Home Work #2

t t a.Unearned Revenue: Liability—balance sheet t t b.Salary Expense: Expense—income statement t t c.Prepaid Insurance: Asset—balance sheet t t d.Contributed capital: Owners’ equity—statement of changes in owners’ equity t t e.Distributions to Owners: Owners’ equity—statement of changes in owners’ equity t t a.Unearned Revenue: Liability—balance sheet t t b.Salary Expense: Expense—income statement t t c.Prepaid Insurance: Asset—balance sheet t t d.Contributed capital: Owners’ equity—statement of changes in owners’ equity t t e.Distributions to Owners: Owners’ equity—statement of changes in owners’ equity

t t f.Equipment: Asset—balance sheet t t g.Sales revenue: Revenue—income statement t t h.Cost of goods sold: Expense—income statement t t i.Cash from investing activities: Asset—statement of cash flows t t j.Depreciation Expense: Expense—income statement t t k.Inventory: Asset—balance sheet

a. Revenue – Expenses = Net Income $350 – Expenses = $110 $350 – Expenses = $110 Expenses = $240 Expenses = $240 b. Beginning Retained Earnings +Net Income –Dividends= Ending Retained Earnings $140+$110–Dividends=$200 Dividends=$50

c. Liabilities + Contributed Capital + Retained Earnings = $600 $50 + Contributed Capital + $200 =$600 $50 + Contributed Capital + $200 =$600 Contributed Capital=$350 Contributed Capital=$350 d. Assets= Liabilities + Contributed Capital + Retained Earnings Assets= $60 + $350 + $140 Assets= $60 + $350 + $140 Assets=$550 Assets=$550

P2-1B a.a. Assets=Liabilities+Owner’s Equity 1.+7,500 cash+7,500 capital 2.+6,000 cash+6,000 notes payable 3.(2,000) cash(2,000) expenses 4.(850) cash(850) expenses 5.+5,500 cash+5,500 revenue

Assets=Liabilities+Owner’s Equity 6.(425) cash(425) expenses 7.(560) cash(560) distribution Adjustment: interest payable(50) interest expense $15,165=$6,050+$9,115

B. t 1. Details about the source and plans for the contributed capital t 2.Terms of the note t 3.Details about the vendor and any information used to make the rental decision t 4.The amount of water and electricity used and the effective rates t 5.Characteristics of the customers and the specific items sold t 6.Payroll details, including terms of employment t 7.Timing and decision criteria for distribution

Sugar & Spice Pastry Shop Income Statement For the Month Ended May 31, 2002 Revenue Sales$5500 Expenses Equip. Rental Expense $ 2000 Utility Expense 850 Utility Expense 850 Salary Expense 425 Salary Expense 425 Interest expenses Interest expenses Net income $ 2175

t Sugar & Spice Pastry Shop t Income Statement  For the Month Ended May 31, 2002 Beginning contributed capital -0- Contributions during the year 7500 Ending contributed capital 7500 Beginning retained earning -0- Net Income for the year 2175 Dividends (560) Ending Retained earning $1,615 Total shareholder’s equity $9115

Tom’s Wear Balance Sheet As of 2/28/01 Assets Liabilities + Shareholder’s Equity Assets Liabilities + Shareholder’s Equity Cash$15,165 Notes payable 6000 Interest Payables 50 Interest Payables 50 Capital 7500 Capital 7500 Retained earnings 1615 Retained earnings 1615 Total assets$ 15,165 Total liabilities + Equity $ 15,165

Tom’s Wear, Inc. Statement of Cash Flows For the month ended 2/28/01 Cash from operating activities Cash from customers$ 5500 Cash paid for operating expense (3275) Total cash from operations$2225 Cash from investing activities -0- Cash from financing activities Cash from Owner’s Contribution 7500 Cash from Owner’s Contribution 7500 Dividends (560) Borrowings 6000 Total Cash from Financing12940 Net Increase in Cash $ Net Increase in Cash $ Cash, Beginning Balance 0 Cash, ending Balance15165

Transactions for Green Emerald Magazine Co.: Adjustments and balances t a.Supplies are reduced by $425 and supplies expense for $425 is recorded. t b.Prepaid insurance would be $2,100 at December 31, Insurance expense would be $1,500 for the year ending December 31, Insurance expense would be $1,500 for the year ending December 31, t c.+6,100 – 400 = $5,700 cash from financing activities t d.$750 t e.$10,975 t f.$11,725