Question

On January 1, 2020, Norma Smith and Grant Wood formed a computer sales and service company in Soapsville, Arkansas, by investing $90,936 cash. The new company, Coronado Sales and Service, has the following transactions during January. 1. Pays $9,000 in advance for 3 months’ rent of office, showroom, and repair space. 2. Purchases 42 personal computers at a cost of $1,644 each, 8 graphics computers at a cost of $2,644 each, and 27 printers at a cost of $444 each, paying cash upon delivery. 3. Sales, repair, and office employees earn $13,536 in salaries and wages during January, of which $3,936 was still payable at the end of January. 4. Sells 32 personal computers at $2,694 each, 6 graphics computers for $3,744 each, and 17 printers for $644 each; $75,936 is received in cash in January, and $43,684 is sold on a deferred payment basis. 5. Other operating expenses of $9,336 are incurred and paid for during January; $2,936 of incurred expenses are payable at January 31.

prepare (1) a cash-basis income statement and (2) an accrual-basis income statement for the month of January and prepare (1) a cash-basis balance sheet and (2) an accrual-basis balance sheet as of January 31, 2020

Answer 1

Coronado Sales and services

Cash basis income statement

For the month ending January 31 2020

Revenues :
Sales revenue	75,936
Cost of goods		102188
Expenses:
Rent		9000
Salary		9600
other expenses		6400
Cash basis Income or Loss()		(51252)

Coronado Sales and Services

Accrual basis Income statement

For the month ending January 31 2020 Revenue: Sales revenue 119,620 Expenses: Rent expenses 3000 COGS 76020 Salaries 13536 Other expenses 9336 Accrual basis income 17728

Coronado Sales and services

Cash basis Balance Sheet

For the month ending January 31 2020

Assets:
Cash	39684
Inventories	26168
Advance rent	6000
Total Assets	71852
Liabilities:
Owners equity	71852

Coronado Sales and services

Accrual basis Balance Sheet

For the month ending January 31 2020

Assets:
Cash	39,684
Inventories	26,168
Account Receivables	43,684
Advance Rent	6000
Total Assets	115536
Liabilities:
Salary payable	3936
Expenses payable	2936
Total Liabilities	6872
Owners Equity	90936
Retained earnings	17728
Total owners equity and Liabilities	115536