Page 44 - Accounting Principles (A Business Perspective)

1. Accounting and its use in business decisions

enough without paying these unnecessary costs.” James believed he might lose this client if he did
not do as management instructed.

An accounting perspective:

Uses of technology

Accountants and others can access the home pages of companies to find their annual reports and
other information, home pages of CPA firms to find employment opportunities and services
offered, and home pages of government agencies, universities, and any other agency that has
established a home page. By making on-screen choices you can discover all kinds of interesting

information about almost anything. You can access libraries, even in foreign countries,
newspapers, such as The Wall Street Journal, and find addresses and phone numbers of anyone in
the nation. We have included some Internet Projects at the end of the chapters to give you some
experience at “surfing the net” for accounting applications.

A. Summary of Transactions
METRO COURIER, INC.
Summary of Transactions
Month of July 2010
Assets -Liabilities + Stockholders' Equity
Accounts
Trans- Office Accounts Notes Payable Capital Retained
action Explanation Cash Receiv- Trucks Equipment Payable + Stock Earnings
able
Beginning balances (Illustration $ $ -0- $ 20,000 $ 2,500 = $ -0- $ 6,000 + $ 30,000 $ -0-
1.2) 13,500
Earned service revenue and
1b 4,800 4,800(A)
received cash
$
18,300 $ 20,000 $ 2,500 = $ 6,000 + $ 30,000 $ 4,800
2b Earned service revenue on account 900 900(B)
$ $ 900 $ 20,000 $ 2,500 = $ 6,000 + $ 30,000 $ 5,700
18,300
3b Collected cash on account 200 (200)
$
18,500 $ 700 $ 20,000 $ 2,500 = $ 6,000 + $ 30,000 $ 5,700
4b Paid salaries (2,600) (2,600)(C)
$
15,900 $ 700 $ 20,000 $ 2,500 = $ 6,000 + $ 30,000 $ 3,100
5b Paid rent (400) (400)(D)
$ $ 700 $ 20,000 $ 2,500 = $ 6,000 + $ 30,000 $ 2,700
15,500
6b Received bill for gas and oil used 600 (600)(E)
$15,500( $ $ 2,500
End-of-month balances $ 700(G) $ 600(J) $ 6,000 +(K) $ 30,000(L) $ 2,100(M)
F) 20,000(H) =(I)
$38,700 $6,600 $32,100
B. Balance Sheet
METRO COURIER, INC.
Balance Sheet
2010 July 31
Assets Liabilities and Stockholders'
Cash (F)$15,500 Liabilities:
Accounts receivable (G)700 Accounts payable (J)$600
Trucks (H)20,000 Notes payable (K)6,000
Office equipment (I)2,500 Total liabilities Stockholders' equity $6,600

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