How will the tables be fill-in? Income Statement and Balance sheet?

315 307 Posting Transactions 308 Each business transaction always results in pairs of accounting transactions, a credit and a debit. 309 In the case of a sale of a product or service, a single business transaction results in two pairs of accounting transactions. 310 One pair is related to the Revenues and the other pair is related to the Cost of Revenues. 311 Each of the accounting transactions are posted to one of the above accounts. 312 Therefore each business transaction will result in multiple accounts being updated. 313 Remember, the double entry of a pair of accounting transactions is what make the financial statements balance. 314 The following tutorial exercise (not graded) is designed to prepare you to complete the required (graded) exercise below. Wrong answers on this tutorial exercise will turn red. The graded exercise will not be forgiving. 316 You most post the accounting transactions related to a series of business transactions. 317 In this part of the exercise you will be operating as the Comptroller of the company, preparing the accounting statements 318 Post the business's transactions by entering either a positive or negative value in the appropriate yellow cells. 319 In this exercise you purchase machines for $500 and resell them for $1000. 320 321 Business Transactions Accounting Transactions 322 323 Income Statement Balance Sheet Cost of Accounts 324 Revenues Revenues SG&A Net Income Cash Receivable Inventory 325 326 Prepay $500 for rental of store 327 Receive store rental invoice 328 Purchase 5 machines on credit 329 Sell 3 machines on credit 3 330 Pay owners salary of $1000/month 331 Pay $2500 invoice for 5 machines purchased 332 Receive cash payment for sale on credit 333 Sell 2 machines for cash 334 335 when you have successfully completed the above exercise (no cells highlighted in red) you will notice in columns P through that the Change in Assets = Change in Liabilities + Change in Equity. 336 This is because Assets = Liabilities + Equity. 337 Understanding this fundamental accounting relationship will help you in completing the more complex graded exercise below. 338 Accounts Payable Change in Assets = Change in Liabilities + Change in Equity Prepaid Rent S $ $ $ $ $ $ Balance Sheet Accounts Receivable Accounts Payable Change in Assets = Change in Liabilities Change in Equity Inventory Prepaid Rent - $ $ - $ $ - $ $ $ $ # - $ - $ $ $ $ $ $ $ 379 4/1/2019 $ $ $ - $ $ $ $ $ $ - $ - $ $ $ 365 366 Business Transactions Accounting Transactions 367 368 Income Statement Transaction Cost of 369 Date Revenues Revenues SG&A Net Income Cash 370 371 1/25/2019 Prepay $300 total for 3 Months Rental of Shelves $ 372 2/1/2019 Receive February Shelf Rental Invoice $ 373 2/9/2019 Purchase 10 pairs on credit due 4/6 $ 374 2/12/2019 Sell 1 pair for cash $ 375 2/15/2019 Pay Owners February Salary of $30/month $ 376 2/25/2019 Sell 4 pairs on credit due 4/15 $ 377 3/1/2019 Receive March Shelf Rental Invoice $ 378 3/15/2019 Pay Owners March Salary of $30/month $ Receive April Shelf Rental Invoice $ 380 4/6/2019 Pay the total invoice for 2/9 merchandise purchase (row 373) $ 381 4/15/2019 Pay Owners April Salary of $30/month $ 382 4/20/2019 Sell 3 pairs for cash $ 383 4/15/2019 Receive cash payment for 2/25 sale $ 384 4/25/2019 Sell 2 pairs at 20% discount for cash $ 385 386 Management Reporting Having posted the accounting transactions you are going to analyze the resulting management reporting. 388 In this part of the exercise you will be operating as a financial analyst or business manager, seeking to understand what is happening in the business Accountants process transactions according to GAAP. These transactions go into the General Ledger as debits and credits. 391 The General Ledger generates management reporting. 392 Managers, supported by financial analysts, use this reporting to understand financial performance and make business decisions. 393 Below is monthly summary data that suggests how a financial analyst or manager might view the performance of a business: 394 395 Income Statement Cost of 896 Revenues Revenues SG&A Net Income Cash 397 January 398 February 899 March 200 April 01 402 in which month was the Net Income the greatest: 103 204 in which month was the Cash generated the greatest: 05 106 The difference between Net Income and Cash generated is a direct result of accrual accounting. 107 If you had managed the business strictly based on cash flow, you might have closed down the business after March before the huge inflow of cash occurred. 08 You might never have enjoyed the large inflow of payment from customer (Accounts Receivable) or monetized (converted it to cash) your inventory. 109 The 6 explains what caused the changes in Cash presented in Column K. 110 Which is a better measure of a company's performance? 111 12 13 14 Balance Sheet Accounts Receivable Accounts Payable Inventory Prepaid Rent 315 307 Posting Transactions 308 Each business transaction always results in pairs of accounting transactions, a credit and a debit. 309 In the case of a sale of a product or service, a single business transaction results in two pairs of accounting transactions. 310 One pair is related to the Revenues and the other pair is related to the Cost of Revenues. 311 Each of the accounting transactions are posted to one of the above accounts. 312 Therefore each business transaction will result in multiple accounts being updated. 313 Remember, the double entry of a pair of accounting transactions is what make the financial statements balance. 314 The following tutorial exercise (not graded) is designed to prepare you to complete the required (graded) exercise below. Wrong answers on this tutorial exercise will turn red. The graded exercise will not be forgiving. 316 You most post the accounting transactions related to a series of business transactions. 317 In this part of the exercise you will be operating as the Comptroller of the company, preparing the accounting statements 318 Post the business's transactions by entering either a positive or negative value in the appropriate yellow cells. 319 In this exercise you purchase machines for $500 and resell them for $1000. 320 321 Business Transactions Accounting Transactions 322 323 Income Statement Balance Sheet Cost of Accounts 324 Revenues Revenues SG&A Net Income Cash Receivable Inventory 325 326 Prepay $500 for rental of store 327 Receive store rental invoice 328 Purchase 5 machines on credit 329 Sell 3 machines on credit 3 330 Pay owners salary of $1000/month 331 Pay $2500 invoice for 5 machines purchased 332 Receive cash payment for sale on credit 333 Sell 2 machines for cash 334 335 when you have successfully completed the above exercise (no cells highlighted in red) you will notice in columns P through that the Change in Assets = Change in Liabilities + Change in Equity. 336 This is because Assets = Liabilities + Equity. 337 Understanding this fundamental accounting relationship will help you in completing the more complex graded exercise below. 338 Accounts Payable Change in Assets = Change in Liabilities + Change in Equity Prepaid Rent S $ $ $ $ $ $ Balance Sheet Accounts Receivable Accounts Payable Change in Assets = Change in Liabilities Change in Equity Inventory Prepaid Rent - $ $ - $ $ - $ $ $ $ # - $ - $ $ $ $ $ $ $ 379 4/1/2019 $ $ $ - $ $ $ $ $ $ - $ - $ $ $ 365 366 Business Transactions Accounting Transactions 367 368 Income Statement Transaction Cost of 369 Date Revenues Revenues SG&A Net Income Cash 370 371 1/25/2019 Prepay $300 total for 3 Months Rental of Shelves $ 372 2/1/2019 Receive February Shelf Rental Invoice $ 373 2/9/2019 Purchase 10 pairs on credit due 4/6 $ 374 2/12/2019 Sell 1 pair for cash $ 375 2/15/2019 Pay Owners February Salary of $30/month $ 376 2/25/2019 Sell 4 pairs on credit due 4/15 $ 377 3/1/2019 Receive March Shelf Rental Invoice $ 378 3/15/2019 Pay Owners March Salary of $30/month $ Receive April Shelf Rental Invoice $ 380 4/6/2019 Pay the total invoice for 2/9 merchandise purchase (row 373) $ 381 4/15/2019 Pay Owners April Salary of $30/month $ 382 4/20/2019 Sell 3 pairs for cash $ 383 4/15/2019 Receive cash payment for 2/25 sale $ 384 4/25/2019 Sell 2 pairs at 20% discount for cash $ 385 386 Management Reporting Having posted the accounting transactions you are going to analyze the resulting management reporting. 388 In this part of the exercise you will be operating as a financial analyst or business manager, seeking to understand what is happening in the business Accountants process transactions according to GAAP. These transactions go into the General Ledger as debits and credits. 391 The General Ledger generates management reporting. 392 Managers, supported by financial analysts, use this reporting to understand financial performance and make business decisions. 393 Below is monthly summary data that suggests how a financial analyst or manager might view the performance of a business: 394 395 Income Statement Cost of 896 Revenues Revenues SG&A Net Income Cash 397 January 398 February 899 March 200 April 01 402 in which month was the Net Income the greatest: 103 204 in which month was the Cash generated the greatest: 05 106 The difference between Net Income and Cash generated is a direct result of accrual accounting. 107 If you had managed the business strictly based on cash flow, you might have closed down the business after March before the huge inflow of cash occurred. 08 You might never have enjoyed the large inflow of payment from customer (Accounts Receivable) or monetized (converted it to cash) your inventory. 109 The 6 explains what caused the changes in Cash presented in Column K. 110 Which is a better measure of a company's performance? 111 12 13 14 Balance Sheet Accounts Receivable Accounts Payable Inventory Prepaid Rent