Accounts Essay

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Q1. Copies Express was incorporated on November 20, 2005, and began operating on January 2, 2006. This balance sheet as of the beginning of operations is shown in Exhibit 1. In preparing financial statements for the first year of operations, the accountant reviewed the record of cash receipts and cash disbursements for Copies express. This information appears in Exhibit 2. In addition, the accountant examined certain other information relative to operations. These additional items appear in exhibit 3. EXHIBIT 1 Copies Express, Inc. Balance sheet (As of January 2, 2006) Assets Cash $ 2000 Supplies 24,400 Building and equipment 300,000 Land 12,000 Total 338,400 Liabilities and Owners’ Equity Accounts Payable $ 10,400 Bank loan 24,000 Capital stock 304,000 Total `338,400 EXHIBIT 2 Copies Express, Inc. Cash Receipt and Disbursements: 2006 Cash receipt: Cash sales $ 176,450 Collect accounts receivable 64,750 Total 241,200 Cash disbursements: Wages and salaries $ 85,750 Heat, light, power 15,000 Additional supplies 52,600 Selling & Administration 28,375 Interest (Note 1) 2,880 Payment –bank loan (12/31) 12,000 Payment –accounts payable 10,400 Total

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