Chapter 2, Problem 4PSA

1.

Summary Introduction

Introduction: Cash Flow Analysis is a technique used by the company to know the overall worth of the company as well as its subsidiary or branches. Cash flow analysis helps in analyzing the company’s cash outflow and inflow through different activities like financing activities, investing activities, operating activities. This analysis shows how the company generates money or revenue for its working.   

To prepare: The general journal entries for the following transaction.

Explanation of Solution

September	Particular	PR	Dr.	Cr.
a.	Cash	101	60,000
	Office Equipment	163	25,000
	To capital	301		85,000
	(Owner’s investment)
b.	Land	172	40000
	Building	170	16000
	Cash	101		30000
	Notes payable	250		170000
	(To record the purchase of land building with cash and notes payable)
c.	Office supplies	108	2000
	To account payable	201		2000
	(Purchased office equipment and office supplies)
d.	Automobile	164	16,500
	Capital	301		16,500
	(to record the owner’s investment
e.	Office equipment	163	5600
	Account payable	201		5600
	(to record the purchased office equipment on credit)
f.	Salaries expense	601	1800
	To cash	101		1800
	(to record the cash paid for salary)
g	Cash	101	8000
	Fees earned	402		8000
h.	Utilities expense	602	635
	To Cash	101		635
	(Paid cash for utilities)
i.	Account payable	201	2000
	Cash	101		2000
	(to record the cash paid that was due)
j.	Office equipment	163	20300
	Cash	101		20300
	(to record the purchase of office equipment by paying cash)
K	Account receivable	106	6250
	Fees earn	406		6250
	(to record the service provided on credit)
l.	Salaries expenses	601	1800
	Cash	101		1800
m.	Cash	101	4000
	Account receivable	106		4000
N	Withdrawals	302	2800
	Cash	101		2800
	(being cash withdrawals )

2.

Summary Introduction

Introduction: Cash Flow Analysis is a technique used by the company to know the overall worth of the company as well as its subsidiary or branches. Cash flow analysis helps in analyzing the company’s cash outflow and inflow through different activities like financing activities, investing activities, operating activities. This analysis shows how the company generates money or revenue for its working.   

To prepare: Ledger for the following transactions.

Answer to Problem 4PSA

Balance of cash ledger is $12665, account receivable $2250, office supplies $2000, office equipment $50900, salary $3600

Explanation of Solution

Cash Account No.101
Date	PR	Debit	Credit	Balance
a.	G1	60000		60000
b.	G1		30000	30000
f.	G1		1800	28200
g.	G1	8000		36200
h.	G1		635	35565
i.	G1		2000	33565
j.	G1		2030	13265
l.	G1		1800	11465
m.		4000		15465
n.			2800	12665

Account receivable				Account no.106
Date	PR	Debit	Credit	Balance
k.	G1	6250		6250
M	G1		4000	2250

Office supplies				Account no. 108
Date	PR	Debit	Credit	Balance
c.	G1	2000		2000

Office equipment				Account no. 163
Date	PR	Debit	Credit	Balance
a.	G1	25000		25000
e.	G1	5600		30600
j.	G1	20300		50900

Automobile				Account no. 164
Date	PR	Debit	Credit	Balance
d.	G1	16500		16500

Building				Account no. 170
Date	PR	Debit	Credit	Balance
b.	G1	160,000		160,000

Land				Account no. 172
Date	PR	Debit	Credit	Balance
b.	G1	40000		40000

Account payable				Account no. 201
Date	PR	Debit	Credit	Balance
c.	G1		2000	2000
e.			5600	7600
I		2000		5600

Note payable				Account no. 250
Date	PR	Debit	Credit	Balance
b.	G1		170000	170000

Capital				Account no. 301
Date	PR	Debit	Credit	Balance
a.	G1		85000	85000
d.	G1		16500	101500
	G1

Withdrawals				Account no. 302
Date	PR	Debit	Credit	Balance
n.	G1	2800		2800

Fees earn				Account no. 402
Date	PR	Debit	Credit	Balance
g.	G1		8000	8000
k.	G1		6250	14250

Utilities Expense				Account no. 602
Date	PR	Debit	Credit	Balance
h.	G1	635		635

Salaries				Account no. 601
Date	PR	Debit	Credit	Balance
f.	G1	1800		1800
l.	G1	1800		3600

3.

Summary Introduction

Introduction: Cash Flow Analysis is a technique used by the company to know the overall worth of the company as well as its subsidiary or branches. Cash flow analysis helps in analyzing the company’s cash outflow and inflow through different activities like financing activities, investing activities, operating activities. This analysis shows how the company generates money or revenue for its working.   

To prepare: Trail balance.

Answer to Problem 4PSA

Total of trail balance is $291,350

Explanation of Solution

Trail balance
Particular	Dr.	Cr.
Cash	12665
Account receivable	2250
Office supplies	2000
Land	40,000
Automobile	16,500
Office equipment	50,900
Account payable		5600
Note Payable		170,000
Capital		101,500
Withdrawals		2800
Fees earn		14,250
Utilities	635
Salaries expense		3600
Total	291,350	291350