Question

Below is the complete list of accounts of Cobras Incorporated and the related balance at the end of March. All accounts have their normal debit or credit balance. Supplies, $1,100; Buildings, $38,000; Salaries Payable, $300; Common Stock, $18,000; Accounts Payable, $1,350; Utilities Expense, $2,000; Prepaid Insurance, $1,100; Service Revenue, $17,800; Accounts Receivable, $2,500; Cash, $1,800; Salaries Expense, $4,700; Retained Earnings, $13,750. Required: Prepare a trial balance with the list of accounts in the following order: assets, liabilities, stockholders' equity, revenues, and expenses.

Answer 1

Answer:

We construct a trial Balance

Cobras Incorporated

Trial Balance

March 31, 2009

Accounts                   Debit                          Credit

Cash                           $1,800  

Accounts Receivable    $2,500  

Supplies                           1100  

Prepaid Insurance            $1,100  

Buildings                  $38,000  

Accounts Payable                          $1,350

Salaries Payable                            $300

Common Stock                          $18,000;

Retained Earnings                            $13,750.

Service Revenue                             $17,800;

Salaries Expenses          $4,700

Utilities Expenses         $2,000  

Totals                         $51200              $51200

Explanation:

classification

Assets are ;Cash,Accounts Receivable ,Buildings,Supplies,Prepaid Insurance

Liabilities are:Salaries Payable and Accounts payable

Stakeholders Equity:Common Stock  ,Retained Earnings

Revenue:Service Revenue

Expenses:Salaries Expenses, Utilities Expenses

Let us construct a trial balance

                Cobras Incorporated

                     Trial Balance

                     March 31, 2009

Accounts                   Debit                     Credit

Cash                           $1,800  

Accounts Receivable    $2,500  

Supplies                           1100  

Prepaid Insurance            $1,100  

Buildings                        $38,000  

Accounts Payable                            $1,350

Salaries Payable                               $300

Common Stock                                 $18,000;

Retained Earnings                            $13,750.

Service Revenue                               $17,800;

Salaries Expenses        $4,700

Utilities Expenses         $2,000  

Totals                             $51200       $51200

Answer 2

Answer:

See attached file

Explanation:

Revenues and Expenses arise from equity variations, which produce changes in stockholders' equity.

Capital contributions increase the stockholders' equity, but they are not revenues. Benefit distributions among owners are decreases but they are not expenses.

Revenues are caused by increases in assets or decreases in liabilities that are generated by operations or economic events over a period of time. The Expenses, are constituted by all the costs incurred in the activities of the company.

As a result we can get the expanded accounting equation:

ASSETS = LIABILITIES + STOCKHOLDERS´ EQUITY + REVENUES – EXPENSES

Also:  

Net Income = Income − Expenses