Question: Gossett Company had the following beginning
Gossett Company had the following beginning balances in its accounting records as of January 1, Year 2:
The following accounting events apply to Gossett for Year 2:
Jan.  1 Acquired an additional $30,000 cash from the issue of common stock.
April  1 Paid $7,200 cash in advance for a one-year lease for office space.
June  1 Paid a $5,000 cash dividend to the stockholders.
July  1 Purchased additional land that cost $40,000 cash.
Aug.  1 Made a cash payment on accounts payable of $21,000.
Sept.  1 Received $9,600 cash in advance as a retainer for services to be performed monthly during the next eight months.
Sept. 30 Sold land for $20,000 cash that had originally cost $20,000.
Oct.  1 Purchased $1,200 of supplies on account.
Dec. 31 Earned $75,000 of service revenue on account during the year.
31 Received $62,000 cash collections from accounts receivable.
31 Incurred $27,000 in other operating expenses on account during the year.
31 Recognized accrued salaries expense of $18,000
31 Had $100 of supplies on hand at the end of the period.
31 The land purchased on July 1 had a market value of $56,000.
Required:
Based on the preceding information for Gossett Company, answer the following questions. All questions pertain to the Year 2 financial statements. (Hint: Record the events in general ledger accounts under an accounting equation before answering the questions.)
a. What amount would be reported for land on the balance sheet?
b. What amount of net cash flow from operating activities would be reported on the statement of cash flows?
c. What amount of rent expense would be reported on the income statement?
d. What amount of total liabilities would be reported on the balance sheet?
e. What amount of supplies expense would be reported on the income statement?
f. What amount of unearned revenue would be reported on the balance sheet?
g. What amount of net cash flow from investing activities would be reported on the statement of cash flows?
h. What amount of total expenses would be reported on the income statement?
i. What total amount of service revenue would be reported on the income statement?
j. What amount of cash flows from financing activities would be reported on the statement of cash flows?
k. What amount of net income would be reported on the income statement?
l. What amount of retained earnings would be reported on the balance sheet?
Transcribed Image Text:
Llabilitles and Equity Accounts Payable Assets $ 32,000 $ 60,000 45,000 35,000 Cash Accounts Receivable Common Stock 60,000 Land Retalned Earnings 48,000 Totals $140,000 $140,000
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