Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Accrual basis Cash basis Cash receipts Debit Credit Cash payments $ 6,800 $ 50.000 Advertising expense Bank loan payable Dividends declared Equipment Income tax expense

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Accrual basis Cash basis Cash receipts Debit Credit Cash payments $ 6,800 $ 50.000 Advertising expense Bank loan payable Dividends declared Equipment Income tax expense Insurance expense Inventory purchased Issue of common shares Rent expense Salaries expense Sales revenue Supplies on hand 11.000 $40.000 6.600 3.840 150.000 20.000 18.400 57.700 250.300 8.100 $302.440 $320.300 Your favorite uncle owns Wheels Forever Ltd., a local company who sells skateboards and accessories. Your uncle approaches a local bank for a loan and is asked to submit financial statements prepared on an accrual basis. Although the company keeps no formal accounting records, it does maintain record of cash receipts and payments made on the company's debit card. Th following information is available for company's first year of operations ending September 30, 2021. Cash payments Cash receipts $20,000 250,300 Issue of common shares Sales revenue Equipment Supplies on hand Inventory purchased Rent expense Insurance expense Income tax expense Bank loan Advertising expense Salaries expense Dividends declared $40,000 8,100 150,000 18,400 3,840 6,600 50.000 6.800 57.700 11,000 I You are a talented Hill School of Business student who is just about to finish BU 285. You have been asked by your uncle to help prepare the information requested by the bank. You thought you should brush up on the definitions of the two accounting methods - cash and accrual. You remembered there was a question about cash vs. accrual on URCourses so you thought you should complete this NOW to make sure you were clear on the concepts. 50,000 Bank loan Advertising expense Salaries expense Dividends declared 6,800 57,700 11,000 You are a talented Hill School of Business student who is just about to fini 285. You have been asked by your uncle to help prepare the inforr requested by the bank. You thought you should brush up on the definitions of the two accounting methods - cash and accrual. You remembered there was a question abou cash vs. accrual on URCourses so you thought you should complete this NC make sure you were clear on the concepts. I In addition to the chart above, your uncle provides the following: In addition to the chart above, your uncle provides the following: 1) Revenue from skateboards delivered but not yet collected amounted to $24.560 2) The store furnishing equipment was purchased at the beginning of October 2020 and has an estimated five year useful life. The company uses straight line depreciation. 3) Supplies on hand on September 30 were $2,260. 4) Rent payments included a $1,370 per month rental fee and a $1.960 deposit that is refundable at the end of the two year lease (September 30, 2023). 5) The insurance was purchased on February 1 for a one year period expiring June 30, 2022. 6) Salaries earned for the last four days in September and to be paid in October 2021 amounted to $3.950. 7) At year end, it was determined that an additional $9,500 is owed for income tax 8) Inventory on hand on September 30 was $20,000. The company uses a perpetual inventory system. Your uncle has to leave for the day but says he would let you know soon what other adjustments might be needed to have complete and accurate statements ready for the bank. You decide to prepare an unadjusted trial balance today so you are ready to record the final year end adjustments later. You remember your BUS 285 instructor showing you a way to organize the preparation of a trial balance and adjusting Jentries in t-accounts. You also remember your BUS 285 instructor always wanted

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: Charles T. Horngren, Walter T. Harrison Jr., M. Suzanne Oliv

9th Edition

130898414, 9780132997379, 978-0130898418, 132997371, 978-0132569309

More Books

Students also viewed these Accounting questions