BUSI 101 1st Edition Lecture 5 Outline of Last Lecture I. Review of Financial and Managerial AccountingA. External vs. Internal AccountingII. Return Practice ProblemIII. The Four Accounts ReviewIV. T-Chart Accountsa. Credit vs. DebitV. In-Class Practice QuizOutline of Current Lecture I. Review of the Four Financial StatementsII. Chapter 3 In-Class Practice ProblemsIII. Pg. 20 ProblemsIV. Chapter 4 In-Class Practice ProblemsV. Pg. 86 Problems in Text BookCurrent LectureThe Four Statements:Balance Sheet: A=L+OEIncome Statement: NI=R-EStatement of Cash Flows: Changes in Cash : Operating, Investing, FinancingStatement of Owner’s EquityI/SB/S 12/31 B/S1/1 12/31These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.SCF12/31In Class Practice Problems: (pg. 19)1. A=L+OE90=75+152. Beg. Retained Earnings 45+Net Income 225Available Retained Earnings 270-Dividend Declared 87End Retained Earnings 183Retained Earnings (OE)4587 2251833. Beginning Cash 47+Cash Receipts 139Cash Available 180-Cash Dispersements 118Ending Cash 68Cash (A)47139 118684. OP +86INV -65FIN +37Beg. Cash = 200End Cash = 2585. A=L+OEBeginning: 80=53+27Change: +30=-22End: 110=31+79Page 201/1/X1 12/31/X1A 60 95L 18 30OE: CC 42 54OE: RE 0 11Beginning Retained Earnings 0-Net Income 20=Available Retained Earnings 20-Dividends Declared 9=Ending Retained Earnings 11Working Capital=$33,000 (WC=Current Assets-Current Liabilities)Current Ratio=2.5 (CA/CL)- Current Assets – use within a year- Current Liabilities – paid within a year2.5CLxCA2.5CL-1CL=33,0001.5CL=33,000CL=22,000CA=55,000What is the effect on WC and CR when inventory is purchased on account the last day of the year?NOW Assume Purchased 10,000 on AccountCA 55,000 65,000CL 22,000 32,000WC 33,000 33,000CR 2.5 2.03125What is the effect on WC and CR when a short-term note is paid off on the last day of the year?NOW Assume STD of 20,000 are all paid offCA 55,0000 35,000CL 22,000 2,000WC 33,000 33,000CR 2.5 17.5Page 211.a) I/Sb) B/S, SCFc) I/Sd) B/S, Statement of Retained Earningse) I/Sf) B/Sg) B/S, Statement of Owner’s Equityh) Statement of Retained Earnings, Statement of Cash Flowsi) I/Sj) I/Sk) I/S, SCF2. a.Sales 170,000-Cost of Goods Sold 82,000Gross Profit 88,000b.+Gain 20,000-Tax Expense (14000)-Loss (24,000)-ADV (15,000)=NI 55,000c. Beginning Retained Earnings 800,000+Net Income 55,000=Available Retained Earnings 855,000-Dividends Declared (7,000)=End Retained Earnings 848,0003.Assets Liabilities4.Expenses=Expired Assets (pertain to the past)Assets = Un-Expired Expenses (pertain to the future)a. assetb. expensec. expensed. asset5. OP INV FIN(900) 10002,200(500)(400) (700) A/P 11,000S/P 7,000N/P 45,000C.S. 120,000R.E. 29,000212,000Cash 8,000INV 10,000Building 158,000Equipment 30,000212,000200 -900 +1000Change in Cash: 300+Beginning Cash: 500Ending Cash: 800Notes:Debit: Lef Credit: RightAssets+ -Expenses+ -Liabilities- +Owner’s Equity- +Revenue- +Assets and Expenses have a normal debit balanceOE, L, Revenue have a normal credit balanceChapter 4 In-Class Practice Quiz1. Normal Debit Balances: Assets, Expense (name three examples of assets)2. Normal Credit Balances: Liabilities, Revenue, OE’s3. Journal Entry:Land (A) 700,000Cash(A) 700,0004. Journal Entry:Land (A) 700,000Accounts Payable (L) 700,0005. Beginning Accounts Receivable 650+Credit Sales 3,000=Available Accounts Receivable 3650-Cash Collections 3230=Ending Accounts Receivable 420Accounts Receivable (A)6503000 32304206. Beginning Accounts Payable 380+Purchases on Account 1610=Available Accounts Payable 1990-Payments on Account 1650=Ending Account Payable 430Accounts Payable (L)3801560 16104307. Beginning Land 4700+Land Payments 8000=Available Land 12,700-Cost of Land Sold 6450Ending Land 6250Land (A)47008000 64506250Page 86 in Text Book1.Inventory (A) 2000Account Payable (L) 2,0002. Salary Expense (E) 300Cash (A) 3003. Cash (A) 9000Notes Payable 90004. a. Accounts Receivable (A) 5000Sales (R) 5000b. CGS (E) 2000Inventory 2,0005. I/P (L) 700Cash (A) 7006. TRUCK (A) 40,000Cash (A) 10,000N/P (L) 30,000Net Assets did NOT change7. Cash (A) 19000Common Stock 19,0008. Cash (A) 5000A/R (A) 50009.A/P (L) 2000Cash (A) 200010. Prepaid Rent (A) 4000Cash (A) 400011. Land (A) 8,000Cash (A) 8,00012. Cash 11,000Land (A) 8,000Gain (R) 3,00013. Cash (A) 3,000Unearned Revenue (L) 3,00014. Retained Earnings (OE) 600Cash (A)