Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 3 Accrual Accounting Concepts 139

Balance Sheet

Assets  Liabilities Stockholders’ Equity

Laundry Prepaid Laundry Acc. Accts. Wages Capital Retained

CashSuppliesInsuranceEquip.Deprec.PayablePayableStockEarnings

25,000 6,000 4, 800 225,000 45,000 5,100 0 36,000 174,700

Statement of Cash Flows

Operating (Revenues) 28 0,000

Financing (Capital Stock) 10,000

Operating (Expenses) 160,000

Investing (Equipment) 110,000

Financing (Dividends) 4,000

Net increase in cash 16,000

Beginning cash balance 9,000

Ending cash balance 25,000

Statement of

Cash Flows

Income

Statement

Income Statement

Aug. 28 0,000 Laundry revenue

Aug. 77,500 Wages expense

Aug.  28 ,000 Rent expense

Aug. 22,600 Utilities expense

Aug. 3,500 Misc. expense

Balances, Aug. 31, 2007

INTEGRATED FINANCIAL

STATEMENT FRAMEWORK

3. Prepare a classified balance sheet as of August 31, 2007.


4. Prepare a statement of cash flows for the year ended August 31, 2007.

Tyro Health Care, Inc., is owned and operated by Dr. Ricky Owens, the sole stockholder. During

March, Tyro Health Care entered into the following transactions:

Mar. 2 Received $10,800 from Mutton Company as rent for the use of a vacant office in

Tyro Health Care’s building. Mutton prepays the rent six months in advance.

2 Paid $4,200 for an insurance premium on a one-year, general business policy.

3 Purchased supplies of $1,250 on account.

6 Collected $6,600 for services provided to customers on account.

9 Paid creditors $2,750 on account.

18 Invested an additional $15,000 in the business in exchange for capital stock.

23 Billed patients $17,800 for services provided on account.

25 Received $5,800 for services provided to customers who paid cash.

30 Paid expenses as follows: wages, $12,300; utilities, $4,500; rent on medical

equipment, $3,000; interest, $150; and miscellaneous, $400.

31 Paid dividends of $1,000 to stockholders (Dr. Owens).

Instructions

Analyze and record the March transactions for Tyro Health Care, Inc., using the integrated

financial statement framework. Record each transaction by date and show the balance for each ac-

count after each transaction. The March 1, 2007, balances for the balance sheet are shown below.

ALTERNATE ACCOUNTING APPLICATION PROBLEMS

Alternate Problem
3-1B

Accrual basis accounting

Goal 2

GENERAL LEDGER

Stockholders’
Assets  Liabilities  Equity
Accts. Pre. Acc. Accts. Un. Wages Notes Capital Ret.
Cash Rec. Ins.Supp.BuildingDep. Land  Pay. Rev. Pay.  Pay.  Stock  Earn.
Bal., Mar. 1 7,000 9,900 360 220 60,000 4,800 30,000 5,100 0 0 25,000 50,000 22,580