Acc300 Principles of Accounting: Week 3 (P1-30A O'Shea Enterprises and M3-2 Mostert Music Company)

Acc300 Principles of Accounting
Week 3

PROBLEM 1-30A Interrelationships among Financial Statements
O'Shea Enterprises started the 2002 accounting period with $30,000 of assets (all cash), $18,000 of liabilities, and $4,000 of common stock. During the year, O'Shea earned cash revenues of $48,000, paid cash expenses of $32,000, and paid a cash dividend to stockholders of $2,000. O'Shea also acquired $10,000 of additional cash from the sale of common stock and paid $6,000 cash to reduce the liability owed to a bank.
Required
1. Prepare an income statement, statement of changes in stockholders' equity, period-end balance sheet, and statement of cash flows for the 2002 accounting period. (Hint: Determine the amount of beginning retained earnings before considering the effects of the current period events. It also might help to record all events under an accounting equation before preparing the statements.)
2. Determine the percentage of total assets that were provided by creditors, investors, and earnings.

M3-2 Reporting Cash Basis Verus Accural Basis Income
Mostert Music Company had the following transactions in March:
a. Sold instruments to customers for $10,000; received $6,000 in cash and the rest on account. The cost of the instruments was $7,000.
b. Purchased $4,000 of new instruments inventory; paid $1,000 in cash and owed the rest on account.
c. Paid $600 in wages for the month.
d. Received a $200 bill for utilities that will be paid in April.
e. Received $1,000 from customers as deposits on orders of new instruments to be sold to the customers in April.
Powered by