ICQ Question Chapter 3 PDF

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FINANCIAL ACCOUNTING – PART I IN-CLASS DISCUSSION QUESTIONS (ICQs) CHAPTER 3

6th Edition

ICQ #1 M3-2 Reporting Cash Basis versus Accrual Basis Earnings LO3-3 Mostert Music Company had the following transactions in March: 1. Sold instruments to customers for $15,000; received $10,000 in cash and the rest on account. 2. Determined that the cost of the instruments sold was $9,000. 3. Purchased $3,000 of new instruments inventory; paid $1,000 in cash and the rest on account. 4. Paid $750 in wages for the month. 5. Received a $200 bill for utilities that will be paid in April. 6. Received $3,000 from customers as deposits on orders of new instruments to be sold to customers in April. Complete the following statements: Cash Basis Statement of Earnings Accrual Basis Statement of Earnings Revenues Cash sales

$

Revenues Sales to customers

Customer deposits Expenses

Expenses

Inventory purchases

Cost of sales

Wages paid

Wages expense

6th Edition

$

Utilities expense Net earnings

Net earnings

Does the cash basis or the accrual basis of accounting provide a better indication of the operating performance of Mostert Music Company in March? Explain.

6th Edition

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6th Edition

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6th Edition

ICQ#2 E3–11 Recording Journal Entries LO3-4 Sysco Sysco, formed in 1969, is the largest U.S. marketer and distributor of food service products, serving nearly 400,000 restaurants, hotels, schools, hospitals, and other institutions. The following summarized transactions are typical of those that occurred in a recent year (dollars in millions). 1. Borrowed $181 from financial institutions, signing short-term notes. 2. Provided $39,323 in service to customers during the year, with $28,558 on account and the rest received in cash. 3. Purchased equipment for $96 in cash. 4. Purchased inventory for $32,305 on account. 5. Paid $3,500 in salaries during the year. 6. Received $39,043 on account paid by customers. 7. Purchased and used fuel of $750 in delivery vehicles during the year (paid for in cash). 8. Declared and paid $597 in dividends for the year. 9. Paid $32,074 cash on accounts payable. 10.Incurred $68 in utility usage during the year; paid $55 in cash and the rest on account. Required: Prepare a journal entry to record each of the transactions. Determine whether the accounting equation remains in balance and debits equal credits after each entry.

6th Edition

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