AFM123 Lecture Notes - Lecture 1: Promissory Note, Life Insurance, Canada Pension Plan

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marooncaribou68

28 May 2016

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM123

Professor

Peter Blake

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Document Summary

All liabilities are recorded at the amount of the obligation owed on that particular date. They will either be classified as current liabilities or long-term liabilities. Current liabilities will be paid within one year from the balance sheet. Long term liabilities will be paid later than one year from the balance sheet date. In some cases, the amount owed changes with the passage of time since interest is being charged (note payable, loan payable, mortgage payable). In other cases, the amount owed does not change until it is paid (amounts owed under accounts payable where interest is not charged). Accounts payable buy merchandise on account; e. g. ,000 worth of inventory, due in 30 days. Notes payable promissory notes signed by officer and usually interest is charged; e. g. ,000 note payable due in one month plus interest at 12% p. a. (i. e. receive ,000 cash; repay ,020 in one month)

Related Questions

Current assets				Current liabilities

	Cash	$72,000				Accounts payable	$12,000
	Accounts receivable	18,000				Interest payable	12,000
	Interest receivable	1,000
	Inventory	60,000
Total current assets		$151,000		Total current liabilities			$24,000

Long-term assets				Long-term liabilities

	Equipment (net of depreciation)	$128,000				Note payable	100,000

Total long-term assets		$128,000		Total long-term liabilities			$100,000

				Equity
						Common stock	10,000
						Paid-in capital	50,000
						Retained earnings	95,000

					Total equity			$155,000

Total assets			279,000		Total liabilities and equity			$279,000

Yes the difference between account payable and accountsreceivable is required.

Is accounts payable larger or smaller than accounts receivable?What is the difference? What do the numbers indicate? Explain.

What does "equipment net of depreciation" mean?

Are payables short-term or long-term?

Determine total liabilities.

Determine net short-term assets or liabilities.

Determine the total amount owed by VWV at the end of theyear.

How do we know that the above is a corporate (not a soleproprietor) balance sheet?

Arrange the following items in proper balance sheetpresentation: (Amounts to be deducted should be indicatedwith parentheses or a minus sign.)


Accumulated depreciation	$	391,000
Retained earnings		35,000
Cash		19,000
Bonds payable		174,000
Accounts receivable		49,000
Plant and equipmentâoriginal cost		741,000
Accounts payable		37,000
Allowance for bad debts		6,000
Common stock, $1 par, 100,000 shares outstanding		100,000
Inventory		68,000
Preferred stock, $54 par, 1,000 shares outstanding		54,000
Marketable securities		21,000
Investments		27,000
Notes payable		36,000
Capital paid in excess of par (common stock)		92,000

Balance Sheet
Assets			Liabilities and StockholdersâEquity
Current Assets:			Current Liabilities:



			Total current liabilities
			Long-term liabilities

Net accounts receivable
Total current assets			Total liabilities
Other Assets:			Stockholdersâ Equity:


Fixed assets:


Net plant and equipment			Total stockholdersâ equity
Total assets			Total liabilities andstockholdersâ equity

whiteweasel907

. In a one-page memo, provide an explanation to the managementteam on July's financial performance. Please provide a one-pageexplanation. Thanks in advance

Ajayi Art Inc.
	Trial Balance

	Account Title& Explaination	Amt (Dr)	Amt (Cr)
	Cash	$ 2,48,525
	AccountsReceivable	$ 2,400
	Prepaid Rent	$ 2,000
	OfficeEquipment	$ 22,250
	Art Supplies	$ 8,790
	AccumulatedDepreciation		$ 371
	AccountsPayable		$ 6,800
	SalaryPayable		$ 3,800
	InterestPayable		$185
	ServiceRevenue		$ 4,300
	UneanedRevenue		$ 3,500
	Common Stock		$ 2,50,000
	Note Payable		$ 22,250
	SalaryExpenses	$ 3,800
	Misc OfficeExpenses	$ 375
	DepreciationExpenses	$ 371
	Rent	$ 1,000
	InterestExpenses	$ 185
	SuppliesExpenses	$ 1,510
	Total	$ 2,91,206	$ 2,91,206


	Ajayi Art Inc.
	Income Statement		-

	Service Revenue		$ 4,300.00
	Expenses
	Salary Expenses	$ 3,800.00
	Supplies Expenses	$ 1,510.00
	Rent Expenses	$ 1,000.00
	Interest Expenses	$ 185.42
	Depreciation	$ 370.83
	Misc.Office Expenses	$ 375.00

	Total Expenses=(B)		$ 7,241.25
	Net Income(A)-(B)		$ -2,941.25

	Ajayi Art Inc.
	Statement of Owner'sEquity
	July 31st
	Beginning RetainedEarnings	0
	Add: Net Income	$ (2,941.25)
	Ending Retained Earnings	$ (2,941.25)

	Ajayi Art Inc.
	Balance Sheet
	July 31st
	Assets
	Cash	$ 2,48,525.00
	Accounts Receivable	$ 2,400.00
	Art Supplies	$ 8,790.00
	Prepaid Rent	$ 2,000.00
	Office Equipment	$ 22,250.00
	AccumulatedDepreciation-Office Equipment	$ -370.83
	Total Assets		$ 2,83,594.17
	Liabilities &Stockholder's equity
	Liabilities
	Accounts Payable	$ 6,800.00
	Salary Payable	$ 3,800.00
	Interest Payable	$ 185.42
	Unearned Service Revenue	$ 3,500.00
	Note Payable	$ 22,250.00
	Total Liabilities		$ 36,535.42
	Stockholder's Equity
	Common Stock	$ 2,50,000.00
	Retained Earnings	$ (2,941.25)
	Total Equity		$ 2,47,058.75
	Total Liabilities &Stockholder's Equity		$ 2,83,594.17

violetbutterfly818

AFM123 Lecture Notes - Lecture 1: Promissory Note, Life Insurance, Canada Pension Plan

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