Intermediate Accounting II, ACCT-2154



Intermediate Accounting II, ACCT-2154Chapter 2 Practice Problem SolutionsRequirement 12013 Debit CreditJan. 1Cash 100,000 Common stock 100,000Jan. 2Inventory 35,000 Accounts payable 35,000Jan. 4Prepaid insurance 2,400 Cash 2,400Jan. 10Accounts receivable 12,000 Sales revenue 12,000Jan. 10Cost of goods sold 7,000 Inventory 7,000Jan. 15Cash 30,000 Note payable 30,000Jan. 20Wages expense 6,000 Cash 6,000Jan. 22Cash 10,000 Sales revenue 10,000Jan. 22Cost of goods sold 6,000 Inventory 6,000Jan. 24Accounts payable 15,000 Cash 15,000Jan. 26Cash 6,000 Accounts receivable 6,000Jan. 28Utilities expense 1,000 Cash 1,000Jan. 30Prepaid rent 2,000Rent expense 2,000 Cash 4,000Problem 2–1 (continued)Requirement 2balance sheet AccountsCashAccounts receivable1/1 Bal.01/1 Bal.01/1100,0002,400 1/41/1012,0006,0001/261/1530,0006,0001/201/2210,00015,0001/241/266,0001,0001/284,0001/301/31 Bal.117,6001/31 Bal.6,000InventoryPrepaid insurance1/1 Bal.01/1 Bal.01/235,0007,0001/101/42,4006,0001/221/31 Bal.22,0001/31 Bal.2,400Prepaid rentAccounts payable1/1 Bal.001/1 Bal.1/302,0001/2415,00035,0001/21/31 Bal.2,00020,0001/31 Bal.Note payableCommon stock01/1 Bal.01/1 Bal.30,0001/15100,0001/130,0001/31 Bal.100,0001/31 Bal.Problem 2–1 (continued)InCOME STATEMENT AccountsSales revenueCost of goods sold01/1 Bal.1/1 Bal.012,0001/101/107,00010,0001/221/226,00022,0001/31 Bal.1/31 Bal.13,000Wages expenseRent expense1/1 Bal.01/1 Bal.01/206,0001/302,0001/31 Bal.6,0001/31 Bal.2,000Utilities expense1/1 Bal.01/281,0001/31 Bal.1,000Problem 2–1 (concluded)Requirement 3Account TitleDebitsCreditsCash117,600 Accounts receivable 6,000Inventory 22,000Prepaid insurance2,400Prepaid rent 2,000Accounts payable 20,000Note payable 30,000Common stock 100,000Sales revenue 22,000Cost of goods sold 13,000Wages expense6,000Utilities expense1,000Rent expense 2,000______ Totals 172,000 172,000Brief Exercise 2–71.Service revenue 4,000Unearned service revenue 4,0002.Advertising expense ($2,000 x 1/2)1,000Prepaid advertising 1,0003.Salaries expense16,000Salaries payable16,0004.Interest expense ($60,000 x 8% x 4/12)1,600Interest payable1,600Requirement 1BLUEBOY CHEESE CORPORATIONIncome StatementFor the Year Ended December 31, 2013Sales revenue $800,000Cost of goods sold 480,000Gross profit 320,000Operating expenses:Salaries$120,000Rent30,000Depreciation 60,000Advertising 5,000 Total operating expenses 215,000Operating income 105,000Other expense:Interest 4,000Net income $101,000Exercise 2–11 (continued)BLUEBOY CHEESE CORPORATIONBalance SheetAt December 31, 2013 AssetsCurrent assets: Cash $ 21,000Accounts receivable 300,000Inventory50,000Prepaid rent 10,000Total current assets 381,000Property and equipment:Equipment $600,000Less: Accumulated depreciation (250,000) 350,000Total assets $731,000Liabilities and Shareholders' EquityCurrent liabilities:Accounts payable $ 60,000Salaries payable 8,000Interest payable Note payable 2,000 60,000Total current liabilities 130,000 Shareholders’ equity:Common stock $400,000Retained earnings 201,000*Total shareholders’ equity 601,000Total liabilities and shareholders’ equity $731,000*Beginning balance of $100,000 plus net income of $101,000.Exercise 2–11 (concluded)Requirement 2December 31, 2013Sales revenue800,000Income summary800,000Income summary699,000Cost of goods sold480,000Salaries expense120,000Rent expense30,000Depreciation expense60,000Interest expense4,000Advertising expense5,000Income summary ($800,000 – 699,000)101,000Retained earnings101,000 ................
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