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T-Accounts and Computing Ca 0 Analyzing the Effects of Transactions in 4 Accrual Basis Net Income Stacey's Piano Rebuilding Company has been operating for one
T-Accounts and Computing Ca 0 Analyzing the Effects of Transactions in 4 Accrual Basis Net Income Stacey's Piano Rebuilding Company has been operating for one year. At the its income statement accounts had zero balances and its balance sheet follows: Cash Accounts receivable Supplies Equipment Land Building 6,400 32,000 1,500 9,500 7,400 25,300 Accounts payable Unearned revenue Long-term note payable Common stock Additional paid-in capital Retained earnings Required accounts: Rebuild ing Fees Revenue, Rent Revenue, Wages Expense, and Utilities Expense, Bacount balances. 1. Create T-accounts for the balance sheet accounts and for these additional 2. Enter the following transactions for January of the second year into the T-accounts, of each transaction as the reference: a. Rebuilt and delivered five pianos in January to customers who paid $19,000i b. Received a $600 deposit from a customer who wanted her piano rebuil c. Rented a part of the building to a bicycle repair shop; received $850 for rent in January d. Received $7,200 from customers as payment on their accounts. t. c. Received an electric and gas utility bill for $400 to be paid in February. f Ordered $960 in supplies. g. Paid $2,300 on account in January. h. Received from the home of Stacey Eddy, the major shareholder, a $920 tool (equipment) to e in the business in exchange for 100 shares of $1 par value stock. i. Paid $16,500 in wages to employees who worked in January j. Declared and paid a $2,200 dividend (reduce Retained Earnings and Cash). k. Received and paid cash for the supplies in (). 3. Using the data from the T-accounts, amounts for the following at the end of January of the second year were Revenues S_ Assets SLiabilities SStockholders'Equity S Expenses S = Net Income $ 4. What is net income if Stacey's used the cash basis of accounting? Why does this differ from accrual basis net income (in requirement 3)? Preparing an Income Statement Refer to E3-10. Required January of the second year (ignore income taxes). Use the ending balances in the T-accounts in E3-10 to prepare in good form an income statemen for
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