Question

The following information applies to the questions displayed below) Stacey's Plano Rebuilding Company has been operating for one year. Al the start of the second year, its income statement accounts had zero balances and its balance sheet account balances were as follows: Cash Accounts receivable Supplies Equipment Land Building $ 6,600 30,800 1530 10.300 8,000 26,500 Accounts payable Uneamed revenue Note payable long term Common stock Retained earnings Additional paid in capital $ 9.000 3,640 47200 1580 15.900 6,320 a. Rebuilt and delivered five planos in January to customers who paid $19,300 in cash b. Received a $540 deposit from a customer who wanted her plano rebuilt c. Rented a part of the building to a bicycle repair shop received $870 for rent in January d. Received $7,800 from customers as payment on their accounts e. Received an electric and gas utility bill for $450 to be paid in February f. Ordered $950 in supplies. g. Pald $1540 on account in January h. Received from the home of Stacey Eddy, the major shareholder, a $970 tool (equitment) to use in the business in exchange for 130 shares of St par value stock. Paid $14,900 in wages to employees who worked in January 1. Declared and paid a $1,800 freduce Retained Earnings and Cashi, k. Received and paid cash for the supplies in m Required information

Answer 1

Answer -

In a T-accounts debit is always on the left side and credit is always on the right side.

Accounts are differentiating by categories such as asset, liabilities, shareholders’ equity, revenue and expense accounts.

Asset accounts are debited when increase in balance and credited when decrease in balance. Liabilities and Stockholders’ equity accounts are credited when increase in balance and debited when decrease in balance. Revenue accounts are credited when increase in balance and debited when decrease in balance. And expense accounts are debited when increase in balance and credited when decrease in balance.

Here,

Asset accounts:

Cash, accounts receivable, supplies, equipment, land, and building.

Liabilities accounts:

Accounts payable, unearned revenue, and notes payable.

Stockholders’ equity or owners’ equity accounts:

Common stock, retained earnings, and additional paid-in-capital.

Revenue accounts:

Rebuilding fees revenue and rent revenue.

Expense accounts:

Wages expense and utilities expense

Now,

1& 2. Answer -

g Cash Beg. Bal. $6,600 (a) $19,300 $1,540 (b) $540 $14,900 (c) $870 $1,800 (d) $7,800 $950 (i) G) (k) End. Bal. $15,920

Calculation:

Ending balance = $6,600 + $19,300 + $540 + $870 + $7,800 - $1,540 - $14,900 - $1,800 - $950

= $15,920

Accounts receivable Beg. Bal. $30,800 $7,800 (d) End. Bal. $23,000

Calculation:

Ending balance = $30,800 - $7,800

= $23,000

Supplies Beg. Bal. $1,530 (k) $950 End. Bal. $2,480

Calculation:

Ending balance = $1,530 + $950

= $2,480

Equipment Beg. Bal. $10,300 (h) $970 End. Bal. $11,270

Calculation:

Ending balance = $10,300 + $970

= $11,270

Land Beg. Bal. $8,000 End. Bal. $8,000

Building Beg. Bal. $26,500 End. Bal. $26,500

Accounts payable Beg. Bal. $9,000 (g) $1,540 $450 (e) End. Bal. $7,910

Calculation:

Ending balance = $9,000 + $450 - $1,540

= $7,910

Unearned revenue Beg. Bal. $3,640 $540 (b) End. Bal. $4,180

Calculation:

Ending balance = $3,640 + $540

= $4,180

Long-term notes payable Beg. Bal. $47,200 End. Bal. $47,200

Beg. Bal. Common stock $1,580 $130 (h) End. Bal. $1,710

Calculation:

(h) A $970 tools invested in business in exchange of 130 shares at $1 par value

Issue common stock = Issue shares * Par value per share

= 130 shares * $1 per share

= $130

Therefore,

Ending balance = $1,580 + $130

= $1,710

Additional paid-in-capital Beg. Bal. $6,320 $840 (h) End. Bal. $7,160

Calculation:

A $970 tools invested in business in exchange of 130 shares at $1 par value

Issue common stock = Issue shares * Par value per share

= 130 shares * $1 per share

= $130

Now,

Additional paid in capital = Investment - Issue common stock

= $970 - $130

= $840

Therefore,

Ending balance = $6,320 + $840

= $7,160

Retained earnings Beg. Bal. $15,990 G) $1,800 End. Bal. $14,190

Calculation:

Ending balance = $15,990 - $1,800

= $14,190

Rebuilding fees revenue Beg. Bal. $19,300 (a) End. Bal. $19,300

Calculation:

Ending balance = $0 + $19,300 = $19,300

Rent revenue Beg. Bal. $870 (c) c End. Bal. $870

Calculation:

Ending balance = $0 + $870 = $870

Wages expense Beg. Bal. (i) $14,900 End. Bal. $14,900

Calculation:

Ending balance = $0 + $14,900 = $14,900

Utilities expense Beg. Bal. (e) $450 End. Bal. $450

Calculation:

Ending balance = $0 + $450 = $450

3. Answer -

Revenues

$20,170

-

Expenses

15,350

=

Net income

$4,820

Assets

$87,170

=

Liabilities

$59,290

+

Stockholders' equity

$27,880

Calculation:

Revenues:

= Rebuilding fees revenue + Rent revenue

= $19,300 + $870

= $20,170

Expenses:

= Wages expense + Utilities expense

= $14,900 + $450

= $15,350

Therefore,

Net income = Revenues - Expenses

= $20,170 - $15,350

= $4,820

Assets:

= Cash + Accounts receivable + Supplies + Equipment + Land + Building

= $15,920 + $23,000 + $2,480 + $11,270 + $8,000 + $26,500

= $87,170

Liabilities:

= Accounts payable + Unearned revenue + Notes payable

= $7,910 + $4,180 + $47,200

= $59,290

Stockholders’ equity:

Here,

Retained earnings = Ending balance as per T-account + Net income

= $14,190 + $4,820

= $19,010

Now,

Stockholders’ equity = Common stock + Retained earnings + Additional paid-in-capital

= $1,710 + $19,010 + $7,160

= $27,880

Therefore,

Assets = Liabilities + Stockholders equity

= $59,290 + $27,880

= $87,170

4. Answer -

Net income = $11,120

Calculation:

Cash receipts:

= Transaction (a) + Transaction (b) + Transaction (c) +Transaction (d)

= $19,300 + $540 + $870 + $7,800

= $28,510

Cash disbursement:

= Transaction (g) + Transaction (i) + Transaction (k)

= $1,540 + $14,900 + $950

= $17,390

Therefore,

Net income = Cash receipts - Cash disbursement

= $28,510 - $17,390

= $11,120