ACCT 121 Final: Chap 1 Part 5

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9 May 2020

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• TRANSACTION 7. PAYMENT OF EXPENSES Softbyte Inc. pays the following expenses in

cash for September: office rent $600, salaries and wages of employees $900, and

utilities $200

Assets = Liabilities + Stockholders’ Equity

Cash goes down 1700

Stockholders Equity goes down 1700

• TRANSACTION 8. PAYMENT OF ACCOUNTS PAYABLE Softbyte Inc. pays its $250 Daily

News bill in cash. The company previously (in Transaction 5) recorded the bill as an

increase in Accounts Payable.

Assets = Liabilities + Stockholders’ Equity

Cash goes down 250

Accounts Payable goes down 250

• TRANSACTION 9. RECEIPT OF CASH ON ACCOUNT Softbyte Inc. receives $600 in cash

from customers who had been billed for services (in Transaction 6).

Assets = Liabilities + Stockholders’ Equity

Cash goes up 600

Accounts Receivable goes 600

• TRANSACTION 10. DIVIDENDS The corporation pays a dividend of $1,300 in cash to Ray

and Barbara Neal, the stockholders of Softbyte Inc.

Assets = Liabilities + Stockholders’ Equity

Cash goes down 1300

Dividends went down 1300

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Document Summary

Payment of expenses softbyte inc. pays the following expenses in cash for september: office rent , salaries and wages of employees , and utilities . Stockholders equity goes down 1700: transaction 8. Payment of accounts payable softbyte inc. pays its daily. The company previously (in transaction 5) recorded the bill as an increase in accounts payable. Accounts payable goes down 250: transaction 9. Receipt of cash on account softbyte inc. receives in cash from customers who had been billed for services (in transaction 6). Dividends the corporation pays a dividend of ,300 in cash to ray and barbara neal, the stockholders of softbyte inc.

Related Questions

Statement of Cash Flows Using A method of preparing the statement of cash flows that reconciles net income with net cash flows from operating activities.Indirect Method

For the year ending March 31, 20Y5, Omega Systems Inc. reported net income of $105,450 and paid dividends of $7,500. Comparative balance sheets as of March 31, 20Y5 and 20Y4, are as follows:

OMEGA SYSTEMS INC.
Balance Sheets
	March 31,		Changes Increase (Decrease)
	20Y5	20Y4	Changes Increase (Decrease)
Assets
Current assets:
Cash	$ 39,500	$ 29,250	$ 10,250
Accounts receivable	114,120	78,000	36,120
Inventory	126,550	117,550	9,000
Estimated Returns Inventory	6,600	5,000	1,600
Office supplies	4,255	4,435	(180)
Prepaid insurance	3,975	4,500	(525)
Total current assets	$ 295,000	$238,735	$ 56,265
Property, plant, and equipment:
Land	$ 30,000	$ 30,000	$ 0
Store equipment	350,000	285,000	65,000
Accumulated depreciationâstore equipment	(118,550)	(93,900)	(24,650)
Office equipment	23,355	15,000	8,355
Accumulated depreciationâoffice equipment	(7,080)	(3,345)	(3,735)
Total property, plant, and equipment	$ 277,725	$232,755	$ 44,970
Total assets	$ 572,725	$471,490	$101,235
Liabilities
Current liabilities:
Accounts payable	$ 24,630	$ 13,905	$ 10,725
Customer refunds payable	9,000	7,500	1,500
Notes payable (current portion)	7,500	7,500	0
Salaries payable	1,710	2,250	(540)
Unearned rent	2,700	3,600	(900)
Total current liabilities	$ 45,540	$ 34,755	$ 10,785
Long-term liabilities:
Notes payable (final payment due in eight years)	30,000	37,500	(7,500)
Total liabilities	$ 75,540	$ 72,255	$ 3,285
Stockholdersâ Equity
Common stock	$ 37,500	$ 37,500	$ 0
Retained earnings	459,685	361,735	97,950
Total stockholdersâ equity	$ 497,185	$399,235	$ 97,950
Total liabilities and stockholdersâ equity	$ 572,725	$471,490	$101,235

Instructions:

1. Prepare a statement of cash flows, using the indirect method. Enter account decreases, cash outflows, and the income statement effects that reduce net income as negative amounts.

Omega Systems Inc.

Statement of Cash Flows

For the Year Ended March 31, 20Y5

Cash flows from operating activities:

Net income

Depreciation expense-store equipment

Depreciation expense-office equipment

Changes in noncash current operating assets and liabilities:

Increase in accounts receivable

Increase in inventory

Increase in estimated returns inventory

Decrease in office supplies

Decrease in prepaid insurance

Increase in accounts payable

Increase in customer refunds payable

Decrease in salaries payable

Decrease in unearned rent

Net cash flows used for investing activities

Cash flows used for financing activities:

Payment of note payable

Payment of dividends

Net cash flows used for financing activities

Net increase in cash

April 1, 20Y4 cash balance

March 31, 20Y5 cash balance

scarletgnu53

Transactions

On September 1 of the current year, Joy Tucker established a business to manage rental property. She completed the following transactions during September:

Opened a business bank account with a deposit of $36,000 in exchange for common stock.
Purchased office supplies on account, $1,800.
Received cash from fees earned for managing rental property, $6,750.
Paid rent on office and equipment for the month, $5,000.
Paid creditors on account, $1,375.
Billed customers for fees earned for managing rental property, $9,500.
Paid automobile expenses for month, $840, and miscellaneous expenses, $960.
Paid office salaries, $3,600.
Determined that the cost of supplies on hand was $350; therefore, the cost of supplies used was $1,450.
Paid dividends, $3,000.

Required:

1. Indicate the effect of each transaction and the balances after each transaction:
For those boxes in which no entry is required, leave the box blank.
For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)

Assets

Liabilities

Stockholders' Equity

Item

Cash

Accounts Receivable

Supplies

Accounts Payable

Common Stock

Dividends

Fees Earned

Rent Expense

Sal. Expense

Supp. Expense

Auto Expense

Misc. Expense

Item

Bal.

2. Stockholders' equity is the right of stockholders' to the assets of the business. These rights are increased by issuing common stock and revenues and decreased by dividends and expenses.

3. Determine the net income for September.
$

4. How much did September's transactions (a-j) increase or decrease retained earnings?
Increased by $

coralcattle151

Data Table

Outdoor Adventure Company
Comparative Balance Sheet
December 31, 2019 and 2018
		2019	2018
Assets
Current Assets:
	Cash	$1,398,330	$14,790
	Short-term Investments, net	29,000	0
	Accounts Receivable, net	1,600	6,300
	Merchandise Inventory	400	0
	Office Supplies	70	300
	Prepaid Rent	0	2,000
Property, Plant, and Equipment:
	Land	615,000	75,000
	Building	944,000	94,000
	Canoes	13,920	13,920
	Office Furniture and Equipment	140,000	0
	Accumulated DepreciationâPP&E	(31,920)	(1,740)
Total Assets		$3,110,400	$204,570
Liabilities
Current Liabilities:
	Accounts Payable	$6,420	$4,400
	Utilities Payable	550	250
	Telephone Payable	640	290
	Wages Payable	3,700	1,200
	Notes Payable	18,000	0
	Interest Payable	630	30
	Unearned Revenue	650	450
Long-Term Liabilities:
	Notes Payable	6,720	6,720
	Mortgage Payable	725,000	0
	Bonds Payable	1,000,000	0
	Discount on Bonds Payable	(1,140)	0
Total Liabilities		1,761,170	13,340
Stockholders' Equity
Paid-In Capital:
	Preferred Stock	60,000	0
	Paid-In Capital in Excess of ParâPreferred	480,000	0
	Common Stock	229,000	189,000
	Paid-In Capital in Excess of ParâCommon	240,000	0
Retained Earnings		340,230	2,230
Total Stockholders' Equity		1,349,230	191,230
Total Liabilities and Stockholders' Equity		$3,110,400	$204,570

1.	Theincome statement for 20192019 included the following items:
	a.	Net income, $ 435 comma 000$435,000
	b.	Depreciation expense for the year, $ 30 comma 180$30,180.
	c.	Amortization on the bonds payable, $ 380$380.
2.	There were no disposals of property, plant and equipment duringthe year. All acquisitions of PP&E were for cash except theland, which was acquired by issuing preferred stock.
3.	Thecompany issued bonds payable with a face value of $ 1 comma 000 comma 000$1,000,000 , receiving cash of $ 998 comma 480$998,480.
4.	Thecompany distributed 8 comma 0008,000 shares of common stock in a stock dividend when the market valuewas $ 9.00$9.00 per share. All other dividends were paid in cash.
5.	The common stock, except for the stock dividend, was issued forcash.
6.	Thecash receipt from the notes payable in 20192019 is considered a financing activity because it does not relate tooperations.

Net Cash Provided by (Used for) Investing Activities

(990,000)

Cash Flows From Financing Activities:
Cash Receipt from Issuance of Common Stock
Cash Receipt from Issuance of Notes Payable
Cash Receipt from Issuance of Mortgage Payable
Cash Receipt from Issuance of Bonds Payable
Cash Payment of Dividends
Net Cash Provided by (Used for) Financing Activities

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ACCT 121 Final: Chap 1 Part 5

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