Charles Company

Balance Sheet
As of December 31

Assets

Current Assets:
Cash $12,000.00
Inventory $95,000.00
Other items $13,000.00

Total current
assets $120,000.00

Noncurrent assets $0.00

Total assets $120,000.00

 arles Company
Balance Sheet
of December 31

Liabilities and Owner's Equity

Current Liabilities:

Bank loan $40,000.00

Total current
liabilities $40,000.00

Noncurrent liabilites $0.00

Owners' equity $0.00

Total liabilities and owners' equity $40,000.00

 Microtech Company
Balance Sheet

Year 1 Year 2 Year 3 Year 4

Current assets $113,624.00 $90,442.00 $85,124.00 $69,090.00

Non current assets $410,976.00 $198,014.00 $162,011.00 $151,021.00

Total assets $524,600.00 $288,456.00 $247,135.00 $220,111.00

Current liabilities $56,142.00 $40,220.00 $15,583.00 $17,539.00

Noncurrent liabilites $240,518.00 $71,297.00 $60,100.00 $30,222.00
Paid-in capital $214,155.00 $173,295.00 $170,000.00 $170,000.00
Retained earnings $13,785.00 $3,644.00 $1,452.00 $2,350.00

Total liabilites and

owners' equity $524,600.00 $288,456.00 $247,135.00 $220,111.00
 Accounting Equations:
1. Total assets = Total liabilities and owners' equity
2. Total assets = current assets + Non current assets
3. Total liabilities and owners' equity = current liabilities + Non current liabilites + paid-in capital + Retained earnings
al + Retained earnings
 Astrotech Company
income Statement

Year 1 Year 2 Year 3 Year 4

Sales $12,011.00 $11,968.00 $11,545.00 $10,000.00

Cost of goods sold $3,011.00 $2,992.00 $2,886.00 $2,500.00

Gross Margin $9,000.00 $8,976.00 $8,659.00 $7,500.00

Other expenses $6,201.00 $6,429.00 $6,296.00 $5,330.00

Profit before taxes $2,799.00 $2,547.00 $2,363.00 $2,170.00

Tax expense $1,120.00 $1,019.00 $945.00 $870.00

Net income $1,679.00 $1,528.00 $1,418.00 $1,300.00

Accounting Equations:
1. Gross margin = Sales revenue - Cost of sales
2. Profit before taxes = Gross margin - Other expenses
3. Net income = Profit before tax - Tax expense

Year 4, Gross margin = sales * 75%

Year 4, Profit before taxes = sales * 21.70 % ( average of Other three)
Year 4, Net income = sales * 13 % ( average of other three)
Explaination of Transactions:
Transactions:
1 Owners made an investment of $20,000 in Acme Consulting.
2 there was reduction in the asset cash (-$5,000). Equipment worth $7000 was purchased using cash of $5000 an
3 asset cash reduction of $1000. Supplies Inventory was purchased using cash.
4 asset cash reduction of $4500. Owner's salary was paid using this cash.
5 Owners has earned revenue of $10,000. Amount of $5000 was in form of cash, other $5000 has to be recovere
6 asset cash reduction of $1500. same amount was paid to creditors.
7 amount of $1000 was paid to the company. Increase in asset cash.
8 Owner's rent was paid using cash worth $750. reduction of asset cash.
9 Owner's utilities were covered with cash of $500. reduction in asset cash.
10 $200 is account payable. Travel bill of $200 is payable, not paid yet.
11 Supply inventory of $200 were consumed. Owner also spent $200.
ased using cash of $5000 and $2000 is account payable.

r $5000 has to be recovered.

 Acme Consulting
Balance Sheet
July

Assets

Current Assets:
Cash $12,750.00
Accounts receivable $4,000.00
Supply inventories $800.00

Total
current
assets $17,550.00

Noncurrent assets
Equipment $7,000.00

Total assets $24,550.00

 Liabilities and Owner's Equity

Current Liabilities:

Accounts payable $700.00

Total
current
liabilities $700.00

Noncurrent liabilites $0.00

Owners' equity $23,850.00

Total liabilities and owners'

equity $24,550.00
 Acme Consulting
Income Statement
July

Revenues $10,000.00
Salaries expense $4,500.00
Rent $750.00
Utilities $500.00
Travel $200.00
Others $200.00

Net income $3,850.00

Explaination of changes in the cash account:

$20,000 Owner made an investment in the company

-$5,000.00 Company bought equipment worth $5000
-$1,000.00 Supplies inventory purchased by company using cash
-$4,500.00 Owner's salary was paid using cash
$5,000.00 Earned from revenues
-$1,500.00 Account payable using cash. Some creditors were paid.
$1,000.00 part of revenue collection
-$750.00 rent payment of owner
-$500.00 Utilities payment

$12,750 Total asset cash

Month's income is not same as change in cash account, because income statement includes only Sales revenue and other expe
investement transaction also. It also has partial data for revenue earned by owner.
nly Sales revenue and other expenses. Whereas change in cash account involves owner's
 Account Supplies
Cash + Receivable + Inventory + Equipment
$25,000.00
-$500.00
$8,000.00
-$500.00 $500.00
-$750.00
-$3,000.00
$2,000.00 $8,000.00
-$5,000.00
-$100.00
= Account Payable + Owner's Equity Description of Transactions
$25,000.00 Investment
-$500.00 Rent
$8,000.00

-$750.00 Advertising
-$3,000.00 Salaries
$10,000.00 Travel commissions
-$5,000.00
-$100.00
$1,000.00 -$1,000.00 Other Expenses
 Bon Voyage Travel
Balance Sheet
June

Assets

Current Assets:
Cash $17,250.00
Accounts receivable $8,000.00
Supply inventories $400.00

Total
current
assets $25,650.00

Noncurrent assets
Equipment $8,000.00

Total assets $33,650.00

 Liabilities and Owner's Equity

Current Liabilities:

Accounts payable $4,000.00

Total
current
liabilities $4,000.00

Noncurrent liabilites $0.00

Owners' equity $29,650.00

Total liabilities and owners'

equity $33,650.00
 Bon Voyage Travel
Income Statement
June

Commission $10,000.00
Salaries expense $3,000.00
Rent $500.00
Advertising $750.00
Supplies $100.00
Others $1,000.00

Net income $4,650.00

Explaination of changes in the cash account:

$25,000.00 Owner invested $25,000 in cash to start the business.

-$500.00 Month's rent was paid using cash. Reduction of asset cash.
-$500.00 Payment for office supplies
-$750.00 cash payment for advertising
-$3,000.00 cash payment for employee salary
$2,000.00 commission amount received in cash
$5,000.00 cash payment to equipment supplier

$27,250.00 Total asset cash

Month's income is not same as change in cash account, because income statement includes only Sales revenue and
investement transaction also. It also has partial data for commisions earned by owner.
includes only Sales revenue and other expenses. Whereas change in cash account involves owner's