INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR
INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR
10th Edition
ISBN: 9781264038947
Author: Libby
Publisher: MCG
bartleby

Videos

Question
Book Icon
Chapter 3, Problem 13E

1.

To determine

Journalize the given transactions.

1.

Expert Solution
Check Mark

Explanation of Solution

Journalize the given transactions:

DateAccount Title and ExplanationDebit ($)Credit ($)
aCash (+A)$9,500 
Consulting fees revenue (+R) (+SE) $9,500
 (To record the fees earned)  
    
bCash (+A)$1,200 
Common stock (+SE) $10
Additional paid-in capital (+SE) $1,190
 (To record the purchase of building)  
    
cOffice equipment (+A)$640 
Cash (-A) $160
Short-term notes payable (+L) $480
 (To record the purchase of equipment on account)  
    
dCash (+A)$890 
Unearned revenue (+L) $890
 (To record the unearned revenue)  
    
eSupplies (+A)$470 
Accounts payable (-L) $470
 (To record the purchase of supplies on account)  
    
fUtilities expense (+E) (-SE)$1,800 
Cash (-A) $1,800
 (To record the utilities expense)  
    
gAccounts receivable (+A)$1,620 
Consulting fees revenue (+R) (+SE) $1,620
 (To record the fees earned)  
    
hCash (+A)$2,980 
Accounts receivable (-A) $2,980
 (To record the cash receivable from customer)  
    
iSalaries expense (+E) (-SE)$6,210 
Cash (-A) $5,300
 Salaries payable (+L) $910
 (To record the payment of cash for accounts payable)  
    
jShort term investments (+A)$1,230 
Prepaid expenses (+A)$800 
 Cash (-A) $2,030
 (To record the cash receivable from customer)  
    
kCash (+A)$10 
Interest revenue (+R) (-SE) $10
 (To record the interest revenue)  

Table (1)

2

To determine

Prepare the T- account and enter the transaction into their respective accounts for calculating the ending balance.

2

Expert Solution
Check Mark

Explanation of Solution

Prepare the T-accounts:

INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR, Chapter 3, Problem 13E , additional homework tip  1

Figure (1)

INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR, Chapter 3, Problem 13E , additional homework tip  2

Figure (2)

INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR, Chapter 3, Problem 13E , additional homework tip  3

Figure (3)

INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR, Chapter 3, Problem 13E , additional homework tip  4

Figure (4)

Thus, the T-accounts are prepared and the ending balances are calculated.

3.

To determine

Ascertain the amount for the given equations at the end of the January.

3.

Expert Solution
Check Mark

Explanation of Solution

For the equationRevenuesExpenses=Net income:

RevenueExpenses=Net income$11,130$8,010=$3,120

For the equationAssets=Liabilities+Stockholders' equity:

Assets=Liabilities+Stockholders' equity$18,870=$5,930+$12,940

Working note (1):

Calculate the revenues:

Revenues=Consulting fees revenue+Interest revenue=$11,120+$10=$11,130

Working note (2):

Calculate the expenses:

Expenses=Salaries expenses+Utilities expenses=$6,210+$1,800=$8,010

Working note (3):

Calculate the net income:

ParticularsAmount($)Amount ($)
Revenues(1) 11,130 
Less: Expenses(2) 8,010 
Net income $3,120

Table (2)

4.

To determine

Calculate the net income under cash basis of accounting and explain the reason in which manner the net income differs from accrual basis of accounting.

4.

Expert Solution
Check Mark

Explanation of Solution

Calculate the net income under cash basis accounting:

ParticularsAmount ($)Amount ($)
Cash receipts(4) 14,580 
Less: Cash payments(5) 9,290 
Net income $5,290

Table (3)

Net income of Incorporation C under cash basis of accounting is $5,290.

Working note (4):

Calculate the cash receipts:

Cash receipts=(Consulting fees revenue)+(Common stock issued)+(Consulting fees revenue)+(Accounts receivable)+(Interest revenue)=$9,500+$1,200+$890+$2,980+$10=$14,580

Working note (5):

Calculate the cash payments:

Cash payments=(Short-term notes payable)+(Utilities expenses)+(Salaries expenses)+(Purchase of short-term invenstment)=$160+$1,800+$5,300+$2,030=$19,760

  • According to the cash basis of accounting, the net income is $5,290 which higher than the accrual basis of accounting.
  • The recording of the expenses and revenues differ from the accrual basis of accounting.
  • Hence, the net income is different for the accrual basis of accounting and cash basis of accounting.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Chapter 3 Solutions

INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR

Ch. 3 - 10. Complete the following matrix by entering...Ch. 3 - Prob. 12QCh. 3 - 13. State the equation for the net profit margin...Ch. 3 - 1. Which of the following is not a specific...Ch. 3 - 2. Which of the following is not one of the...Ch. 3 - 3. The expense recognition principle...Ch. 3 - Prob. 4MCQCh. 3 - Prob. 5MCQCh. 3 - During 2019, CliffCo Inc. incurred operating...Ch. 3 - 7. Which of the following is the entry to be...Ch. 3 - 8. You have observed that the net profit margin...Ch. 3 - Prob. 9MCQCh. 3 - 10. This period a company collects SI00 cash on an...Ch. 3 - Prob. 1MECh. 3 - Reporting Cash Basis versus Accrual Basis...Ch. 3 - The following transactions are July activities of...Ch. 3 - The following transactions are July activities of...Ch. 3 - The following transactions are July activities of...Ch. 3 - The following transactions are July activities of...Ch. 3 - The following transactions are July activities of...Ch. 3 - The following transactions are July activities of...Ch. 3 - The following transactions are July activities of...Ch. 3 - The following data are from annual reports of...Ch. 3 - Prob. 11MECh. 3 - Matching Definitions with Terms Match each...Ch. 3 - Prob. 2ECh. 3 - Prob. 3ECh. 3 - Prob. 4ECh. 3 - Amazon.com, Inc., headquartered in Seattle, WA,...Ch. 3 - Wolverine World Wide, Inc., manufactures military,...Ch. 3 - Sysco Corporation, formed in 1969, is the largest...Ch. 3 - Vail Resorts, Inc., owns and operates 11 premier...Ch. 3 - Recording Journal Entries Blaine Air Transport...Ch. 3 - Prob. 10ECh. 3 - Stacey’s Piano Rebuilding Company has been...Ch. 3 - Prob. 12ECh. 3 - Prob. 13ECh. 3 - Prob. 14ECh. 3 - Prob. 15ECh. 3 - Prob. 16ECh. 3 - Kate’s Kite Company (a corporation) sells and...Ch. 3 - Prob. 18ECh. 3 - Prob. 19ECh. 3 - Prob. 20ECh. 3 - The following is a list of accounts for Sanjeev...Ch. 3 - Ryan Terlecki organized a new Internet company,...Ch. 3 - According to its annual report, The Wendy’s...Ch. 3 - Prob. 4PCh. 3 - Kaylee James, a connoisseur of fine chocolate,...Ch. 3 - Prob. 6PCh. 3 - Cedar Fair, L.P. (Limited Partnership), is one of...Ch. 3 - The following is a series of accounts for Kruger &...Ch. 3 - Jimmy Langenberger is the president of TemPro,...Ch. 3 - Barnes & Noble is the nation’s largest bookseller...Ch. 3 - Alpine Stables, Inc., is established in Denver,...Ch. 3 - Alpine Stables, Inc., is established in Denver,...Ch. 3 - Prob. 6APCh. 3 - Penny’s Pool Service & Supply, Inc. (PPSS), had...Ch. 3 - Prob. 1CPCh. 3 - Refer to the financial statements of Express, Inc....Ch. 3 - Refer to the financial statements of American...Ch. 3 - Prob. 4CPCh. 3 - Prob. 5CPCh. 3 - Prob. 6CP
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License