mYKN8tlJEei3xw56fgKVxg Week-4-Slides PDF

Introduction to Financial
Statement Preparation
The Accounting Cycle

Analyze Events
& Transactions
Close Temporary Accounts Record

(Revenue & Expense Accounts) Transactions
(Journalize & Post)
Prepare
Financial Record
Statements Adjusting Entries
(Journalize & Post)
Occurs every fiscal period (e.g., month, quarter, year)
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Preparing the Income
Statement
The Income Statement For the Year
Revenues
Expenses
Net earnings
The Garden Spot: With ending balances
A = L + OE
Cash (A) Accounts Receivable (A) Truck (A) Loan Payable (L) Capital Stock (OE)
BB 0 BB 0 BB 0 0 BB 0 BB
(1) 60,000 12,000 (3) (6a) 85,000 (3) 12.000 2,400 (10) (8) 10,000 40,000 (2) 60,000 (1)
(2) 40,000 10,000 (4) EB 85,000 EB 9,600 30,000 EB 60,000 EB
(6a) 315,000 235,000 (5)
140,000 (7) Inventory (A) Equipment (A) Accounts Payable (L) Retained Earnings (OE)
14,000 (8) BB 0 BB 0 0 BB 0 BB
990 (11)
EB 3,010 (5) 260,000 240,000 (6b) (4) 10,000 2,000 (10) 25,000 (5) COGS (6a) 240,000 400,000 (6a) Revenues
EB 20,000 EB 8,000 25,000 EB Op exp (7) 140,000
Int exp (8) 4,000
Journal Entry Wages Payable (L) Wage exp (9) 5,000
Dep exp (10) 4,400
0 BB
Tax exp (11) 990
5,000 (9) 5,610 EB
5,000 EB
Retained Earnings (OE) Revenues 400,000
0 BB Expenses
COGS 240,000
COGS (6) 240,000 400,000 (6) Revenues
Op exp (7) 140,000 Operating Expenses 140,000
Int exp (8) 4,000
Interest Expense 4,000
Wage exp (9) 5,000
Dep exp (10) 4,400 Wage Expense 5,000
Tax exp (11) 990
Depreciation Expense 4,400
5,610 EB Tax Expense 990
Net earnings 5,610
Preparing the Balance Sheet
The Balance Sheet at Assets:
the End of the Year
Total assets
Liabilities:
Total liabilities
Owners’ equity:
Total owners’ equity

Total liabilities and owners’ equity
A = L + OE
(1) 60,000 12,000 (3) (6a) 85,000 (3) 12.000 2,400 (10) (8) 10,000 40,000 (2) 60,000 (1)
(2) 40,000 10,000 (4) EB 85,000 EB 9,600 30,000 EB 60,000 EB
(6a) 315,000 235,000 (5)
14,000 (8) BB 0 BB 0 0 BB 0 BB
990 (11)
EB 20,000 EB 8,000 25,000 EB Op exp (7) 140,000
Int exp (8) 4,000
Dep exp (10) 4,400
0 BB
Tax exp (11) 990
5,000 (9) 5,610 EB
5,000 EB
the End of the Year Cash

Accounts receivable
Inventory
PP&E
Cash (A) Total assets
BB 0
Liabilities:
(1) 60,000 12,000 (3)
(2) 40,000 10,000 (4)
(6) 315,000 235,000 (5)
140,000 (7) Total liabilities
14,000 (8)
990 (11) Owners’ equity:
EB 3,010

Accounts receivable
3,010
85,000
Inventory
PP&E
Accounts Receivable (A) Total assets
BB 0
Liabilities:
(6) 85,000
EB 85,000
Total liabilities
Owners’ equity:


Accounts receivable
3,010
85,000
Inventory 20,000
PP&E 17,600
Total assets 125,610
Liabilities:
Total liabilities
Owners’ equity:

A = L + OE
(1) 60,000 12,000 (3) (6a) 85,000 (3) 12.000 2,400 (10) (8) 10,000 40,000 (2) 60,000 (1)
(2) 40,000 10,000 (4) EB 85,000 EB 9,600 30,000 EB 60,000 EB
(6a) 315,000 235,000 (5)
14,000 (8) BB 0 BB 0 0 BB 0 BB
990 (11)
EB 20,000 EB 8,000 25,000 EB Op exp (7) 140,000
Int exp (8) 4,000
Dep exp (10) 4,400
0 BB
Tax exp (11) 990
5,000 (9) 5,610 EB
5,000 EB

Accounts receivable
3,010
85,000
Inventory 20,000
PP&E 17,600
Liabilities:
Accounts payable
Wages payable
Loan payable
Total liabilities
Owners’ equity:


Accounts receivable
3,010
85,000
Inventory 20,000
PP&E 17,600
Liabilities:
Accounts payable 25,000
Wages payable 5,000
Loan payable 30,000
Total liabilities 60,000
Owners’ equity:

A = L + OE
(1) 60,000 12,000 (3) (6a) 85,000 (3) 12.000 2,400 (10) (8) 10,000 40,000 (2) 60,000 (1)
(2) 40,000 10,000 (4) EB 85,000 EB 9,600 30,000 EB 60,000 EB
(6a) 315,000 235,000 (5)
14,000 (8) BB 0 BB 0 0 BB 0 BB
990 (11)
EB 20,000 EB 8,000 25,000 EB Op exp (7) 140,000
Int exp (8) 4,000
Dep exp (10) 4,400
0 BB
Tax exp (11) 990
5,000 (9) 5,610 EB
5,000 EB

Accounts receivable
3,010
85,000
Inventory 20,000
PP&E 17,600
Capital Stock (OE) Total assets 125,610
0 BB
Liabilities:
60,000 (2) Accounts payable 25,000
Wages payable 5,000
60,000 EB Loan payable 30,000
Owners’ equity:
Capital stock
Retained earnings

Accounts receivable
3,010
85,000
Inventory 20,000
PP&E 17,600
Retained Earnings (OE) Total assets 125,610
0 BB
Liabilities:
COGS (6) 240,000 400,000 (6) Revenues Accounts payable 25,000
Op exp (7) 140,000 Wages payable 5,000
Int exp (8) 4,000 Loan payable 30,000
Wage exp (9) 5,000 Total liabilities 60,000
Dep exp (10) 4,400
Tax exp (11) 990 Owners’ equity:
Capital stock 60,000
5,610 EB
Retained earnings 5,610

Accounts receivable
3,010
85,000
Inventory 20,000
PP&E 17,600
Liabilities:
Wages payable 5,000
Loan payable 30,000
Owners’ equity:
Total owners’ equity 65,610
Total liabilities and owners’ equity 125,610
Revisiting the Financial
Statement Framework
The First Year at the Garden Spot
Jan 1 During the Year Dec 31
Income Statement
Balance Sheet Revenues Balance Sheet
A L A L
-Expenses
Cash Cash
=Net Earnings
OE OE
RE RE
A Managerial Approach to
Recording Transactions
Mary Jo and Josh invested $60,000 in the Assets:

company in exchange for shares of Cash +60,000
common stock.
Revenues Total assets
Expenses
Liabilities:
Total liabilities
Owners’ equity:
Capital stock +60,000

Net earnings
Purchased inventory throughout the year
costing $260,000, $235,000 of which was Assets:
paid in cash and $25,000 was purchased Cash -235,000
on account.
Inventory +260,000
PP&E
Expenses
Liabilities:
Accounts payable +25,000
Loan payable
Total liabilities
Owners’ equity:
Capital stock

Net earnings
Sales of $400,000, $315,000 of which

were cash sales and $85,000 of which Assets:
were sales on account. The inventory sold Cash +315,000
had originally cost a total of $240,000. Accounts receivable +85,000
Inventory
PP&E
Revenues +400,000 Total assets
Expenses
Liabilities:
Accounts payable
Loan payable
Total liabilities
Owners’ equity:
Capital stock
Retained earnings +400,000
Net earnings +400,000
Sales of $400,000, $315,000 of which
were sales on account. The inventory sold Cash
had originally cost a total of $240,000. Accounts receivable
Inventory -240,000
PP&E
Expenses
Liabilities:
COGS +240,000
Accounts payable
Loan payable
Total liabilities
Owners’ equity:
Capital stock
Retained earnings -240,000
Net earnings -240,000
More Details on Recording

Transactions
Mary Jo and Josh invested $60,000 in the Assets:
company in exchange for shares of Cash +60,000
common stock.
Expenses
Liabilities:
Total liabilities
Owners’ equity:
Capital stock +60,000

Net earnings
Assets:
Cash 60,000
Revenues Total assets 60,000
Expenses
Liabilities:
Total liabilities
Owners’ equity:

Net earnings
Assets:
Obtained a $40,000 loan from bank. Cash +40,000 60,000
Expenses
Liabilities:
Loan payable +40,000

Total liabilities
Owners’ equity:

Net earnings
Assets:
Cash 100,000
Expenses
Liabilities:
Loan payable 40,000

Owners’ equity:

Net earnings
Assets:
Purchased a truck for $12,000 cash. Cash -12,000 100,000
PP&E +12,000
Expenses
Liabilities:
Loan payable 40,000

Owners’ equity:

Net earnings
Assets:
Cash 88,000
PP&E 12,000
Expenses
Liabilities:
Loan payable 40,000

Owners’ equity:

Net earnings
Assets:
Purchased equipment for $10,000 cash. Cash -10,000 88,000
PP&E +10,000 12,000

Expenses
Liabilities:
Loan payable 40,000

Owners’ equity:

Net earnings
Assets:
Cash 78,000
PP&E 22,000
Expenses
Liabilities:
Loan payable 40,000

Owners’ equity:

Net earnings
Purchased inventory throughout the year
costing $260,000, $235,000 of which was Assets:
paid in cash and $25,000 was purchased Cash -235,000 78,000
on account.
Inventory +260,000
PP&E 22,000
Expenses
Liabilities:
Accounts payable +25,000
Loan payable 40,000

Owners’ equity:

Net earnings
Assets:
Cash -157,000
Inventory 260,000
PP&E 22,000
Expenses
Liabilities:
Loan payable 40,000

Owners’ equity:

Net earnings
Sales of $400,000, $315,000 of which
were sales on account. The inventory sold Cash +315,000 -157,000
had originally cost a total of $240,000. Accounts receivable +85,000
Inventory 260,000
PP&E 22,000
Revenues +400,000 Total assets 125,000
Expenses
Liabilities:
Loan payable 40,000

Owners’ equity:
Retained earnings +400,000 0
Net earnings +400,000
Sales of $400,000, $315,000 of which

were sales on account. The inventory sold Cash 158,000
had originally cost a total of $240,000. Accounts receivable 85,000
Inventory -240,000 260,000
PP&E 22,000
Revenues 400,000 Total assets 525,000
Expenses
Liabilities:
COGS +240,000
Loan payable 40,000

Owners’ equity:
Retained earnings -240,000 400,000
Net earnings -240,000 400,000
Assets:
Cash 158,000
Accounts receivable 85,000
Inventory 20,000
PP&E 22,000
Expenses
Liabilities:
COGS 240,000
Loan payable 40,000

Owners’ equity:
Net earnings 160,000
Incurred operating expenses of $140,000, Assets:

all paid in cash. Cash - 140,000 158,000
Inventory 20,000
PP&E 22,000
Expenses
Liabilities:
COGS 240,000
Operating Expenses + 140,000
Loan payable 40,000
Owners’ equity:
Retained earnings - 140,000 160,000
Net earnings - 140,000 160,000
Assets:
Cash 18,000
Inventory 20,000
PP&E 22,000
Expenses
Liabilities:
COGS 240,000
Operating Expenses 140,000
Loan payable 40,000
Owners’ equity:
Net earnings 20,000
Made payment to bank of $14,000, Assets:

$10,000 for repayment of principal and Cash - 14,000 18,000
$4,000 for payment of interest.
Inventory 20,000
PP&E 22,000
Expenses
Liabilities:
COGS 240,000
Interest Expense + 4,000 Loan payable - 10,000 40,000

Owners’ equity:
Net earnings - 4,000 20,000
Assets:
Cash 4,000
Inventory 20,000
PP&E 22,000
Expenses
Liabilities:
COGS 240,000
Interest Expense 4,000 Loan payable 30,000

Owners’ equity:
Net earnings 16,000
Employees did work in December for which Assets:

$5,000 would be in January paycheck. Cash 4,000
Inventory 20,000
PP&E 22,000
Expenses
Liabilities:
COGS 240,000
Operating Expenses 140,000 Wages payable +5,000

Wage Expense + 5,000
Owners’ equity:
Assets:
Cash 4,000
Inventory 20,000
PP&E 22,000
Expenses
Liabilities:
COGS 240,000
Operating Expenses 140,000 Wages payable 5,000

Wage Expense 5,000
Owners’ equity:
Net earnings 11,000
Recorded depreciation expense on truck Assets:

and equipment Cash 4,000
Inventory 20,000
PP&E - 4,400 22,000
Expenses
Liabilities:
COGS 240,000

Wage Expense 5,000
Depreciation Expense + 4,400 Owners’ equity:

Assets:
Cash 4,000
Inventory 20,000
PP&E 17,600
Expenses
Liabilities:
COGS 240,000

Wage Expense 5,000
Depreciation Expense 4,400 Owners’ equity:

Net earnings 6,600
Assets:
Paid $990 in income taxes. Cash - 990 4,000
Inventory 20,000
PP&E 17,600
Expenses
Liabilities:
COGS 240,000

Wage Expense 5,000

Tax Expense + 990 Capital stock 60,000
Retained earnings - 990 6,600
Net earnings - 990 6,600
Assets:
Cash 3,010
Inventory 20,000
PP&E 17,600
Expenses
Liabilities:
COGS 240,000

Wage Expense 5,000

Tax Expense 990 Capital stock 60,000
Net earnings 5,610
Introduction to the
Statement of Cash Flows
The Statement of Cash Flows
Shows sources Operating Activities 3 sections:

- Collections from customers
and uses of - Payments to suppliers
Cash flow from operating activities
(Cash flows related to
cash over a CFO $$ normal business activities)
period of time Investing Activities:
Cash flow from investing activities
- Purchase of equipment
(Cash flows related to
- Purchase of building
buying or selling long-lived assets)
CFI $$
Financing Activities: Cash flow from financing activities
- Take out a loan (Cash flows related to
- Issue stock transactions with owners or creditors)
CFF $$
Change in Cash $$
CFO + CFI + CFF = Change in Cash
Financial Statement Framework

Beginning End
of Period of Period
Income Statement
Revenues
Balance Sheet -Expenses Balance Sheet

A L A L
Cash =Net Earnings Cash
OE Change in Cash OE
RE Statement of Cash Flow Dividends RE
The Statement of Cash Flows
Cash Inflows Cash Outflows
Operating • Collections from customers • Payment to suppliers
Activities • Receipt of dividends and • Payment to employees
interest on investments • Payment for other operating items
• Payment of interest on debt
• Payment of taxes
Investing • Sale of PP&E • Purchase of PP&E
Activities • Sale of intangible assets • Purchase of intangible assets
• Sale of investments • Purchase of investments
• Divestiture of businesses • Acquisition of businesses
Financing • Issuance of stock • Repurchase of stock
Activities • Issuance of bonds • Retirement of bonds
• Taking out a loan • Repayment of loan principal
• Payment of dividends
Closing Entries
The Accounting Cycle
Analyze Events
& Transactions
Close Temporary Accounts Record

(Revenue & Expense Accounts) Transactions
(Journalize & Post)
Prepare
Financial Record
Statements Adjusting Entries
(Journalize & Post)
Occurs every fiscal period (e.g., month, quarter, year)
The Statement of Cash Flows:

A Conceptual Understanding
Two Methods of Preparation
DIRECT METHOD INDIRECT METHOD
Operating Activities: Operating Activities:
Net income
[Directly lists cash receipts from customers, + Depreciation
cash payments to suppliers, etc.] +/- Other adjustments
+/- Decr/Incr in operating assets and liabilities
CFO CFO
Investing Activities: Investing Activities:
… …
CFI CFI
Financing Activities: IDENTICAL Financing Activities:
… …
CFF CFF
Change in Cash Change in Cash
A Simple Case: The Garden Spot

• Mary Jo started The Garden Spot on January 1
• Several things happened during the first year
• We have:
 recorded transactions
 prepared an income statement for the first year of operations
 prepared a balance sheet as of the end of the first year
• We need to prepare a statement of cash flow for the
first year
Assets: Beg End
Cash 0 3,010
Operating Activities: Accounts receivable 0 85,000
Net income
Inventory 0 20,000
+ depreciation PP&E 0 17,600
- Increase in AR
- Increase in inventory Total assets 0 125,610
- Increase in AP
- Increase in wages payable
CFO Liabilities:
Accounts payable 0 25,000
Investing Activities:
- Purchase of truck Wages payable 0 5,000
- Purchase of equipment Loan payable 0 30,000
CFI Total liabilities 0 60,000
Financing Activities:
- Proceeds from issuing stock Owners’ equity:
- Proceeds from loan
- Repayment of loan principal Capital stock 0 60,000
CFF Retained earnings 0 5,610
ΔCash Total owners’ equity 0 65,610
Total liabilities and owners’ equity 0 125,610
Assets: Beg End

Cash 0 3,010
Operating Activities: Accounts receivable 0 85,000
Net income 5,610
Inventory 0 20,000
+ depreciation 4,400 PP&E 0 17,600
- Increase in AR (85,000)
- Increase in inventory (20,000) Total assets 0 125,610
- Increase in AP 25,000
- Increase in wages payable 5,000
CFO (65,990) Liabilities:
Accounts payable 0 25,000
- Purchase of truck (12,000) Wages payable 0 5,000
- Purchase of equipment (10,000) Loan payable 0 30,000
CFI (22,000) Total liabilities 0 60,000
- Proceeds from issuing stock 60,000 Owners’ equity:
- Proceeds from loan 40,000
- Repayment of loan principal (10,000) Capital stock 0 60,000
CFF 90,000 Retained earnings 0 5,610
ΔCash 3,010 Total owners’ equity 0 65,610
Total liabilities and owners’ equity 0 125,610
Financial Statement Framework
Beginning End
of Period of Period
Income Statement
Revenues
Balance Sheet -Expenses Balance Sheet

A L A L
Cash =Net Earnings Cash
OE Change in Cash OE
RE Statement of Cash Flow Dividends RE
A Conceptual Revenues $xxx

Understanding less:
COGS xxx
of the Indirect Income Wage expense
Depreciation expense
xxx
xxx
Statement
Method Gain/loss on sale
Etc.
xxx
xxx
Operating Activities:
Net income $xxx
:
ΔAccounts receivable xxx
:
CFO $xxx
Statement of Investing Activities:
Cash Flow : xxx
CFI $xxx
: xxx
CFF $xxx
ΔCash = CFO + CFI + CFF $xxx
Direct Method Indirect Method
Revenues
less:
COGS
Wage expense
Depreciation expense
Gain/loss on sale
Etc.
Operating Activities: Operating Activities:

Net income
:
ΔAccounts receivable
:
CFO CFO
Investing Activities: Investing Activities:

: :
CFI CFI
Financing Activities: Financing Activities:

: :
CFF CFF
ΔCash = CFO + CFI + CFF ΔCash = CFO + CFI + CFF
Indirect Method
Illustrative Examples Revenues
less:
COGS
Wage expense
Revenue recognized on the income Depreciation expense
statement for the period totaled Gain/loss on sale
Etc.
$200,000; 25% of sales were on
account. The beginning and ending
Net income
accounts receivable balances found on :
the balance sheets were $25,000 and ΔAccounts receivable
:
$20,000, respectively. CFO
:
CFI
:
CFF
ΔCash = CFO + CFI + CFF
Indirect Method
less:
COGS
Wage expense
Cost of goods sold for the period was Depreciation expense
$135,000. The balance in the inventory Gain/loss on sale
Etc.
account on the balance sheet at the
beginning of the period was $40,000. Of
Net income
the $145,000 total inventory purchased :
during the period, $29,000 was on ΔAccounts receivable
:
account. A liability was booked directly to CFO
accounts payable, an account that
related only to inventory transactions. Its :
beginning balance on the balance sheet CFI
was $5,000, and its ending balance was Financing Activities:

:
$14,000. CFF
Indirect Method
less:
COGS
Wage expense
Wage expense for the period was Depreciation expense
$50,000. The beginning and ending Gain/loss on sale
Etc.
balances in the wages payable account
on the balance sheets were $10,000 and
Net income
$5,000, respectively. :
:
CFO
:
CFI
:
CFF
Indirect Method
less:
COGS
Wage expense
Stock investments, purchased in a prior Depreciation expense
period for $2,000, were sold during the Gain/loss on sale
Etc.
period for $3,000. The total beginning
balance in the investment account on
Net income
the balance sheet was $20,000. :
:
CFO
:
CFI
:
CFF
Indirect Method
less:
COGS
Wage expense
The company purchased equipment Depreciation expense
during the period for $5,000 cash. Gain/loss on sale
Etc.
Including the depreciation on this new
equipment, the company recording
Net income
$6,000 in depreciation expense during :
the period. The company sold no ΔAccounts receivable
:
equipment during the period. The CFO
beginning and ending balances in the
equipment account on the balance :
sheets were $18,000 and $17,000, CFI
respectively. Financing Activities:

:
CFF
Indirect Method
less:
COGS
Wage expense
During the period the company issued Depreciation expense
stock for $10,000 cash, paid $3,000 in Gain/loss on sale
Etc.
dividends, and borrowed $2,500 for
three years from the bank (on the last
Net income
day of the year). The beginning balances :
in the common stock account, retained ΔAccounts receivable
:
earnings account, and long-term debt CFO
account on the balance sheet were
$50,000, $100,000, and $0, :
respectively. CFI
:
CFF
Summary
• 2 methods of preparation: Direct Method and Indirect Method
• Both methods
 Are identical except for the Operating Activities section
 Yield the same CFO, even though it is arrived at differently
 Yield the same CFI and CFF
 Yield the same total cash flow
• Conceptually, the indirect method begins with net income and
makes adjustments based on the difference between accrual
accounting net income and operating cash flows.
• Let’s take this logic to our Garden Spot case
TGS Year 1: Using the Direct
Method to Prepare the SCF
Direct Method
The Garden Spot:
SCF Using Direct Method Operating Activities:
- Collections from customers 315,000
- Payment to suppliers (235,000)
- Payment for operating items (140,000)
Cash (A) - Payment of interest on loan (4,000)
- Payment of taxes (990)
BB 0 CFO (64,990)
Issued stock (1) 60,000 12,000 (3) Purchased Truck Investing Activities:
Took out loan (2) 40,000 10,000 (4) Purchased equipment - Purchase of truck (12,000)
Cash sales (6) 315,000 235,000 (5) Paid suppliers - Purchase of equipment (10,000)
140,000 (7) Paid operating items CFI (22,000)
14,000 (8) Made loan payment
990 (11) Paid taxes
- Proceeds from issuing stock 60,000
EB 3,010 - Repayment of loan principal (4,000)
CFF 96,000
ΔCash 3,010
TGS Year 1: Using the Indirect
Method to Prepare the SCF
The Garden Spot: Revenues 400,000

SCF Using Indirect Method less:
COGS
(240,000)
(140,000)
Wage expense (4,000)
Depreciation expense (5,000)
Gain/loss on sale (4,400)
Etc. (990)
Net income 5,610
:
:
CFO
:
CFI
:
CFF
The Garden Spot:
SCF Using Indirect Method
Net income 5,610
Revenues 400,000
less: (240,000) + depreciation 4,400
COGS (140,000) - Increase in AR (85,000)
Wage expense (4,000) - Increase in inventory (20,000)
Depreciation expense (5,000) - Increase in AP 25,000
Gain/loss on sale (4,400) - Increase in wages payable 5,000
Etc. (990) CFO (64,990)
Net income 5,610 - Purchase of truck (12,000)
- Purchase of equipment (10,000)
CFI (22,000)
- Proceeds from issuing stock 60,000
- Repayment of loan principal (10,000)
CFF 90,000
ΔCash 3,010
The Direct and Indirect
Methods: A Summary
Summary
• 2 methods of preparation: Direct Method and Indirect
Method
• Both methods
 Are identical except for the Operating Activities section
 Yield the same CFO, even though it is arrived at differently
 Yield the same CFI and CFF
 Yield the same total cash flow
• Conceptually, the indirect method begins with net
income and makes adjustments based on the difference
between accrual accounting net income and operating
cash flows.

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Introduction to Financial

The Accounting Cycle

Close Temporary Accounts Record

Occurs every fiscal period (e.g., month, quarter, year)

The Income Statement For the Year

The Garden Spot: With ending balances

Net earnings 5,610

Preparing the Balance Sheet

the End of the Year

Total owners’ equity

The Garden Spot: With ending balances

the End of the Year Cash

The Balance Sheet at Assets:

the End of the Year Cash

Total owners’ equity

the End of the Year Cash

Total owners’ equity

The Garden Spot: With ending balances

the End of the Year Cash

Total owners’ equity

The Balance Sheet at Assets:

the End of the Year Cash

Total owners’ equity

The Balance Sheet at Assets:

the End of the Year Cash

the End of the Year Cash

The Balance Sheet at Assets:

the End of the Year Cash

The First Year at the Garden Spot

Jan 1 During the Year Dec 31

Mary Jo and Josh invested $60,000 in the Assets:

Revenues Total assets

Total owners’ equity

Total owners’ equity

Sales of $400,000, $315,000 of which

More Details on Recording

Revenues Total assets

Total owners’ equity

Revenues Total assets 60,000

Total owners’ equity 60,000

Revenues Total assets 60,000

Loan payable +40,000

Total owners’ equity 60,000

Revenues Total assets 100,000

Loan payable 40,000

Total owners’ equity 60,000

Loan payable 40,000

Total owners’ equity 60,000

Loan payable 40,000

Total owners’ equity 60,000

PP&E +10,000 12,000

Loan payable 40,000

Total owners’ equity 60,000

Loan payable 40,000

Total owners’ equity 60,000

Loan payable 40,000

Total owners’ equity 60,000

Loan payable 40,000

Total owners’ equity 60,000

Loan payable 40,000

Sales of $400,000, $315,000 of which

Loan payable 40,000

Loan payable 40,000