cash received during the period was, $66,000 11,000 = $55,000. – (b) +56,000 Cash borrowed is not income. –0– (c) Purchase of the truck does not represent –0– –12,500 an expenseuntil it is used (it is an asset); cash outflow was $12,500. (d) All of the wages incurred reduce income, –25,000 –12,500 $25,000; cash paid during the quarter was, $25,000 x 1/2 = $12,500. The $12,500 owed will be paid on the next payroll date. (e) Not all of the supplies were used; expense is –2,900 –3,800 the amount used, $3,800–900 = $2,900. Cash paid during the quarter was $3,800. (f) All expenses incurred reduce income; cash –38,000 –31,500 expended was, $38,000 6,500 = $31,500. – (g) only on the above: Income (loss) $100 Cash inflow (outflow) $ 50,700 P1–4. Req. 1 The personal residences of the organizers are not resources of the business entity. Therefore, they should be excluded. Req. 2 It is not indicated whether the $57,000 listed for service trucks and equipment is cost when acquired or the current market value on December 31of the current year. Req. 3 The list of company resources (i.e., assets) suggests the following areas of concern: Company resources: (1) Cash, inventories, and bills due from customers (i.e., accounts receivable)–these items tend to fluctuate; they may be significantly more or less at date of the loan and during the term of the loan.
cash received during the period was, $66,000 – 11,000 = $55,000. (b) –0– +56,000 Cash borrowed is not income. (c) –0– –12,500 Purchase of the truck does not represent an expenseuntil it is used (it is an asset); cash outflow was $12,500. (d) –25,000 –12,500 All of the wages incurred reduce income, $25,000; cash paid during the quarter was, $25,000 x 1/2 = $12,500. The $12,500 owed will be paid on the next payroll date. (e) –2,900 –3,800 Not all of the supplies were used; expense is the amount used, $3,800–900 = $2,900. Cash paid during the quarter was $3,800. (f) –38,000 –31,500 All expenses incurred reduce income; cash expended was, $38,000 – 6,500 = $31,500. (g) only on the above: Income (loss) $100 Cash inflow (outflow) $ 50,700 P1–4. Req. 1 The personal residences of the organizers are not resources of the business entity. Therefore, they should be excluded. Req. 2 It is not indicated whether the $57,000 listed for service trucks and equipment is cost when acquired or the current market value on December 31of the current year. Req. 3 The list of company resources (i.e., assets) suggests the following areas of concern: Company resources: (1) Cash, inventories, and bills due from customers (i.e., accounts receivable)–these items tend to fluctuate; they may be significantly more or less at date of the loan and during the term of the loan.
Solution-Manual-for-Financial-Accounting-9th-Edition-by-Libby.docx