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 7PSB
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 follow,

  

  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 7PSB

     Table (1)

Hence, the cash balance is $130,060,accounts receivables is$675 equipment is $2,400, common stock is $130,000, dividend is $4,000, revenue is $16,925 and expenses is $9,790.

2.

To determine

To prepare: The income statement, statement of retained earnings and balance sheet for the month of June 31,20XX.

2.

Expert Solution
Check Mark

Explanation of Solution

Prepare income statement.

    N. Company
    Income Statement
    For the month ended June 30,20XX
    ParticularsAmount($)Amount($)
    Revenue:
    Service Revenue16,925
    Total Revenue16,925
    Expenses:
    Advertising Expenses1,150
    Rent Expenses6,000
    Salary Expenses1,600
    Telephone Expenses150
    Utilities Expenses890
    Total Expense9,790
    Net income7,135

     Table (2)

Hence, net income of .N Company as on June 30, 20XX is $7,135

Prepare statement of retained earnings

    N. Company
    Retained Earnings Statement
    For the month ended June 30,20XX
    ParticularsAmount($)
    Opening balance0
    Net income7,135
    Total7,135
    Dividends(4,000)
    Retained earnings3,135

     Table (3)

Hence, the retained earnings of N Company as on June 30, 20XX are $3,135.

Prepare balance sheet

    N. Company
    Balance sheet
    As on June 30, 20XX
    ParticularsAmount($)
    Assets
    Cash130,060
    Equipment2,400
    Accounts Receivables675
    Total Assets133,135
    Liabilities and Stockholder’s Equity
    Liabilities
    Stockholder’s Equity
    Common Stock130,000
    Retained earnings3,135
    Total stockholders’ equity133,135
    Total Liabilities and Stockholder’s equity133,135

     Table (4)

Hence, the total of the balance sheet of the N Company as on June 30, 20XX is of $133,135.

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:

    N. Company
    Statement of Cash Flows
    Month Ended June 30, 20XX
    ParticularsAmount($)Amount($)
    Cash flow from operating activities
    Receipts:
    Collections from customers16,250
    Payments:
    …Advertising Expense(1,150)
    Rent Expenses(6,000)
    Salary Expenses(1,600)
    Telephone Expenses(150)
    Utilities Expense(890)(9,790)
    Net cash from operating activities6,460
    Cash flow from investing activities
    Purchase of equipment(2,400)
    Net cash from investing activities(2,400)
    Cash flow from financing activities
    Issued common stock130,000
    Less: Payment of cash dividends(4,000)
    Net cash from financing activities126,000
    Net increase in cash130,060
    Cash balance, June 1,20XX0
    Cash balance, June 30,20XX130,060

     Table (5)

Hence, the cash balance of the N Company as on June 30, 20XX is $130,060.

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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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