Financial Accounts

Topics: Generally Accepted Accounting Principles, Balance sheet, Accounts payable Pages: 2 (260 words) Published: February 27, 2013
aStewart invested $100,000 and became the sole shareholder.
Assets+Expense=Liabilities+IncomesAsset named Cash Balance created and Liability Shareholder's Capital gets created
100000+0=100000+0

bPurchased inventory on account for $200,000.
Assets+Expense=Liabilities+IncomesAsset named Inventory created and Liability Vendor payable gets created
200000+0=200000+0

cSold inventory for $200,000. $75,000 of the sales were for cash and $125,000 were on account. The inventory sold had cost Stewart $120,000.

Assets+Expense=Liabilities+IncomesAsset named Cash Balance with get added with 75000, Asset named Account receivable will get added with 125000 and Income named Sales Revenue will get added with 200000. Note to be considered here is income is income whether received or not.

75000+0=0+200000
125000+0=0+0
200000+0=0+200000

Assets+Expense=Liabilities+IncomesAsset named Inventory decreases by 120000 and Expense named Cost of goods sold gets created
-120000+120000=0+0

dPaid $140,000 of accounts payable.
Assets+Expense=Liabilities+IncomesAsset named Cash Balance Decreases by 140000 and Liability named Vendor payable gets reducted by 140000
-140000+0=-140000+0

eCollected $50,000 on account
Assets+Expense=Liabilities+IncomesAsset named Account receivable decreases by 50000 and Cash balance increases by 50000
50000+0=0+0
-50000+0=0+0
0+0=0+0

fPaid $45,000 in operating expenses.
Assets+Expense=Liabilities+IncomesAsset named Cash Balance decreases by 45000 and Expense named Operating cost gets created by 45000
-45000+45000=0+0
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