Accrual basis accounting

we rec ognize revenue whenever it is performed or delivered regardless of hen it is collected

we recognized expense whenever it is incurred, regardeless of when it is paid or settled

a unused office supplies 320

supplies expense 320

b prepaid insurance 1800

insurance expense 1800

c depreciation expense 4500

accumulated depreciation 4500

d unearned rental income 4000

rental income 4000

e accrued income 447000

service income 447000

f accrued interest 100

notes receivable 100

g impairment loss 1050

accounts receivable 1050

h accrued salaries 108000

salaries expense 108000
f hen it is collected
paid or settled

depreciation = (cost-salvage value)/ depreciable life

92,000 - 2,000= 90,000/10
9,000 x 6/12
4500
4 phases
journalizing
classifying
summarizing
interpreting

REY'S INTERNET CAFÉ

TRIAL BALANCE
DECEMBER 31. 200D
ACCOUNT TITLE DEBIT CREDIT
CASH 56,600
ACCOUNTS RECEIVABLE 3,000
NOTES RECEIVABLE 1,650
TOOLS 1,000
FURNITURE AND FIXTURES 4,000
OFFICE EQUIPMENT 25,900
COMMUNICATION EQUIPME 50,000
NOTES PAYABLE 4,900
LOANS PAYABLE 25,000
ACCOUNTS PAYABLE 11,700
REY CAPITAL 124,500
REY DRAWING 7,000
SERVICE INCOME 25,350
RENT INCOME 8,000
TAX AND LISCENCE EXPENS 3,000
COMMUNICATION EXPENSE 1,250
MISCELLANEOUS EXPENSE 450
RENT EXPENSE 12,000
ADVERTISING EXPENSE 3,600
SALARIES EXPENSE 30,000
TOTAL 199,450 199,450
A=L + OE

ACCOUNTS REC- ALLOW FOR IMPAIRMENT LOSS = NET REALIZABLE VALUE

PREPAID EXPENSES ARE ASSETS

THESE ARE EXPENSES PAID IN ADVANCE

UNEXPIRED INSURANCE - IS ALSO AN ASSET

FURNITURE AND FIXTURE- ACCUM DEPR. = NET BOOK VALUE

ACCRUED INTEREST EXPENSE - LIABILITY

ACCRUED INTEREST INCOME - ASSET

UNEARNED COMMISSION - LIABILITY

B.
CALENDAR PERIOD - IT FOLLOWS THE CALENDAR FROM JAN TO DEC
FISCAL PERIOD - WHICH COMPLETES THE 12 MONTH PERIOD BUT NOT STARTING JANUARY

NELSON TRUCKING COMPANY

STATEMENT OF CHANGES IN OWNER'S EQUITY
FOR THE FISCAL YEAR ENDED JUNE 30, 200B

NELSON CAPITAL, JUNE 30, 200B 500000

ADD: ADDITIONAL INVESTMENT 20000
BALANCE 520000
ADD: NET INCOME (LESS: NET LOSS) 73100
BALANCE 593100
LESS: NELSON PERSONAL -25000
NELSON CAPITAL, JUNE 30, 200C 568100

NELSON TRUCKING COMPANY

INCOME STATEMENT
FOR THE FISCAL YEAR ENDED JUNE 30, 200B

TRUCKING SERVICE INCOME 267000

RENTAL INCOME 12000
TOTAL INCOME 279000
LESS: EXPENSES
RENT 48000
REPAIR & MAINTENANCE 36000
Utilities 12450
Gas & Oil 76000
Insurance 25000
Taxes and Licenses 8450
TOTAL EXPENSES -205900
NET INCOME 73100
 SUPER MASSAGE CLINIC - CASE 1
DECEMBER 31, 200H

ASSET:
CASH
DUE FROM CUSTOMER
DELIVERY VAN
OFFICE EQUIPMENT
NOTES RECEIVABLE
FURNITURE AND FIXTURES
TOTAL

LIABILITIES:
NOTES PAYABLE
LOANS PAYABLE
DUE TO SUPPLIERS
TOTAL

COMPUTATION OF OWNER'S EQUITY

ASSET: 321,650
LIABILITY: 73,000
ARTING JANUARY
ACCOUNTING EQUATION
ASSET-LIABILITIES = OWNER'S EQUITY

321,650 - 73,000 = 248650

OWNER'S EQUITY
 SAGE CLINIC - CASE 1
EMBER 31, 200H
DEBIT CREDIT SUPER MASSAGE CLINIC - CASE 2

24,200 ASSET:
13,450 CASH
200,000 ACCOUNTS RECEIVABLE
48,000 ALLOW. IMPAIRMENT LOSS
8,000 UNUSED OFFICE SUPPLIES
28,000 PREPAID ADVERTISING
321,650 UNEXPIRED INSURANCE
FURNITURE AND EQUIPMENT
ACCUMULATED DEPRECIATION
12,000 ACCRUED INTEREST INCOME
40,000 RENTAL RECEIVABLE
21,000 REPAIR SUPPLIES INVENTORY
73,000
TOTAL
ON OF OWNER'S EQUITY
LIABILITIES:
ACCOUNTS PAYABLE
NOTES PAYABLE
ACCRUED INTEREST EXPENSE
UNEARNED COMMISSION
ER'S EQUITY SALARIES EXPENSE
TOTAL

COMPUTATION OF OWNER'S EQUITY

248,650
ASSET: 214,790
LIABILITY: 68,700
ACCOUNTING EQUATION
ASSET - LIABILITIES = OWNER'S EQUITY

214,790 - 68,700 = 146090

OWNER'S EQUITY
SAGE CLINIC - CASE 2
DEBIT CREDIT

68,900
36,500
1,200
2,350
12,000
6,500
76,000
7,600
2,340
15,000
4,000
223,590 8800
214,790

32,000
16,500
1,200
11,000
8,000
68,700

ON OF OWNER'S EQUITY
NER'S EQUITY

146,090