| ACC 502 |
| Week 1 Assignment |
| Toys, Inc began operations on December 31, 2019 with the following transactions: |
| 1. Purchased equipment for $15,000 |
| 2. Purchased inventory on account for $6,000 |
| 3. Issued common stock for $20,000 |
| Toys, Inc's balance sheet including those transactions as of December 31, 2019, was as follows: |
| Toys, Inc. |
| Balance Sheet |
| As of December 31, 2019 |
| Assets: |
| Cash | $ 5,000 |
| Receivables | - 0 |
| Inventory | 6,000 |
| Land | - 0 |
| Property Plant and Equipment | 15,000 |
| Total Assets | $ 26,000 |
| Liabilities and Equity: |
| Accounts Payable | $ 6,000 |
| Note Payable | - 0 |
| Common Stock | 20,000 |
| Retained Earnings | - 0 |
| Total liabilities and stockholders' equity | $ 26,000 |
| During January 2020, the company had the following transactions: |
| Example: Made payments of $4,000 on outstanding accounts payable |
| 1. Sold $2,000 of inventory to customers for $3,000 in cash. |
| 2. Purchased $2,500 of new inventory for cash |
| 3. Sold $3,500 of inventory to customers on account for $5,500. |
| 4. During the month, received $3,500 from customers as payments on their accounts |
| 5. Borrowed $20,000 from the bank and issued stock for $5,000 to purchase land for $25,000 for a future warehouse |
| 6. Paid employees $2,000 for payroll |
| Required: |
| 1. Record the January 2020 transactions by adding and subtracting amounts in the rows of the following table in a way that the row totals represent the end of the month balances in the financial statements. (fill in the shaded area as needed) |
| 2. Explain the main characteristics of the balance sheet and the income statement and the relationship between those two statements. |
| | Balance | | Transaction Number |
| | at 12/31/19 | Example | 1 | 2 | 3 | 4 | 5 | 6 | Total |
| |
| Cash | $ 5,000 | (4,000) | | (2,500) | 5,500 | 3,500 | | 2,000 | $ 9,500 |
| Receivables | - 0 | | 3,000 | | | 3,500 | | | 6,500 |
| Inventory | 6,000 | | (2,000) | 2,500 | (3,500) | | | | 3,000 |
| Land | - 0 | | | | | | 25,000 | | 25,000 |
| Property Plant and Equipment | 15,000 | | | | | | | | 15,000 |
| Total Assets | $ 26,000 | | | | | | | | $ 59,000 |
| Accounts Payable | $ 6,000 | (4,000) | | | | | | | $ 2,000 |
| Note Payable | - 0 | | | | | | 20,000 | | 20,000 |
| Common Stock | 20,000 | | | | | | 5,000 | | 25,000 |
| Retained Earnings | - 0 | | | | | | | 1,000 | 1,000 |
| Total Liabilities and Equity | $ 26,000 | | | | | | | | $ 48,000 |
| Check (must equal zero) | | | | | | | | | (11,000) |
| Income Statement |
| Sales | | | 3,000 | | 5,500 | | | | $ 8,500 |
| Cost of Goods Sold | | | 2,000 | | 3,500 | | | 2,000 | 7,500 |
| Payroll expenses | | | | | | | | | - 0 |
| Net Income | | | | | | | | | $ 1,000 |
| Requirement 2 |
| Characteristics of a Balance Sheet |
| A balance sheet is a financial statement found in a company's 10k report. It summarizes a business's assets, liabilities, and shareholders ' equity. Additionally, it also captures the financial position of a company at a particular point in time. |
| Characteristics of an Income Statement |
| An income statement shows the net income for a company. It may also be found in a company's 10k report. It focuses on four key items—revenue, expenses, gains, and losses. It does not differentiate between cash and non-cash receipts (sales in cash versus sales on credit) or the cash versus non-cash payments/disbursements (purchases in cash versus purchases on credit) |
| Relationship between the Balance Sheet and the Income Statement |
| The Net income will ultimately be determined by the amounts shown in the balance sheet and income statement. This shows the amount of earnings or equity is available for a company. |
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CompanyOverview-ACC-502week1assignment1finished.xlsx
