Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
7th Edition
ISBN: 9781260581256
Author: John Wild
Publisher: McGraw-Hill Education
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Chapter 1, Problem 7PSA
To determine

Accounting Equation:

The assets, liabilities and equity relation, are known as the accounting equation. Assets are the resources of company and that increase as business expand whereas liabilities are the burden on company that has to pay in future. Equity means the owner claim on assets. An accounting equation represent the assets of the company are equal to the liabilities and equity of the company.

In can be represented as follows,

  

  Assets=Liabilities+Equity

Income Statement:

It includes the information of net income earn or net loss suffered by the company. The expenses deducting from revenue and the resultant is net income or loss to the company. This is informative report that helps the user of financial information to take decision.

Statement of Retained Earnings:

It is the part of financial statement of the company, that contained information related to retained earnings. Retained earnings are the amount that a company wants to keep aside for internal usage of the company. That will not pay in the form of dividends to the shareholders and kept by the company aside, to pay debts or further investment.

Balance Sheet:

It is a part of the Financial Statement of a company, which shows the financial position of the company as from where the company receive the money (assets) and to whom the company has to pay. (liabilities and shareholders').While purchase a share in the company the investor will firstly see the balance sheet of the respective company than only decide whether he purchase the share or not.

Statement of Cash Flows:

This statement records the inflows and outflows of cash and funds of the Company during the accounting period.

It has following three parts:

  • Cash flow from operating activities
  • Cash flow from investing activities
  • Cash flow from financing activities

1.

To identify: The effect of given transactions on the accounting equation.

Expert Solution
Check Mark

Explanation of Solution

  Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card, Chapter 1, Problem 7PSA

     Table (1)

Hence, the cash balance is $42,780, office equipment is $1,890, accounts payable is $80, common stock is $40,000, dividend is $1,400, revenue is $11,100 and expenses is $5,110.

2.

To determine

To prepare: The income statement, statement of retained earnings and balance sheet.

2.

Expert Solution
Check Mark

Explanation of Solution

Prepare income statement.

    G. Company
    Income Statement
    For the month ended May 31,20XX
    ParticularsAmount($)Amount($)
    Revenue:
    Service Revenue11,100
    Total Revenue11,100
    Expenses:
    Advertising Expenses80
    Cleaning Expenses750
    Rent Expenses2200
    Salary Expenses1,500
    Telephone Expenses300
    Utilities Expenses280
    Total Expense5,110
    Net income5,990

     Table (2)

Hence, net income of .G Company as on May 31, 20XX is $5,990.

Prepare statement of retained earnings.

    G. Company
    Retained Earnings Statement
    For the month ended May 31,20XX
    ParticularsAmount($)
    Opening balance0
    Net income5,990
    Total5,990
    Dividends(1,400)
    Retained earnings4,590

     Table (3)

Hence, the retained earnings of G Company as on May 31, 20XX are $4,590.

Prepare balance sheet.

    G. Company
    Balance Sheet
    As on May 31, 20XX
    ParticularsAmount($)
    Assets
    Cash42,780
    Equipment1,890
    Total assets44,670
    Liabilities and stockholder’s equity
    Liabilities
    Accounts payable80
    Stockholder’s equity
    Common stock40,000
    Retained earnings4,590
    Total stockholders’ equity44,590
    Total Liabilities and Stockholder’s equity44,670

     Table (4)

Hence, the total of the balance sheet of the G Company as on May 31, 20XX is of $44,670.

3.

To determine

To prepare: The statement of cash flows of the M Company.

3.

Expert Solution
Check Mark

Explanation of Solution

Prepare the cash flow statement.

    G. Company
    Statement of Cash Flows
    Month Ended May 31, 20XX
    ParticularsAmount($)Amount($)
    Cash flow from operating activities
    Receipts:
    Collections from customers11,100
    Payments:
    Cleaning Expenses(750)
    Rent Expenses(2200)
    Salary Expenses(1,500)
    Telephone Expenses(300)
    Utilities(280)(5,030)
    Net cash from operating activities6,070
    Cash flow from investing activities
    Purchase of equipment(1,890)
    Net cash from investing activities(1,890)
    Cash flow from financing activities
    Issued common stock40,000
    Less: Payment of cash dividends(1,400)
    Net cash from financing activities38,600
    Net increase in cash42,780
    Cash balance, May 1,20XX0
    Cash balance, May 31,20XX42,780

     Table (5)

Hence, the cash balance of the G Company as on May 31, 20XX is $42,780.

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Chapter 1 Solutions

Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card

Ch. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQCh. 1 - Prob. 11DQCh. 1 - Prob. 12DQCh. 1 - Prob. 13DQCh. 1 - Prob. 14DQCh. 1 - Why is the revenue recognition principle needed?...Ch. 1 - Prob. 16DQCh. 1 - Prob. 17DQCh. 1 - Prob. 18DQCh. 1 - Prob. 19DQCh. 1 - Prob. 20DQCh. 1 - Prob. 21DQCh. 1 - Prob. 22DQCh. 1 - Prob. 23DQCh. 1 - Prob. 24DQCh. 1 - Prob. 25DQCh. 1 - Prob. 26DQCh. 1 - Prob. 27DQCh. 1 - Prob. 28DQCh. 1 - Prob. 29DQCh. 1 - Prob. 30DQCh. 1 - Prob. 31DQCh. 1 - Prob. 32DQCh. 1 - Prob. 33DQCh. 1 - Prob. 1QSCh. 1 - Prob. 2QSCh. 1 - Prob. 3QSCh. 1 - Prob. 4QSCh. 1 - Prob. 5QSCh. 1 - Prob. 6QSCh. 1 - Prob. 7QSCh. 1 - Prob. 8QSCh. 1 - Prob. 9QSCh. 1 - Prob. 10QSCh. 1 - Prob. 11QSCh. 1 - Identifying items with financial statements P2...Ch. 1 - Prob. 13QSCh. 1 - Prob. 14QSCh. 1 - Prob. 15QSCh. 1 - Computing and interpreting return on assets A2 In...Ch. 1 - Prob. 17QSCh. 1 - Prob. 1ECh. 1 - Prob. 2ECh. 1 - Prob. 3ECh. 1 - Prob. 4ECh. 1 - Prob. 5ECh. 1 - Prob. 6ECh. 1 - Prob. 7ECh. 1 - Prob. 8ECh. 1 - Prob. 9ECh. 1 - Prob. 10ECh. 1 - Identifying effects of transactions on the...Ch. 1 - Prob. 12ECh. 1 - Prob. 13ECh. 1 - Prob. 14ECh. 1 - Prob. 15ECh. 1 - Prob. 16ECh. 1 - Prob. 17ECh. 1 - Prob. 18ECh. 1 - Prob. 19ECh. 1 - Prob. 20ECh. 1 - Prob. 21ECh. 1 - Prob. 22ECh. 1 - Using the accounting equation A1 Answer the...Ch. 1 - Prob. 1PSACh. 1 - Prob. 2PSACh. 1 - Prob. 3PSACh. 1 - Prob. 4PSACh. 1 - Prob. 5PSACh. 1 - Prob. 6PSACh. 1 - Prob. 7PSACh. 1 - Prob. 8PSACh. 1 - Prob. 9PSACh. 1 - Prob. 10PSACh. 1 - Prob. 11PSACh. 1 - Prob. 12PSACh. 1 - Prob. 13PSACh. 1 - Prob. 14PSACh. 1 - Identifying effects of transactions on financial...Ch. 1 - Prob. 2PSBCh. 1 - Prob. 3PSBCh. 1 - Prob. 4PSBCh. 1 - Prob. 5PSBCh. 1 - Prob. 6PSBCh. 1 - Prob. 7PSBCh. 1 - Prob. 8PSBCh. 1 - Analyzing transactions and preparing financial...Ch. 1 - Prob. 10PSBCh. 1 - Prob. 11PSBCh. 1 - Prob. 12PSBCh. 1 - Prob. 13PSBCh. 1 - Prob. 14PSBCh. 1 - Prob. 1SPCh. 1 - Prob. 1AACh. 1 - Prob. 2AACh. 1 - Prob. 3AACh. 1 - Prob. 1BTNCh. 1 - Prob. 2BTNCh. 1 - Prob. 5BTN
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