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SMG AC 221 Lecture Notes - Lecture 3: Promissory Note, Retained Earnings, Accounts Payable

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pinkmanatee811
30 Sep 2016
School
Boston University
Department
Accounting
Course
SMG AC 221
Professor
Cameron Anderson

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Document Summary

*check post-class 3 slides ( recognition ) for list of examples of accounts. Dividends payable, notes payable, accounts payable = liability. Retained earnings = contribution (sum of income dividends payable, which is a liability), liability. Test or exam example: sheet of which account types are which, fill in the blanks. Looking at small time slices: changes in cash & net income will be different. Looking at big over time: no change in cash & net income numbers. Assets used in future to generate cash inflow or reduce cash outflow. Liabilities - obligations or claims against assets, as a result of past events. Equity residual after changes in assets & liabilities. Current expense change cash & net income/expenses at the same time. Cash-based and accrual-based income are the same. Ie prepaid rent, use of space for a month, era, whatever. No asset/ formal agreement/ payment related to the fact that the tenant uses the office for a month.

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Related Questions

How would you interpret the below financial statements?

Income Statement - Quarter1
Gross Revenue 1,458,932 100.0%
- Commissions 128,612 8.8%
- Refunds 97,748 6.7%
+ Interest Income - 0.0%
Net Revenue 1,232,572 84.5%
Flight Operations 299,590 20.5%
Fuel 257,205 17.6%
Maintenance 274,102 18.8%
Passenger Service 212,316 14.6%
Cabin/Food Service 17,776 1.2%
Insurance 17,640 1.2%
Marketing Expenses 30,000 2.1%
Add. Employee Compensation - 0.0%
Quality and Training 1,000 0.1%
Hiring/On-Job-Training Costs 12,000 0.8%
Social Performance Budget 500 0.0%
Market Research Cost - 0.0%
Interest Expense 34,219 2.3%
Lease Payment 132,000 9.0%
Administrative Exp 100,000 6.9%
Depreciation 19,000 1.3%
Other Expense 9,000 0.6%
Total Operating Expense 1,416,348 97.1%
Operating Profit/Loss (183,776) -12.6%
Net Cargo Profit - 0.0%
Other Income - 0.0%
Profit Before Tax (183,776) -12.6%
Less Income Tax (40%) - 0.0%
Net Profit (183,776) -12.6%
Dividends Paid -

0.00/sh
Current QuarterYear To-Date
Balance Sheet -Quarter 1
Cash 556,635
Short-term Investment -
Accounts Receivable 583,573
Total Current Assets 1,140,208
Aircraft Cost 800,000
Less Depreciation (320,000)
Net Aircraft 480,000
Facilities/Equipment-Net 75,000
Total Fixed Assets 555,000
Total Assets 1,695,208
Accounts Payable 419,204
Short-term Loans 937,268
Total Current Liabilities 1,356,472
Long-term Loans 271,177
Total Liabilities 1,627,649
Common Stock 1,525,000
Retained Earnings (1,457,440)
Total Equity 67,560
Total Liabilities &Equity 1,695,209
Cash Flow - Quarter1
Beginning Cash 735,596
CD Redemption -
Gross Revenue (60%) 875,359
Accounts Receivable 524,258
Stock Issued -
Loan Proceeds -
Other Income -
Total Cash Inflow (a) 2,135,213
Commissions + Refunds 226,360
Operating Expense (70%) 978,144
Accounts Payable 368,540
Income Tax -
Total Loan Payments 5,534
CD Purchase -
Dividends -
Equipment Purchases -
Total Cash Outflow (b) 1,578,578
Net Cash (a)-(b) 556,635
Overdraft Loan -
Ending Cash 556,635

How would you interpret the below financials?

Income Statement -Quarter 3
Gross Revenue 3,182,084 100.0%
- Commissions 285,359 9.0%
- Refunds 187,743 5.9%
+ Interest Income - 0.0%
Net Revenue 2,708,982 85.1%
Flight Operations 646,112 20.3%
Fuel 573,887 18.0%
Maintenance 565,530 17.8%
Passenger Service 443,330 13.9%
Cabin/Food Service 45,478 1.4%
Insurance 66,000 2.1%
Marketing Expenses 31,000 1.0%
Add. Employee Compensation 8,400 0.3%
Quality and Training 4,000 0.1%
Hiring/On-Job-Training Costs 18,000 0.6%
Social Performance Budget 500 0.0%
Market Research Cost - 0.0%
Interest Expense 33,977 1.1%
Lease Payment 502,000 15.8%
Administrative Exp 200,000 6.3%
Depreciation 5,000 0.2%
Other Expense 6,771 0.2%
Total Operating Expense 3,149,985 99.0%
Operating Profit/Loss (441,003) -13.9%
Net Cargo Profit 3,820 0.1%
Other Income - 0.0%
Profit Before Tax (437,183) -13.7%
Less Income Tax (40%) - 0.0%
Net Profit (437,183) -13.7%
Dividends Paid - 0.00/sh
Current QuarterYear To-Date
Balance Sheet - Quarter 3
Cash 243,678
Short-term Investment -
Accounts Receivable 1,272,834
Total Current Assets 1,516,512
Aircraft Cost -
Less Depreciation -
Net Aircraft -
Facilities/Equipment-Net 65,000
Total Fixed Assets 65,000
Total Assets 1,581,512
Accounts Payable 943,496
Short-term Loans 937,268
Total Current Liabilities 1,880,764
Long-term Loans 260,439
Total Liabilities 2,141,203
Common Stock 1,525,000
Retained Earnings (2,084,690)
Total Equity (559,690)
Total Liabilities & Equity 1,581,513
Cash Flow - Quarter 3
Beginning Cash 219,281
CD Redemption -
Gross Revenue (60%) 1,909,250
Accounts Receivable 1,039,620
Stock Issued -
Loan Proceeds -
Other Income 469,820
Total Cash Inflow (a) 3,637,971
Commissions + Refunds 473,102
Operating Expense (70%) 2,201,489
Accounts Payable 714,385
Income Tax -
Total Loan Payments 5,315
CD Purchase -
Dividends -
Equipment Purchases -
Total Cash Outflow (b) 3,394,291
Net Cash (a)-(b) 243,680
Overdraft Loan -
Ending Cash 243,680

How would you interpret the below financials?

Income Statement -Quarter 4
Gross Revenue 3,149,864 100.0%
- Commissions 282,397 9.0%
- Refunds 239,389 7.6%
+ Interest Income - 0.0%
Net Revenue 2,628,078 83.4%
Flight Operations 641,849 20.4%
Fuel 593,729 18.8%
Maintenance 561,836 17.8%
Passenger Service 430,489 13.7%
Cabin/Food Service 38,562 1.2%
Insurance 66,000 2.1%
Marketing Expenses 31,000 1.0%
Add. Employee Compensation - 0.0%
Quality and Training 4,000 0.1%
Hiring/On-Job-Training Costs 18,000 0.6%
Social Performance Budget - 0.0%
Market Research Cost - 0.0%
Interest Expense 33,860 1.1%
Lease Payment 502,000 15.9%
Administrative Exp 200,000 6.3%
Depreciation 5,000 0.2%
Other Expense - 0.0%
Total Operating Expense 3,126,324 99.3%
Operating Profit/Loss (498,246) -15.8%
Net Cargo Profit 6,522 0.2%
Other Income - 0.0%
Profit Before Tax (491,724) -15.6%
Less Income Tax (40%) - 0.0%
Net Profit (491,724) -15.6%
Dividends Paid - 0.00/sh
Current QuarterYear To-Date
Balance Sheet -Quarter 4
Cash - -
Short-term Investment -
Accounts Receivable 1,259,946
Total Current Assets 1,259,946
Aircraft Cost -
Less Depreciation -
Net Aircraft -
Facilities/Equipment-Net 60,000
Total Fixed Assets 60,000
Total Assets 1,319,946
Accounts Payable 936,397
Short-term Loans 1,179,733
Total Current Liabilities 2,116,130
Long-term Loans 255,231
Total Liabilities 2,371,361
Common Stock 1,525,000
Retained Earnings (2,576,410)
Total Equity (1,051,410)
Total Liabilities & Equity 1,319,951
Cash Flow - Quarter4
Beginning Cash 243,678
CD Redemption -
Gross Revenue (60%) 1,889,918
Accounts Receivable 1,272,830
Stock Issued -
Loan Proceeds -
Other Income 6,522
Total Cash Inflow (a) 3,412,948
Commissions + Refunds 521,786
Operating Expense (70%) 2,184,927
Accounts Payable 943,496
Income Tax -
Total Loan Payments 5,208
CD Purchase -
Dividends -
Equipment Purchases -
Total Cash Outflow (b) 3,655,417
Net Cash (a)-(b) (242,469)
Overdraft Loan 242,465
Ending Cash (4)