ACC 311 Lecture Notes - Lecture 3: Matching Principle, Retained Earnings

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viridianraven17

31 Jan 2017

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Document Summary

Revenues increase stockholders" equity through retained earnings. Expenses decrease stockholders" equity through retained earnings. Assets = liabilities + equity (revenue - expenses) Gains: inflows of net assets from transactions not part of primary operations of a business. Losses: outflow of net assets from transactions not part of primary operations of a business. Gains and losses have same effect on net income as revenue and expenses, respectively, but are usually included under other income and expenses. Purchase or manufacture products or supplies on credit. Deliver product or service to customers on credit. What amounts should be recognized for revenues and expenses. When should revenues and expenses be recognized. Cost principle: record revenue and expense at the cash-equivalent value. Product or service provided and cash received. Product or service provided and cash not received. Revenues are not recognized when the product or service is not provided and cash is received.

Related Questions

Statement of Cash Flows
Angela's Cleaning Consortium			Seymour-Johnson, Inc.
Comparative Balance Sheet			Income Statement
December 31, 2020 and 2019			For the Year Ended December 31, 2020
	2020	2019	Net sales	$ 386,000
ASSETS			Cost of goods sold	(212,000)
Current assets			Gross profit	174,000
Cash	$ 66,500	$ 62,000	Operating expenses
Accounts receivable	95,000	113,000	Salaries and wages expense	(66,000)
Merchandise inventory	172,000	165,000	Depreciation expense	(25,000)
Total current assets	333,500	340,000	Other operating expenses	(28,000)
Long-term investments			Income from operations	55,000
Investment in Walking Dead Co.	-	50,000	Other revenues and gains
Property, buildings, and equipment	507,000	304,000	Interest revenue	15,000
Less: Accumulated depreciation	(59,500)	(42,000)	Dividend revenue	9,700
Total assets	$ 781,000	$ 652,000	Gain on disposal of plant assets	12,000
Liabilities and Stockholders' Equity			Other expenses and losses
Current liabilities			Interest expense	(15,000)
Accounts payable	$ 144,000	$ 175,000	Income before income taxes	76,700
Accrued liabilities	17,000	47,000	Income tax expense	(14,000)
Total current assets	161,000	222,000	Net Income	$ 62,700
Long-term Liabilities
Notes payable, long-term	160,000	90,000
Totalliabilities	321,000	312,000
Stockholders' equity
Common stock	370,000	250,000
Retained earnings	140,000	90,000
Treasury stock	(50,000)	-
TotalStockholdersâ Equity	460,000	340,000
Total Liabilities & Stockholders' Equity	$ 781,000	$ 652,000

Additional Information:
A. Sold plant assets with a cost of$75,000 and accumulated depreciation of $7,500,
yielding again of disposal of plant assets of $12,000.
B. Purchased plant assets by payingcash.
C. Issued Notes Payable for Cash.
D. Sold investment in Walking Dead Coat cost (zero gain/loss).
E. Issued Common Stock for Cash.
F. Purchased Treasury Stock for Cash.

Requirements:
Prepare, in good form, a Statement of Cash Flowsusing the indirect method.

beigesardine151

Additional Information:
	A. Sold plant assets with a cost of$75,000 and accumulated depreciation of $7,500,
	yielding again of disposal of plant assets of $12,000.
	B. Purchased plant assets by payingcash.
	C. Issued Notes Payable for Cash.
	D. Sold investment in Walking Dead Coat cost (zero gain/loss).
	E. Issued Common Stock for Cash.
	F. Purchased Treasury Stock for Cash.

	Requirements:
	Prepare, in good form, a Statement of Cash Flowsusing the indirect method.

Statement of Cash Flows
Angela's Cleaning Consortium			Seymour-Johnson, Inc.
Comparative Balance Sheet			Income Statement
December 31, 2020 and 2019			For the Year Ended December 31, 2020
	2020	2019	Net sales	$ 386,000
ASSETS			Cost of goods sold	(212,000)
Current assets			Gross profit	174,000
Cash	$ 66,500	$ 62,000	Operating expenses
Accounts receivable	95,000	113,000	Salaries and wages expense	(66,000)
Merchandise inventory	172,000	165,000	Depreciation expense	(25,000)
Total current assets	333,500	340,000	Other operating expenses	(28,000)
Long-term investments			Income from operations	55,000
Investment in Walking Dead Co.	-	50,000	Other revenues and gains
Property, buildings, and equipment	507,000	304,000	Interest revenue	15,000
Less: Accumulated depreciation	(59,500)	(42,000)	Dividend revenue	9,700
Total assets	$ 781,000	$ 652,000	Gain on disposal of plant assets	12,000
Liabilities and Stockholders' Equity			Other expenses and losses
Current liabilities			Interest expense	(15,000)
Accounts payable	$ 144,000	$ 175,000	Income before income taxes	76,700
Accrued liabilities	17,000	47,000	Income tax expense	(14,000)
Total current assets	161,000	222,000	Net Income	$ 62,700
Long-term Liabilities
Notes payable, long-term	160,000	90,000
Totalliabilities	321,000	312,000
Stockholders' equity
Common stock	370,000	250,000
Retained earnings	140,000	90,000
Treasury stock	(50,000)	-
TotalStockholdersâ Equity	460,000	340,000
Total Liabilities & Stockholders' Equity	$ 781,000	$ 652,000