CHAPTER 3
Processing Accounting Information
EXERCISE 3-5 ANALYZING TRANSACTIONS
LO 3
Assets
Trans.
No.
Cash
1.
Accounts
Receivable
$
$
3.
Bal.
$
750
$
750
$
5.
Bal.
6.
(990)
(100)
1,530
1,365
$ 1,365
$
1,365
$ 1,365
$
1,530
$
1,365
$
8.
(100)
–4,000
Capital
Stock
Retained
Earnings
$
1,530
$
1,530
$
1,530
$
1,365
$
$ 1,365
$
2,280
$ 1,365
$
2,280
4,240
4,240
$
1,530
$
2,500
$
1,365
$
4,240
$ 1,365
$
2,500
$
2,280
$
1,365
$
4,240
$ 1,365
$
2,500
$
2,280
$
2,280
–890
$
640
7.
$
Owners’ Equity
+
Notes
Payable
750
890
$
Bal.
Land
2,500
$
Bal.
(3,490)
Equipment
$
–4,240
4.
Bal.
Supplies
Liabilities
Accounts
Payable
1,530
2.
Bal.
=
$
640
$
1,365
$
4,240
$
50,000
$
50,000
$ 1,365
$
2,500
$
50,000
$
50,000
–4,000
Bal.
$
$
640
$
1,365
$
4,240
$
50,000
$ 1,365
–500
9.
Bal.
(4,100)
$
(4,600)
$
2,500
$
50,000
$
(1,720)
$
2,500
$
50,000
$
(1,720)
–500
$
640
$
1,365
$
TOTAL ASSETS: $51,645
4,240
$
50,000
$
865
TOTAL LIABILITIES AND
OWNERS’ EQUITY: $51,645
LO 1,3
1.
PROBLEM 3-6 TRANSACTION ANALYSIS AND FINANCIAL STATEMENTS
BLUE JAY DELIVERY SERVICE TRANSACTIONS FOR THE MONTH OF JANUARY 2004
Assets
Trans.
Date
Cash
=
Accounts
Receivable
Land
Warehouse
1/2
$100,000
1/3
–80,000
$20,000
$60,000
Bal.
$20,000
$20,000
$60,000
1/4
50,000
Bal.
$70,000
1/6
–45,000
Bal.
$25,000
1/31
Liabilities
Accounts
Notes
Payable
Payable
+
Owners’ Equity
Capital
Retained
Stock
Earnings
$100,000
$100,000
$50,000
$20,000
$60,000
$50,000
$100,000
$50,000
$100,000
$45,000
$20,000
$60,000
$45,000
$15,900
Bal.
$25,000
$15,900
1/31
7,490
–7,490
Bal.
$32,490
$8,410
1/31
Bal.
Delivery
Trucks
______
$32,490
TOTAL ASSETS: $165,900
$8,410
$15,900
$20,000
$60,000
$45,000
$50,000
$100,000
$15,900
$20,000
$60,000
$45,000
$50,000
$100,000
$15,900
______
$20,000
$3,230
$60,000
$45,000
$3,230
TOTAL LIABILITIES AND OWNERS' EQUITY: $165,900
3,230
$50,000
$100,000
$12,670
2.
BLUE JAY DELIVERY SERVICE
INCOME STATEMENT
FOR THE MONTH ENDED JANUARY 31, 2004
Service revenue
Gas and oil expense
Net income
3.
$ 15,900
3,230
$ 12,670
BLUE JAY DELIVERY SERVICE
BALANCE SHEET
JANUARY 31, 2004
Assets
Current assets:
Cash
Accounts receivable
Total current assets
Property, plant, and equipment:
Land
Warehouse
Delivery trucks
Total property, plant, and equipment
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Long-term debt:
Notes payable
Total liabilities
Capital stock
Retained earnings
$ 32,490
8,410
$ 40,900
$ 20,000
60,000
45,000
125,000
$ 165,900
$
3,230
50,000
$ 53,230
$ 100,000
12,670
Total stockholders' equity
Total liabilities and stockholders' equity
112,670
$ 165,900
4. Additional information needed:
Jan. 3: Is the warehouse new?
How large is it?
What volume of business can it support?
Jan. 4: What is the interest rate on the loan?
Are there any restrictions on the company's operations in the debt agreement
Were any assets offered as collateral?
(covenants)?
Jan. 6: How long are the trucks expected to last?
Will they have any salvage value?
What volume of business can they support?
Jan. 31: When will customers pay the remaining balance?
What is the credit standing of the customers?
Jan. 31: Is there a limit on how much the company charges?
What if the company cannot pay by the tenth?