(b) +25,000 Cash borrowed is not income. –0– (c) Purchase of the truck does not represent –0– –8,000 an expense until it is used (it is an asset); cash outflow was $8,000. (d) All of the wages incurred reduce income, –36,000 –30,000 $36,000; cash paid during the quarter was, $36,000 x5/6 = $30,000. The $6,000 owed will be paid on the next payroll date. (e) Not all of the supplies were used; expense is –3,000 –4,000 the amount used, $4,000–1,000 = $3,000. Cash paid during the quarter was $4,000. (f) All expenses incurred reduce income; cash –31,000 –15,500 expended was, $31,000–15,500 = $15,500. (g) Based only on the above: Income (loss)$15,000 Cash inflow (outflow) $ 37,500 CONTINUING PROBLEM CON1–1. Req. 1 Penny’s Pool Service & Supply. Income Statement For the Year Ended December 31, Current Year Revenues Sales revenue $ 60,000 Expenses Cost of supplies used 8,200 Wage expense 24,000 Other administrative expense 4,500 Total expenses 36,700 Pretax income 23,300 Income tax expense 4,000 Net income $19,300 Req. 2
(b) –0– +25,000 Cash borrowed is not income. (c) –0– –8,000 Purchase of the truck does not represent an expense until it is used (it is an asset); cash outflow was $8,000. (d) –36,000 –30,000 All of the wages incurred reduce income, $36,000; cash paid during the quarter was, $36,000 x5/6 = $30,000. The $6,000 owed will be paid on the next payroll date. (e) –3,000 –4,000 Not all of the supplies were used; expense is the amount used, $4,000–1,000 = $3,000. Cash paid during the quarter was $4,000. (f) –31,000 –15,500 All expenses incurred reduce income; cash expended was, $31,000–15,500 = $15,500. (g) Based only on the above: Income (loss)$15,000 Cash inflow (outflow) $ 37,500 CONTINUING PROBLEM CON1–1. Req. 1 Penny’s Pool Service & Supply. Income Statement For the Year Ended December 31, Current Year Revenues Sales revenue $ 60,000 Expenses Cost of supplies used 8,200 Wage expense 24,000 Other administrative expense 4,500 Total expenses 36,700 Pretax income 23,300 Income tax expense 4,000 Net income $19,300 Req. 2
Solution-Manual-for-Financial-Accounting-9th-Edition-by-Libby.docx