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Concept introduction:
Account Payables: For delivered goods or services, the cash owed by the business that they are required to pay to their suppliers is called the account payables. In the balances sheet, the account payables are shown as liabilities.
Account Receivables: For delivered goods or services, the cash owed by the customer that they need to pay to the business is called account payables. In the balances sheet, the account payables are shown as assets.
Asset: A resource which will generate a
Liabilities: During the course of the business operations, an obligation or the company’s debit that arises is known as liability. Liabilities such as mortgages, accounts payables, accrued expenses and loans are recorded on the right hand side of the balance sheet.
Equity: Equity is the value of an asset less the amount of all liabilities on that asset. It can be represented with the
Income Statement: The statement in which the
1. To write: The statement showing addition and subtraction of each transaction for the month of Dec.
Assets = Liability + Equity | ||||||||||
Date | Cash | Account receivable | Office suppliers | Office equipment | Electrical equipment | Accounts payable | S.Sony capital | S.Sony withdrawals | Revenues | Expenses |
Dec.1 | $65,000 | $65,000 | ||||||||
Balance | $65,000 | $65,000 | ||||||||
Dec.2 | ($1,000) | $1,000 | ||||||||
Balance | $64,000 | $65,000 | $1,000 | |||||||
Dec.3 | ($4,800) | $13,000 | $8,200 | |||||||
Balance | $59,200 | $13,000 | $8,200 | $65,000 | $1,000 | |||||
Dec.5 | ($ 800) | $800 | ||||||||
Balance | $58,400 | $800 | $13,000 | $8,200 | $65,000 | $1,000 | ||||
Dec.6 | $ 1,200 | $1,200 | ||||||||
Balance | $59,600 | $800 | $13,000 | $8,200 | $65,000 | $1,200 | $1,000 | |||
Dec.8 | $2,530 | $2,530 | ||||||||
Balance | $59,600 | $800 | $2,530 | $13,000 | $10,730 | $65,000 | $1,200 | $1,000 | ||
Dec.15 | $5,000 | $5,000 | ||||||||
Balance | $59,600 | $5,000 | $800 | $2,530 | $13,000 | $10,730 | $65,000 | $6,200 | $1,000 | |
Dec.18 | $350 | $ 350 | ||||||||
Balance | $59,600 | $5,000 | $1,150 | $2,530 | $13,000 | $11,180 | $65,000 | $6,200 | $1,000 | |
Dec.20 | ($2,530) | ($2,530) | ||||||||
Balance | $57,070 | $5,000 | $1,150 | $2,530 | $13,000 | $8,550 | $65,000 | $6,200 | $1,000 | |
Dec.24 | $ 900 | $ 900 | ||||||||
Balance | $57,070 | $5,900 | $1,150 | $2,530 | $13,000 | $8,550 | $65,000 | $7,100 | $1,000 | |
Dec.28 | $5,000 | ($5,000) | ||||||||
Balance | $62,070 | $900 | $1,150 | $2,530 | $13,000 | $8,550 | $65,000 | $7,100 | $1,000 | |
Dec.29 | ($1,400) | $1,400 | ||||||||
Balance | $60,670 | $900 | $1,150 | $2,530 | $13,000 | $8,550 | $65,000 | $7,100 | ||
Dec.30 | ($ 540) | $ 540 | ||||||||
Balance | $60,130 | $900 | $1,150 | $2,530 | $13,000 | $8,550 | $65,000 | $7,100 | ||
Dec.31 | ($ 950) | $950 | ||||||||
Balance | $59,180 | $900 | $1,150 | $2,530 | $13,000 | $8,550 | $65,000 | $950 | $7,100 | $2,940 |
2. To write: The income statement, owner’s equity and the balance sheet for the month of Dec.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Particulars | Amount | |
Revenue | $7,100 | |
Total Revenues (A) | $7,100 | |
Salaries expense | $1,400 | |
Rental expense | $1,000 | |
Selling and administrative expense | $540 | |
Total Expense (B) | $2,940 | |
Net Income (A-B) | $4,160 | |
Owners Equity account for the month of Dec
Particulars | Amount | Amount |
Owners Capital | ||
Opening Capital | $0 | |
Add: Invested during the year | $65,000 | |
Add: Profit during the year | $4,160 | |
$69,160 | ||
Less: A. Armani Withdrawals | $950 | $68,210 |
Balance Sheet for the month of Dec
Particulars | Amount | Amount |
Owners Capital | $68,210 | |
Current Liabilities | ||
Accounts Payable | $8,550 | |
Total | $76,760 | |
Fixed Assets | ||
Electrical Equipment | $13,000 | |
Office Supplies | $1,150 | |
Office Equipment | $2,530 | |
Current Assets | ||
$900 | ||
Cash | $59,180 | |
Total | $76,760 |
3. To write: The cash flow for the month of Dec.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Particulars | Amount | Amount |
Cash from operating activities | ||
Net Income from business operation | $4,160 | |
Add: Increase in Trade payable | $8,550 | |
Less: Increase in Trade receivable | ($900) | $11,810 |
Cash used by investing activities | ||
Purchase electrical equipment | $13,000 | |
Purchase of Office Equipment | $2,530 | |
Purchase of Office Supplies | $1,150 | ($16,680) |
Cash from financing activities | ||
Capital Introduced | $65,000 | |
Amount withdrawn | $950 | $64,050 |
Net Increase/(decrease) in cash | $59,180 | |
Add: Opening Cash Balance as on Dec.31, 2016 | $0 | |
Closing Cash Balance as on Dec.31, 2017 | $59,180 |
4. To write: Total assets, total liabilities and equity change by the end of this month
![Check Mark](/static/check-mark.png)
Explanation of Solution
Instead of $65,000 cash introduced by owner if $49,000 invested and Sony electronics borrowed $16,000 from bank.
(a) No change in total Assets.
(b) Total liabilities will increase by $16,000 so total liabilities will be $16,000+$8,550 = $24,550.
(c) Total Equity will be decreased by $16,000 so Total Equity will be $68,210-$16,000 = $52,210
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Chapter 1 Solutions
Fundamental Accounting Principles
- Question 11 - HW 5 (Ch 5-6) - Connect ezto.mheducation.com V 5 (Ch 5-6) 11 nts Saved Help Save & Exit Submit Check my work The most recent financial statements for Crosby, Incorporated, ollow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt-equity ratio is held constant. Skipped Sales Costs eBook Hint eferences C raw 115 CROSBY, INCORPORATED 2023 Income Statement Other expenses Earnings before interest and taxes Interest paid Taxable income Taxes (22%) $ 765,000 621,000 30,000 $ 114,000 14,800 $ 99,200 21,824 Net income Dividends Addition to retained earnings $ 77,376 $ 35,940 41,436 CROSBY, INCORPORATED Balance Sheet as of December 31, 2023 Assets Liabilities and Owners' Equity Current assets Cash Accounts receivable Inventory Total Fixed assets $ 25,440 34,880…arrow_forwardKindly help me with accounting questionsarrow_forwardQuick answer of this accounting questionsarrow_forward
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