The following information is available for two different types of businesses for

Question

The following information is available for two different types of businesses for the 2012 accounting period. Eady CPAs is a service business that provides accounting services to small businesses. Campus Clothing is a merchandising business that sells sports clothing to college students. Data for Eady CPAs 1. Borrowed $40,000 from the bank to start the business. 2. Provided $30,000 of services to customers and collected $30,000 cash. 3. Paid salary expense of $20,000. Data for Campus Clothing 1. Borrowed $40,000 from the bank to start the business. 2. Purchased $25,000 inventory for cash. 3. Inventory costing $16,400 was sold for $30,000 cash. 4. Paid $3,600 cash for operating expenses. Required: Prepare an income statement, balance sheet, and statement of cash flows for each of the companies.

Explanation / Answer

EADY income statement service revenue 30,000 less: salary expense -20,000 net income 10,000 balance sheet assets cash 50,000 total assets 50,000 liabilities bank loan 40,000 owner capital capital 10,000 total assets 50,000 Statement of cash flow net income 10,000 add: bank loan 40,000 Net cash at end 50,000 Campus income statement Sales 30,000 less:COGS -16,400 Gross profit 13,600 less:Expenses operating expense -3,600 Net income 10,000 Balance sheet Assets Cash 41,400 inventory 8,600 total assets 50,000 liabilties bank loan 40,000 Capital 10,000 total liab & capital 50,000 Statement of cash flow net income 10,000 less:increse in inventory -8,600 net cash by operating activity 1,400 financing activity bank loan 40,000 Net cash 41,400

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.