ACC 300 Lecture Notes - Lecture 2: Gift Card, Yao Ming, Accounts Payable
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1. Correct the recorded activity for Android for Life during July on the attached spreadsheet
2. Correct the balance sheet and income statement for Android for Life in July 2015 on the attached spreadsheet.
3. Is the large decline in cash a concern?
Android for Life Inc.
On July 1, 2015, Andy incorporated her business under the name Android for Life, Inc. Listed below are various transactions that occurred during the remainder of the year:
(a) On July 1, Andy purchased all of Android for Life common stock for $100,000 cash.
(b) On July 1, Android for Life paid $3,000 to an attorney to prepare and file incorporation documents with the State of Texas.
(c) On July 2, Android for Life borrowed $100,000 from a local bank. The bank note required payment of principal in four annual installments of $25,000 beginning on July 1, 2016. In addition, the note specified interest payments of 6%, with the first payment due on July 1, 2016.
(d) On July 3, Android for Life signed a five-year lease on a building to be used as the veterinary clinic. The lease required a payment of $10,000 per month , payable on the first day of each month. Android for Life paid the amount for July on the date the lease was signed.
(e) On July 5, Android for Life paid $150,000 for medical equipment, office furniture, and other equipment.
(f) On July 6, Android for Life purchased various inventory items for $8,500 cash.
(g) Also on July 6, Android for Life purchased $500 worth of office supplies for cash.
(h) On July 28, Android for Life paid employees wages of $8,000 (which included Andy’s salary of $6,000).
(i) During July, Android for Life received $30,000 from clients for office visits and sales of merchandise (food, clothes, etc.).
A review of Android for Life records at July 31, 2015, revealed the following:
(j) Clients still owed Android for Life $3,500 for services performed during July but not yet billed. These amounts are expected to be billed and collected in August.
(k) At the end of July, a physical count of inventory revealed that $1,000 of inventory was still on-hand.
(l) At the end of July, a physical count of office supplies revealed that $100 of supplies were still on-hand.
(m) Depreciation on the equipment for July was estimated to be $1,250.
(n) Interest needs to be recorded on the note payable.
Assets | Liabilities | Stockholders' Equity | ||||||||||||
Accounts | Office | Property, Plant | Intangible | Accumulated | Notes | Interest | Common | Retained | ||||||
Transaction | Cash | Receivable | Inventory | Supplies | & Equipment | Assets | Depreciation | = | Payable | Payable | Stock | Earnings | ||
purchase of Common Stock | (100,000) | (100,000) | ||||||||||||
Payment for Articles of Incorporation | (3,000) | 3,000 | ||||||||||||
Note / Loan (interest expense on income statement?) | 100,000 | 100,000 | ||||||||||||
Long-term Lease (show on income statement $10k?) | (10,000) | (10,000) | ||||||||||||
Long-term Equipment | (150,000) | 150,000 | ||||||||||||
Inventory Items | (8,500) | 8,500 | ||||||||||||
Office Supplies | (500) | 500 | ||||||||||||
Wages | (8,000) | (8,000) | ||||||||||||
Office Visits/ Merchandise | 30,000 | 30,000 | ||||||||||||
Services Performed | 3,500 | 3,500 | ||||||||||||
Inventory Used (income statement expense?) | 7,500 | (7,500) | ||||||||||||
Office Supplies Used (income statement expense?) | (400) | (400) | ||||||||||||
Depreciation on Equipment (income statement expense?) | (1,250) | (1,250) | ||||||||||||
Interest Expense (income statement expense?) | 6,000 | (6,000) | ||||||||||||
Totals | (142,500) | 3,500 | 1,000 | 100 | 150,000 | 3,000 | (1,250) | 100,000 | 6,000 | (100,000) | 7,850 |
Android Inc. | ||
Income Statement | ||
For the month ended July 31st, 2015 | ||
Revenues | ||
Sales and Revenues | 33,500 | |
Less: Cost of goods Sold | (7,500) | |
Gross Profit | 26,000 | |
Expenses | ||
Organizational Expenses | 3,000 | |
Salaries Expense | 8,000 | |
Office Supplies Expense | 400 | |
Depreciation Expense | 1,250 | |
Interest Expense | 500 | |
TOTAL EXPENSE | 13,150 | |
NET INCOME | 12,850 | |
Android Inc. | ||
Balance Sheet | ||
As at July 31st, 2015 | ||
Assets: | ||
Current Assets | ||
Cash | 60,000 | |
Accounts Receivable | 3,500 | |
Inventory | 1,000 | |
Office Supplies | 100 | |
Total Current Assets | 64,600 | |
Plant Property and Equipment | ||
Plant Property and Equipment | 150,000 | |
Less: Accumulated Depreciation | (1,250) | 148,750 |
TOTAL ASSETS | 213,350 | |
LIABILITIES | ||
Notes Paybles | 100,000 | |
Interest Payale | 500 | |
TOTAL LIABILITIES | 100,500 | |
Shareholder's Equity | ||
Common Stock | 100,000 | |
Retained Earnings | 12,850 | |
TOTAL Shareholder's Equity | 112,850 | |
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | 213,350 | |
I want the question answered in the same format. fill in theboxes
for how it should be recorded each month.
what will be recorded in june
july
august
Exercise 5-13
Expense Recognition
Sun Microsystems uses the accrual basis of accounting andrecognizes revenue at the time it sells goods or renders services.It applies U.S. GAAP and reports in U.S. dollars. Indicate theamount of expenses (if any) the firm recognizes during the monthsof June, July, and August in each of the following hypotheticaltransactions. The firm does the following:
a. Pays $180,000 on July 1 for one year's renton a warehouse beginning on that date.
June | Select$0$15,000$180,000Item 1 | is recognized. |
July | Select$0$15,000$180,000Item 2 | is recognized. |
August | Select$0$15,000$180,000Item 3 | is recognized. |
b. Receives a utility bill on July 2 totaling$4,560 for services received during June. It pays the utility billduring July.
June | Select$0$1,520$4,560Item 4 | is recognized. |
July | Select$0$1,520$4,560Item 5 | is recognized. |
August | Select$0$1,520$4,560Item 6 | is recognized. |
c. Purchases office supplies on account costing$12,600 during July. It pays $5,500 for these purchases during Julyand the remainder during August. Office supplies on hand on July 1cost $2,400, on July 31 cost $9,200, and on August 31 cost$2,900.
June | Select$0$2,400$5,800$6,300Item7 | is recognized. |
July | Select$5,800$6,300$9,200Item 8 | is recognized. |
August | Select$0$2,900$6,300Item 9 | is recognized. |
d. Pays $7,200 on July 15 for property taxes onoffice facilities for the current calendar year.
June | Select$0$600$7,200Item 10 | is recognized. |
July | Select$300$600$7,200Item 11 | is recognized. |
August | Select$600$1,200$7,200Item 12 | is recognized. |
e. Pays $2,000 on July 15 as a deposit on acustom-made delivery van that the manufacturer will deliver onSeptember 30.
June | Select$0$1,000$2,000Item 13 | is recognized. |
July | Select$0$1,000$2,000Item 14 | is recognized. |
August | Select$0$1,000$2,000Item 15 | is recognized. |
f. Pays $4,500 on July 25 as an advance on theAugust salary of an employee.
June | Select$0$1,500$4,500Item 16 | is recognized. |
July | Select$0$1,500$4,500Item 17 | is recognized. |
August | Select$0$1,500$4,500Item 18 | is recognized. |
g. Pays $6,600 on July 25 for advertisementsthat appeared in computer journals during June.
June | Select$2,200$3,300$6,600Item19 | is recognized. |
July | Select$0$3,300$6,600Item 20 | is recognized. |
August | Select$0$3,300$6,600Item 21 | is recognized. |
[The following informationapplies to the questions displayed below.] |
Beech Corporation is a merchandising company that is preparing amaster budget for the third quarter of the calendar year. Thecompany’s balance sheet as of June 30th is shown below: |
Beech Corporation Balance Sheet June 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash | $ 81,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accountsreceivable | 132,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | 56,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plant and equipment,net of depreciation | 214,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ 483,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accountspayable | $ 75,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock | 346,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retainedearnings | 62,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilitiesand stockholders’ equity | $ 483,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
alue: Required information
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