete the tabulation, indicating the amount and effect (+ for increase and for decrease) of each transaction. (Remember that A = L + SE; R - E = NI; and NI affects SE through Retained Earnings.) Write NE if there is no effect. The first transaction is provided as an example. Transaction a. Bennett's collected $15,000 from customers for games played in July. BALANCE SHEET Assets Liabilities +15,000 NE Stockholders' Equity +15,000 INCOME STATEMENT Revenues Expenses +15,000 NE Net Income +15,000

The following transactions are July activities of Bennett's Bowling, Inc., which operates several bowling centers, offering customers lanes for games and merchandise for sale. For each of the following transactions, complete the tabulation, indicating the amount and effect (+ for increase and for decrease) of each transaction. (Remember that A = L + SE; R - E = NI; and NI affects SE through Retained Earnings.) Write NE if there is no effect. The first transaction is provided as an example. Transaction a. Bennett's collected $15,000 from customers for games played in July. BALANCE SHEET Assets Liabilities +15,000 NE Stockholders' Equity +15,000 INCOME STATEMENT Revenues Expenses +15,000 NE Net Income +15,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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