Brief Exercise 41 Transactions that affect earnings do not n

Brief Exercise 4-1 Transactions that affect earnings do not necessarily affect cash. Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. (If an amount reduces the account balance then enter with negative sign preceding the number e.g. -15,000 or parentheses e.g. (15,000).) Cash Net Income $0 -$120 (a) Purchased $120 of supplies for cash. (b) Recorded an adjusting entry to record use of $30 of the above supplies. (c) Made sales of $1,400, all on account. (d) Received $750 from customers in payment of their accounts. (e) Purchased equipment for cash, $2,900. (f) Recorded depreciation of building for period used, $580 Click if you would like to Show Work for this question: Open Show Work

Solution

Exercise4-1 Cash Income a. Purchase of Supplies of cash -120 0 b. Adjusting entry for use of supplies 0 -30 c. Mmade sales on account 0 1400 d. Received cash from customer on account 750 0 e. Purchased equipment for cash -2900 0 f. Depreciation of building to be recorded 0 -580 Exercise4-4 Closing entries: Service revenue Account Dr. 17610     Income Summary 17610 Income Summary Account Dr. 13230       Salaries and wages expense Account 8490       maintenance and repair expense Account 3250       Income Tax expense Account 1490 Income Summary Account Dr. 4380     Retained earnings 4380 Retained earnings Account Dr. 1430      Dividend Account 1430 Balance in Retained earnings: Beginning Balance of Retained earnings 20700 Add: Net income 4380 Less: Dividend paid -1430 Ending balance of Retained earnings 23650