P2-5 Comments 1. This problem continues a thread from P2-1. In P2-1, we observed that the income statement figure is not the same as the cash involved. The revenue is not the same as the cash received. and the expense is not the same as the cash paid. 2. The figures on the income statement are the result of our system of accounting where we record events, like wages, whether we have paid them or not. We state that we "accrue" the unpaid wages. In general, we state that we have reconciled/compared/converted from cash to accrual. In this problem we are given cash basis figures and some balance sheet amounts. From that we are asked to find the income statement figures. Be aware that the question can also be asked in reverse: given income statement figures and some balance sheet amounts, find the the cash receipts or payments. For example, suppose Accounts Receivable (an asset) increase by $100, Unearned Revenue (a liability) increases by $75, and sales (a component of retained earnings) is $1,000. The accounting definitional equation must stay intact for the period, so we can imagine that the changes to both sides of the equation must stay equal. Like this: Cash + Accounts Receivable Unearned Revenue + Retained Earnings x + $100 = $75 +$1,000 Problem statement During August 20X1. Packer Manufacturing had the following cash receipts and disbursements: Cash received from customers Cash received from selling equipment Cash paid for salaries Cash paid to suppliers for inventory purchases $319,000 11.200 47,000 130,000 In addition, the following balance sheet account balances were shown on Packer's books July 31, 20X1 $128,000 August 31, 20X1 $135,000 Accounts receivable Inventory Accounts payable Salaries payable 33,000 25,000 21,000 25,000 8,000 5,000 Assume all sales and purchases are on account. Required From these cash basis figures and the balance sheet amounts, find these figures for the income statement. 1. Find Sales for August, 20X1 2. Find Salary Expense for August, 20X1. 3. Find Cost of Goods Sold for August, 20X1