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Lecture 2

BUSI 1004 Lecture 2: Lecture 2 ICP

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Carleton University
BUSI 1004
Shannon Butler

BUSI 1004 - Lecture 2 – An Introduction to Financial Accounting and Financial Statements ResponseWare Quiz -Inventory is not a current liability  it’s a current asset -Debits = credits (when making a journal entry) Statements of Changes in Shareholder’s Equity -What happens throughout the year -Accounts: -Common Stock (CS): -Issue of capital stock to shareholder (increases balance) -Purchase of capital stock from shareholder (decrease balance) -Retained Earnings (RE): -Net income (Increase) -Dividends (Decrease) -Summary Equations Ending RE = Beginning RE + Net income – Dividends Ending CS = Beginning CS + Issued stocks – Repurchase ICP 1-3 Identify what the accounts are for then generate a Balance Sheet (BS), Income Statement (IS), and a Statement of Changed in Shareholder’s Equity (SE) Known: The company issued $250, 000 of Capital Stock during the year and declared a total of $50, 000 of dividends Order of which to create first: 1- Income statement  Gives net income 2- Statement of changed in shareholder’s equity Gives retained earnings 3- Balance Sheet  Retained earnings is needed BS Accounts Payable BS Land BS Accounts Receivable BS Long Term Debt BS Accumulated Depreciation- Building BS Long Term Investments BS Accumulated Depreciation- Equipment BS Machinery and Equipment BS Building BS Patents BS/SE Capital Stock BS Prepaid Expense BS Cash IS Rent Expense IS Cost of Goods Sold IS Rental Revenues IS Depreciation Expense BS/SE Retained Earnings (beginning of the BS Dividends Payable year balance less dividends) BS Franchise IS Salaries Expense IS Income Tax Expense IS Sales IS Interest Expense BS Short Term Investment IS Interest Income BS Unearned Revenues BS Interest Payable BS Interest Receivable BS Inventories Peters Corporation Income Statement December 31 , 2013 s e l a S Cost of goods sold t i f o r p s s o r G Operating expenses n o i t a i c e r p e D , 4 $ c n a r u s n I t n e R s e i r a l a S Total expenses Operating income Other expenses and revenues Interest expense ( Interest income/revenue Rental revenue - Net income before taxes Income Tax Expense e m o c n i t e N Peters Corporation Statement of Changes in Shareholder’s Equity
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