Problem 3-11 On January 1, 2017, Norma Smith and Grant Wood formed a computer sa

Question

Problem 3-11 On January 1, 2017, Norma Smith and Grant Wood formed a computer sales and service company in Soapsville, Arkansas, by investing $90,100 cash. The new company, Pina Sales and Service, has the following transactions during January. 1. Pays $15,000 in advance for 3 months' rent of office, showroom, and repair space 2. Purchases 41 personal computers at a cost of $1,600 each, 7 graphics computers at a cost of $2,600 each, and 26 printers at a cost of $400 each, paying cash upon delivery 3. Sales, repair, and office employees earn $12,700 in salaries and wages during January, of which $3,100 was still payable at the end of January. 4. Sells 31 personal computers at $2,650 each, 5 graphics computers for $3,700 each, and 16 printers for $600 each; $75,100 is received in cash in January, and $35,150 is sold on a deferred payment basis. Other operating expenses of $8,500 are incurred and paid for during January: $2,100 of incurred expenses are payable at January 31

Explanation / Answer

Answers

Cash

Owner's capital

Revenues

Cost of computers & Printers

Salaries & wages

Rent

Other operating expense

Capital introduced

$       90,100.00

$            90,100.00

Rent advance

$     (15,000.00)

$   15,000.00

Inventory purchased

$     (94,200.00)

$   94,200.00

Salaries expense paid

$       (9,600.00)

$                9,600.00

Sales

$       75,100.00

$                75,100.00

Expenses paid

$       (6,400.00)

$   6,400.00

Total ending balance

$       40,000.00

$            90,100.00

$                75,100.00

$   94,200.00

$                9,600.00

$   15,000.00

$   6,400.00

Net Income (Loss) adjustments

$          (50,100.00)

$              (75,100.00)

$ (94,200.00)

$              (9,600.00)

$ (15,000.00)

$ (6,400.00)

Final Balances after Income Statement

$       40,000.00

$            40,000.00

$                                -  

$                   -  

$                             -  

$                   -  

$                -  

Cash

Accounts receivables

Inventory

Prepaid Rent

Accounts Payable

Salaries & wages payable

Owner's capital

Revenues

Cost of computers & Printers

Salaries & wages

Rent

Other opearting expense

Capital introduced

$       90,100.00

$            90,100.00

Rent advance

$     (15,000.00)

$          10,000.00

$      5,000.00

Equipment purchased

$     (94,200.00)

$                94,200.00

Salaries expense paid

$       (9,600.00)

$              3,100.00

$              12,700.00

Sales

$       75,100.00

$                35,150.00

$              (69,000.00)

$             1,10,250.00

$   69,000.00

Expenses paid

$       (6,400.00)

$      2,100.00

$   8,500.00

Total ending balance

$       40,000.00

$                35,150.00

$                25,200.00

$          10,000.00

$      2,100.00

$              3,100.00

$            90,100.00

$             1,10,250.00

$   69,000.00

$              12,700.00

$      5,000.00

$   8,500.00

Net Income (Loss) adjustments

$            15,050.00

$          (1,10,250.00)

$ (69,000.00)

$           (12,700.00)

$   (5,000.00)

$ (8,500.00)

Final Balances after Income Statement

$       40,000.00

$                35,150.00

$                25,200.00

$          10,000.00

$      2,100.00

$              3,100.00

$        1,05,150.00

$                                -  

$                   -  

$                             -  

$                   -  

$                -  

-----INCOME STATEMENT

Cash Basis

Accrual Basis

Revenues

$       75,100.00

$            1,10,250.00

Expenses:

Cost of computers & Printers

$       94,200.00

$                69,000.00

Salaries & Wages

$          9,600.00

$                12,700.00

Rent

$       15,000.00

$                  5,000.00

Other operating expenses

$          6,400.00

$                  8,500.00

Total expense

$    1,25,200.00

$                95,200.00

Net Income (Loss)

$     (50,100.00)

$                15,050.00

---BALANCE SHEET

Cash Basis

Accrual Basis

ASSETS

Cash

$       40,000.00

$                40,000.00

Accounts receivables

$                       -  

$                35,150.00

Inventory

$                       -  

$                25,200.00

Prepaid Rent

$                       -  

$                10,000.00

Total Assets

$       40,000.00

$            1,10,350.00

LIABILITIES & OWNERS' EQUITY

Accounts Payable

$                       -  

$                  2,100.00

Salaries & Wages payable

$                       -  

$                  3,100.00

Owner's Capital

$       40,000.00

$            1,05,150.00

Total Liabilities & Owner's Equity

$       40,000.00

$            1,10,350.00

Cash

Owner's capital

Revenues

Cost of computers & Printers

Salaries & wages

Rent

Other operating expense

Capital introduced

$       90,100.00

$            90,100.00

Rent advance

$     (15,000.00)

$   15,000.00

Inventory purchased

$     (94,200.00)

$   94,200.00

Salaries expense paid

$       (9,600.00)

$                9,600.00

Sales

$       75,100.00

$                75,100.00

Expenses paid

$       (6,400.00)

$   6,400.00

Total ending balance

$       40,000.00

$            90,100.00

$                75,100.00

$   94,200.00

$                9,600.00

$   15,000.00

$   6,400.00

Net Income (Loss) adjustments

$          (50,100.00)

$              (75,100.00)

$ (94,200.00)

$              (9,600.00)

$ (15,000.00)

$ (6,400.00)

Final Balances after Income Statement

$       40,000.00

$            40,000.00

$                                -  

$                   -  

$                             -  

$                   -  

$                -  

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