ADMS 2500 Study Guide - Final Guide: Deferral, Accrual, Deferred Income

Mostert Music Company had the following transactions in March:a. Sold music lessons to customers for $14,700; received $9,300 incash and the rest on account. b. Paid $1,080 in wages for themonth. c. Received a $500 bill for utilities that will be paid inApril. d. Received $2,100 from customers as deposits on musiclessons to be given in April. 1. Based on the information above,prepare a cash basis and an accrual basis income statement.

On January 1, 2012, Jack & Co. paid $15,000 cash for aone-year lease of a building and $1,800 cash for a one-yearinsurance policy both beginning on January 1. The company purchased$80,000 of inventory on account on January 2. On January 10 apayment of $60,000 was made to the supplier. During January, cashsales totaled $80,000 and sales to customers on account totaled$76,000. Jack & Co. collected $45,000 from customers who boughton credit during January. The inventory sold in January cost Jack& Co. $87,600. Other costs incurred and paid during Januarywere as follows: salaries, $8,000; utilities, $2,400; supplies,$1,500. Additional salaries earned by employees but not paid untilFebruary 3 totaled $1,200. Income taxes incurred but not yet paidfor January sales totaled $30,000.

A. The total net cash flows in January for Jack & Co.was:

B. The total net income in January for Jack & Co. was:

Write out your work.

The following balance sheet is for X Company:

The following summary transactions occurred during 2015:

-borrowed $4,164 from the bank

-paid $80,715 to suppliers for merchandise purchased onaccount

-paid for $56,400 of advertising

-purchased $256,872 of merchandise on account and $201,828 forcash

-sold merchandise for $511,555 on account and $208,945 for cash;the merchandise cost $374,660

-signed a five-year rental lease for $10,000; paid for one yearin advance

-paid $5,989 for land and equipment

-received $217,661 from customers for merchandise sold onaccount

-received $8,160 in cash contributions from new owners

Note: Ignore adjusting entries

What were total liabilities on December 31,2015?

What was net income in 2015?