The following example pertains to Bluefield Company for 2005. Cash received from

Question

The following example pertains to Bluefield Company for 2005.

Cash received from customers during 2005$140,000

Cash received from tenants during 2005    56,000

Cash paid for salaries during 2005    43,000

Cash paid for income taxes during 2005    23,000

Cash paid to suppliers during 2005    78,000

Jan. 1Dec. 31

Accounts receivable$5,000$9,000

Accounts payable11,000   7,000

Income tax payable    7,000    3,000

Inventory14,00020,000

Prepaid salaries 4,000    2,000

Unearned rent revenue 1,000    6,000

Instructions

Compute the amount of each of the following items for 2005 on the accrual basis.

1. Sales

2. Rent revenue

3. Salaries expense

4. Income tax expense

5. Cost of goods sold

Explanation / Answer

1) Sales Cash received from customers during 2005 $140,000.00 Add: Ending Receivables $9,000.00 Less: Beginning Receivables -$5,000.00 Sales (Accrual Basis) $144,000.00 2) Rent Revenue Cash received from tenants during 2005 $56,000.00 Add: Beginning Unearned Revenue $1,000.00 Less: Ending Unearned Revenue -$6,000.00 Rent (Accrual Basis) $51,000.00 3) Salaries Expense Cash paid for salaries during 2005 $43,000.00 Add:Beginning Prepaid Expense $4,000.00 Less: Ending Prepaid Expense -$2,000.00 Salaries(Accrual Basis) $45,000.00 4) Income tax expense Cash paid for income taxes during 2005 $23,000.00 Add: Ending Income Tax Payable $3,000.00 Less: Beginning Income Tax Payable -$7,000.00 Income Tax Expense (Accrual Basis) $19,000.00 5) Cost of goods sold Cash paid to suppliers during 2005 $78,000.00 Add: Beginning Inventory $14,000.00 Less: Ending Inventory -$20,000.00 Add: Ending Account Payable $7,000.00 Less: Beginning Payable -$11,000.00 Cost of Goods Sold (Accrual Basis) $68,000.00

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