Question

Financial accounting : record the impact of the following transations on the basic acounting equation and cashflows for a company that began operations on 1/1/18

1)Provided services and recived cash -3,000 6

2)Paid 450 in advance to rent a storage space for 6 months

3) preformed 2,500 of servies on account

4) accrued 800 of wages to be paid later

5)received 1,200 in advance for a one year service revenue contract

6)used cash to purchase equipment :cost - 2000; salavge value 2000 , useful life (6years)

7) adjust the records to record he expirtion of 4 months of rent on the storage unit (step#2)

8)earned 2 months of the service contract (step#5) record the adjusting entry

9)adjust the record to record 4 months of depreciation on the equipment

10)collected 1,700 from customers on account

balance sheet

Income statment

assets

liabilities

equity

cash

acct receviable

prepaid rent

equipment

accu dep)

=

accrued wages

unearned revenue

retained earnings

revenue

expense

=

net inc.

Cash flow

1)

2)

Answer 1

	balance sheet									Income statment				Cash flow
	assets						liabilities		equity
Event	cash	acct receviable	prepaid rent	equipment	accu dep	=	accrued wages	unearned revenue	retained earnings	revenue	expense	=	net inc.
1	$ 3,000								$ 3,000	$ 3,000			$ 3,000	$ 3,000	Operating Activity
2	$   (450)		$    450						$       -				$       -	$   (450)	Operating Activity
3		$    2,500							$ 2,500	$ 2,500			$ 2,500
4							$        800		$   (800)		$    800		$   (800)
5	$    1,200							$    1,200	$       -				$       -	$ 1,200	Operating Activity
6	$ (2,000)			$    2,000					$       -				$       -	$(2,000)	Investing Activity
7			$      (300)						$   (300)		$    300		$   (300)
8								$      (200)	$    200	$    200			$    200
9					$      (100)				$   (100)		$    100		$   (100)
10	$    1,700	$ (1,700)							$       -				$       -	$ 1,700	Operating Activity

Adjust the records to record he expirtion of 4 months of rent on the storage unit (450/6 = 75) (75*4)	$        300
Earned 2 months of the service contract (step#5) record the adjusting entry (1200/12 = 100) (100*2)	$        200
Dear student, Salvage value is equal to cost of purchase (Entry 6). It means no depreciation expense. So I can consider salvage value 200.
Adjust the record to record 4 months of depreciation on the equipment ((2000-200)/6) = 300 (300*4/12)	$        100