Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Chapter 2, Problem 46PB
1.
To determine
Prepare
2.
To determine
Prepare the income statement, statement of changes in shareholders’ equity, balance sheet and statement of
3.
To determine
Compute the
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Required information
While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing
careers in professional cake decorating. Their company, Good to Eat (GTE), specializes in custom-sculpted cakes for
weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of 2023, and each
contributed $80,000 in exchange for a 50 percent ownership interest. GTE also borrowed $320,000 from a local
bank. Both James and Paul had to personally guarantee the loan. Both owners provide significant services for the
business. The following information pertains to GTE's 2023 activities:
• GTE uses the cash method of accounting (for both book and tax purposes) and reports income on a calendar-year
basis.
• GTE received $600,000 of sales revenue and reported $280,000 of cost of goods sold (it did not have any ending
inventory).
• GTE paid $45,000 compensation to James, $45,000 compensation to Paul, and $55,000 of…
Required Information
While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing
careers in professional cake decorating. Their company, Good to Eat (GTE), specializes in custom-sculpted cakes for
weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of 2023, and each
contributed $140,000 in exchange for a 50 percent ownership Interest. GTE also borrowed $560,000 from a local bank.
Both James and Paul had to personally guarantee the loan. Both owners provide significant services for the business. The
following information pertains to GTE's 2023 activities:
• GTE uses the cash method of accounting (for both book and tax purposes) and reports Income on a calendar-year
basis.
• GTE received $900,000 of sales revenue and reported $420,000 of cost of goods sold (it did not have any ending
Inventory).
• GTE paid $75,000 compensation to James, $75,000 compensation to Paul, and $85,000 of…
Analyze the case below and answer the questions thereafter.
An ABM graduate named Jason decided to start a bakery business in Cateel,
Davao Oriental. Their house is in the heart of the Poblacion and so his mother
allowed him to use a spare portion of their house for his bakeshop. For his
startup capital, he loaned P200,000 from his father. He then proceeded to
purchase an oven, a mixer and other related equipment, machines and tools
for his baking needs. He also purchased raw materials such as flour, sugar,
and all sort of baking supplies.
Because it is the only bakeshop operating in town, the sale of bakery products
rises steeply. In order for him to keep track of sales and expenses, he applied
what he learned in Senior High School about the importance of record
keeping. He uses a journal and a ledger for record keeping purposes.
As his business continues to grow, he sees the opportunity to borrow bigger
capital from the bank. The bank requires a Financial Report showing the
health…
Chapter 2 Solutions
Financial Accounting
Ch. 2 - Prob. 1YTCh. 2 - Prob. 2YTCh. 2 - Is prepaid insurance an expense or an asset?...Ch. 2 - Prob. 4YTCh. 2 - Give an example of the matching principle from the...Ch. 2 - What is the difference between cash basis and...Ch. 2 - Prob. 7YTCh. 2 - What is GAAP? What is IFRS?Ch. 2 - Prob. 2QCh. 2 - Prob. 3Q
Ch. 2 - Prob. 4QCh. 2 - Prob. 5QCh. 2 - What are the four basic financial statements?Ch. 2 - Which financial statement pertains to a single...Ch. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10QCh. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - What does recognize revenue mean in accounting?Ch. 2 - Prob. 14QCh. 2 - What is an accrual? What is a deferral?Ch. 2 - Must a company collect the money from a sale...Ch. 2 - What is the cost of goods sold?Ch. 2 - Explain the difference between cash basis...Ch. 2 - Prob. 19QCh. 2 - Prob. 20QCh. 2 - Prob. 21QCh. 2 - Prob. 1MCQCh. 2 - Prob. 2MCQCh. 2 - Prob. 3MCQCh. 2 - Prob. 4MCQCh. 2 - Prob. 5MCQCh. 2 - Prob. 6MCQCh. 2 - Prob. 7MCQCh. 2 - Prob. 8MCQCh. 2 - Prob. 9MCQCh. 2 - Prob. 10MCQCh. 2 - Elements of the financial statements. (LO 3). For...Ch. 2 - Prob. 2SEACh. 2 - Prob. 3SEACh. 2 - Prob. 4SEACh. 2 - Prob. 5SEACh. 2 - Prob. 6SEACh. 2 - Cash versus credit sales. (LO 3, 4). Company A had...Ch. 2 - Prob. 8SEACh. 2 - Prob. 9SEACh. 2 - Prob. 10SEACh. 2 - Prob. 11SEBCh. 2 - Prob. 12SEBCh. 2 - Prob. 13SEBCh. 2 - Prob. 14SEBCh. 2 - Prob. 15SEBCh. 2 - Prob. 16SEBCh. 2 - Prob. 17SEBCh. 2 - Prob. 18SEBCh. 2 - Prob. 19SEBCh. 2 - Prob. 20SEBCh. 2 - Prob. 21EACh. 2 - Prob. 22EACh. 2 - Prob. 23EACh. 2 - Balance sheet and income statement transactions....Ch. 2 - Prob. 25EACh. 2 - Prob. 26EACh. 2 - Prob. 27EACh. 2 - Prob. 28EACh. 2 - Elements of the financial statements. (LO 3). The...Ch. 2 - Prob. 30EBCh. 2 - Elements of the financial statements. (LO 3)....Ch. 2 - Prob. 32EBCh. 2 - Prob. 33EBCh. 2 - Prob. 34EBCh. 2 - Prob. 35EBCh. 2 - Current ratio. (LO 5). The following data was...Ch. 2 - Prob. 37PACh. 2 - Prob. 38PACh. 2 - Prob. 39PACh. 2 - Prob. 40PACh. 2 - Prob. 41PACh. 2 - Prob. 42PBCh. 2 - Prob. 43PBCh. 2 - Prob. 44PBCh. 2 - Prob. 45PBCh. 2 - Prob. 46PBCh. 2 - Prob. 1FSACh. 2 - Prob. 2FSACh. 2 - Prob. 3FSA
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