Question

Badger World Wide, Inc., manufactures military, work, sport, and casual footwear and leather accessories under a variety of brand names, such as Moth, Lovlies, Walkers, and Bill Ladde. The following transactions occurred during a recent month. a. Made cash sales of $66,800 (example) b. Purchased $4,150 of additional supplies on account. Borrowed $71,600 on long-term notes. d. Purchased $20,200 in additional equipment, paying in cash e. Incurred $40,050 in selling expenses, paying two-thirds in cash and owing the rest on account. f Paid $7,500 in rent for this month, and also paid $7,500 for next month. Required: . For each of the transactions, complete the following table, indicating the account, amount, and direction of the effect+for increase and -for decrease) of each transaction under the accrual basis. Include revenues and expenses as subcategories of stockholders' equity, as shown for the first transaction, which is provided as an example 2. Determine the company's preliminary net income.

In the blue area that is slightly cut-out, it reads: For each of the transactions, complete the following table, indicating the account, amount, and direction of the effect (+ for increase and − for decrease) of each transaction under the accrual basis. Include revenues and expenses as subcategories of stockholders’ equity, as shown for the first transaction, which is provided as an example. (Enter any decreases to account balances with a minus sign.)

Answer 1

1. Badger Worldwide Inc.

Table of transaction:-

Transaction			Assets						Liabilities				Stockholders Equity
	Cash	+	Supplies	+	Equipment	+	Prepaid Rent	=	Accounts Payable	+	Notes Payable (long-term)	+	Revenue	-	Expenses
a.	66,800	+		+		+		=		+		+	66,800	-
b.		+	4,150	+		+		=	4,150	+		+		-
c.	71,600	+		+		+		=		+	71,600	+		-
d.	(20,200)	+		+	20,200	+		=		+		+		-
e.	(26,700)	+		+		+		=	13,350	+		+		-	40,050
f.	(15,000)	+		+		+	7,500	=		+		+		-	7,500
Balance	76,500	+	4,150	+	20,200	+	7,500	=	17,500	+	71,600	+	66,800	-	47,550

Calculations for transaction e.:-

Paid in Cash=(40,050×2/3)=$26,700

And remaining balance $13,350 ($40,050-$26,700) on Accounts.

2. Badger Worldwide Inc.

Income Statement

Items	Amount	Amount
Sales Revenue		66,800
Less:- Expenses
Selling Expenses	40,050
Rent Expenses	7,500
Total Expenses		(47,550)
Net Income		19,250

Company's Preliminary Income is $19,250