The following transactions apply to Cheng Co. for Year 1, its first year of operations: 1. Issued
Question:
The following transactions apply to Cheng Co. for Year 1, its first year of operations:
1. Issued $60,000 of common stock for cash.
2. Provided $94,000 of services on account.
3. Collected $84,500 cash from accounts receivable.
4. Loaned $10,000 to Swan Co. on October 1, Year 1. The note had a one-year term to maturity and a 6 percent interest rate.
5. Paid $41,000 of salaries expense for the year.
6. Paid a $3,000 dividend to the stockholders.
7. Recorded the accrued interest on December 31, Year 1 (see item 4).
8. Determined that $990 of accounts receivable were uncollectible. The company uses the direct write-off method.
Required
a. Show the effects of the preceding transactions in a horizontal statements model like the one shown next.
b. Prepare the income statement, balance sheet, and statement of cash flows for Year 1.
Common StockCommon stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Step by Step Answer:
a Cheng Co Horizontal Statement Model Balance Sheet Income Statement Statement of Event Assets Equit...View the full answer
Introductory Financial Accounting for Business
ISBN: 978-1260299441
1st edition
Authors: Thomas Edmonds, Christopher Edmonds
