P3-11 (LO7) (Cash and Accrual Basis) On January 1, 2017, Norma Smith and Grant W

Question

P3-11 (LO7) (Cash and Accrual Basis) On January 1, 2017, Norma Smith and Grant Wood formed a computer sales and y in Soapsville, Arkansas, by investing $90,000 cash. The new company, Arkansas Sales and Service, has the fol- 071 lowing transactions during January 1. Pays $6,000 in advance for 3 months' rent 2. Purchases 40 personal computers at a cost of office, showroom, and repair space. of $1,500 each, 6 graphics computers at a cost of $2.500 each, and 25 printers at a cost of $300 each, paying cash upon delivery

Explanation / Answer

Workings

Balance Sheet Assets Cash Basis Accrual Basis Cash 58500 58500 Accounts Receivable 23400 Inventory 23000 Prepaid rent 4000 Total assets 58500 108900 Liabilites and Owners’ Equity Accounts payable 2000 Salaries payable 3000 Owners’ equity 58500 103900 Liabilites and Owners’ Equity 58500 108900

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