Financial Statements

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Week Three Exercises
Fatma Miljkovic
ACC/290
March 25, 2013
Professor: Tim Callaghan

| BE4-1  | Transactions that affect earnings do not necessarily affect cash.|

Hint: Identify impact of transactions on cash and net income.(SO 2, 9)| | |

InstructionsIdentify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. | | |
 |  | Cash| Net Income|
(a)| Purchased $100 of supplies for cash. Debit |CreditCash |$100Supplies $100 |_____Assets = Liability + Owner EquityDr | Cr$100 (supplies) | $100 (cash) $0 = $0$100 Cash is spend what is credit, but $assets increase for $100 in supplies what does not affect assets or net income| -$100| $ 0| (b)| Recorded an adjusting entry to record use of $30 of the above supplies.Supplies Supplies Expense $100 | $30 __ Adj. $30 |_______Bal. $70 | Bal. $30 || (c)| Made sales of $1,300, all on account. Debit | CreditAccount Receivable $1,300 |Service Revenue | $1,300| (d)| Received $800 from customers in payment of their accounts. Debit | CreditCash $800 |Account Receivable | $800| (e)| Purchased equipment for cash, $2,500. Debit | CreditCash | $2,500Equipments $2,000 | | (f)| Recorded depreciation of building for period used, $600.Depreciation of building Depreciation ExpenseDebit | Credit Debit | Credit |ADJ. $600 Adj. $600 |_________ |Bal. $600 Bal. $600 | Explanations | Cash| Net Income| Purchased supplies for $100 cash | $ -100| $ 0| Recorded the adjusting entry--no change in cash (cash is there) and income will change| $ 0| $ -30.00| | | |

Made sales on account of $1,300No change in cash (it is in account) --net income will change| $ 0| $1,300,00| Received $800 from the customer account. It will change the cash, but not net income. This is already include there as A/R| $ 800| $ 0| Purchased equipments for cashCash will change, not income. Equipments are the assets| $-2,500| $ 0| Depreciation--cash doesn't change, but it affect the income (lower the income)| $ 0| $ -600| P4-2A        | |

Nick Waege started his own consulting firm, Waegelein Consulting, on June 1, 2010. The trial balance at June 30 is as follows.| WAEGELEIN CONSULTINGTrial BalanceJune 30, 2010|
 | Debit| Credit|
Cash| $ 6,850|  |
Accounts Receivable| 7,000|  |
Prepaid Insurance| 2,640|  |
Supplies| 2,000|  |
Office Equipment| 15,000|  |
Accounts Payable|  |...
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