ACC1100 Lecture Notes - Lecture 2: Current Liability, Income Statement, Financial Statement

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turquoiserat551

5 Aug 2018

School

Monash University

Department

Business - Accounting

Course

ACC1100

Professor

Alan Serry

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Document Summary

Week 2: introduction to financial statements, accrual vs. cash accounting, accounting cycle and transaction analysis. Balance sheet (a, l, oe): measures nancial position at a point in time. An entities nancial position is divided into 3 categories: assets. The owners investment in an will be consumed >1y. Non-current assets: assets repayment >1y that will be consumed <1y. Assets = liabilities + owners equity + income - expenses + capital - drawings (extended equation) Assets = l + oe | owners equity = a - l | liabilities = a - oe | pro t (loss) = i - e. This equation must always stay balanced, therefore, there needs to be a minimum of two effects. Income statement (i, e): measures nancial performance over a period of time. Measures the difference between revenues earned during a period and expenses incurred in earning the revenues: r > e: positive difference, r < e: negative difference.

Related Questions

Following are comparative balance sheets for Millco, Inc., at January 31 and February 28, 2011: MILLCO, INC.Balance SheetsFebruary 28 and January 31, 2011 Assets February 28 January 31 Cash $ 42,000 $ 37,000 Accounts receivable 64,000 53,000 Merchandise inventory 81,000 94,000 Total current assets $ 187,000 $ 184,000 Plant and equipment: Production equipment 166,000 152,000 Less: Accumulated depreciation (24,000 ) (21,000) Total assets $ 329,000 $ 315,000 Liabilities Accounts payable $ 37,000 $ 41,000 Short-term debt 44,000 44,000 Other accrued liabilities 21,000 24,000 Total current liabilities $ 102,000 $ 109,000 Long-term debt 33,000 46,000 Total liabilities $ 135,000 $ 155,000 Owners' Equity Common stock, no par value, 40,000 shares authorized, 30,000 and 28,000 shares issued, respectively $ 104,000 $ 96,000 Retained earnings: Beginning balance $ 64,000 $ 43,000 Net income for month 36,000 29,000 Dividends (10,000 ) (8,000) Ending balance $ 90,000 $ 64,000 Total owners' equity $ 194,000 $ 160,000 Total liabilities and owners' equity $ 329,000 $ 315,000 Required:(a) Calculate the change that occurred in cash during the month. You may assume that the change in each balance sheet amount is due to a single event (for example, the change in the amount of production equipment is not the result of both a purchase and sale of equipment). (Hints: What is the purpose of the statement of cash flows? How is this purpose accomplished?) Because the retained earnings section of the balance sheet is, in and of itself, an analysis of the change in the retained earnings account for the month, the row for net income and dividends should be entered as the February amount and not the change. Use the space to the right of the January 31 data to enter the difference between the February 28 and January 31 amounts of each balance sheet item. (Negative amount should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required.Omit the "$" sign in your response.) MILLCO, INC.Balance SheetsFebruary 28 and January 31, 2011 Assets February 28 January 31 Change Cash $ 42,000 $ 37,000 Accounts receivable 64,000 53,000 Merchandise inventory 81,000 94,000 Total current assets $ 187,000 $ 184,000 Plant and Equipment: Production equipment 166,000 152,000 Less: Accumulated depreciation (24,000 ) (21,000 ) Total assets $ 329,000 $ 315,000 Liabilities: Accounts payable $ 37,000 $ 41,000 Short-term debt 44,000 44,000 Other accrued liabilities 21,000 24,000 Total current liabilities $ 102,000 $ 109,000 Long-term debt 33,000 46,000 Total liabilities $ 135,000 $ 155,000 Owners' Equity Common stock, no par value, 40,000 shares authorized, 30,000 and 28,000 shares issued, respectively $ 104,000 $ 96,000 Retained earnings: Beginning balance $ 64,000 $ 43,000 Net income for month 36,000 29,000 Dividends (10,000 ) (8,000 ) Ending balance $ 90,000 $ 64,000 Total owners' equity $ 194,000 $ 160,000 Total liabilities and owners' equity $ 329,000 $ 315,000 (b) Prepare a statement of cash flows that explains above changes? (Negative amount should be indicated by a minus sign.Omit the "$" sign in your response.)MILLCO, INC.Statement of Cash FlowsFor the Month Ended February 28, 2011 Cash flows from operating activities: Net income $ Add (deduct) items not affecting cash: Net cash by operating activities $ Cash flows from investing activities: Purchases of production equipment Cash flows from financing activities: $ Net cash flows by financing activities Net in cash for the year $

apricothound714

Prepare the Income Statement, Statement of Ownersâ Equity and the Balance Sheet for the fiscal year ending September 30, 2017. To support your work prepare the appropriate journal entries and post to the related Accounting Equation or âT-accounts".

The attached Balance Sheet gives your firm's position at the end of fiscal 2016. During fiscal 2017, your firm has the following transactions:

Your firm has total sales for the year of $1,210,500. Included in the total sales figure are $1,010,500 sales on credit. During the year, the firm received $792,000 of payments on account. Customers returned $7,800 for cash refunds during the year.

During the year, the firm determined that accounts totaling $2,900 were uncollectible. Moreover, a $375 receivable written off during the year was subsequently collected. The $375 is not included in âA.â above.

Your firm uses the allowance method to record bad debts. Specifically, the firm uses the percentage of receivables method to compute the allowance for doubtful accounts. The firm uses the following information to determine the allowance:

Age of Receivables	Percent of current balance	Percent expected uncollectible
<30 days	70%	2%
< 60 days	23%	10%
>60 days	7%	50%

Your Firm
Balance Sheet
September 30, 2016
Assets
Cash		$ 102,530
Accounts receivable	$ 101,640
Allowance for doubtful accounts	(6,160)
Accounts receivable, net		95,480
Inventories		136,400
Trading securities		111,100
Prepaid insurance		17,100
Total Current Assets		462,610

Property, Plant and Equipment, gross	$ 1,633,500
Accumulated depreciation	(546,975)
Property, Plant and Equipment, net		1,086,525
Total Assets		$ 1,549,135

Liabilities and Shareholders' Equity
Accounts payable		$ 89,645
Salaries payable		31,575
Dividends payable		4,400
Total Current Liabilities		125,620

Long-term note payable		380,000
Total Liabilities		505,620

Common stock, no par		490,000
Retained Earnings		591,215
Accumulated Other Comprehensive Income		4,300
Treasury stock		(42,000)
Total Shareholder's Equity		1,043,515
Total Liabilities and Shareholder's Equity		$ 1,549,135