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Classroom Example 8

The document outlines a series of financial transactions for a company, detailing an income statement and balance sheet for September. It includes specific entries for revenue, expenses, and cash movements, along with explanations for each transaction. Additionally, it highlights three scenarios where cash payments do not constitute an expense.

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4 views3 pages

Classroom Example 8

The document outlines a series of financial transactions for a company, detailing an income statement and balance sheet for September. It includes specific entries for revenue, expenses, and cash movements, along with explanations for each transaction. Additionally, it highlights three scenarios where cash payments do not constitute an expense.

Uploaded by

ferityilmazayhan1
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Problem 3.

3A
a.

Income Statement Balance Sheet


Transaction Revenue - Expenses = Net income Assets - Liabilities Owners’ Equity
Sept.1 NE I D D NE D
Sept.3 I NE I I NE I
Sept.9 I NE I I NE I
Sept.14 NE I D NE I D
Sept.25 NE NE NE NE NE NE
Sept.26 I NE I I NE I
Sept.29 NE NE NE D D NE
Sept.30 NE NE NE D NE D

b.

Date Account Titles and Explanation Debit Credit


Sept.1 Rent Expense 4,400
Cash 4,400
Paid rent for September.
Sept.3 Accounts Receivable 5,620
Surveying Revenue 5,620
Performed services on account.
Sept.9 Cash 2,830
Surveying Revenue 2,830
Performed services and received cash.
Sept.14 Advertising Expense 165
Accounts Payable 165
Placed advertisement on a newspaper.
Sept.25 Cash 5,620
Accounts Receivable 5,620
Collected cash from clients on account.
Sept.26 Cash 400
Accounts Receivable 1,490
Surveying Revenue 1,890
Performed services for a client. Collected $400 cash and billed the client
for $1,490.
Sept.29 Accounts Payable 165
Cash 165
Paid cash for accounts payable.
Sept.30 Dividend 7,600
Cash 7,600
Paid cash dividend to shareholders.
c. Three situations in which a cash payment does not involve an expense include: (1) the
payment of a cash dividend, (2) the payment of a liability for a previously recorded expense,
and (3) the purchase of an asset.

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