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Financial Accounting

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Determining the effect of transactions on accounts. See attached file for full problem description.

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https://brainmass.com/business/leasing/120380

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Please see my answers below. Please keep in mind that the name of the accounts can vary depending on which company you are working at, but the basic idea remains the same.

Step 1
Use the tables below to display the requested information for this task. The number of rows in each table is not indicative of the number of accounts affected. Feel free to add or remove rows as necessary.

Which accounts are affected by the lease payment for a lease that is classified as an operating lease? Assume even lease payments over the term of the lease.
Account affected Increase or decrease?
Rental Expense Increase
Cash & Cash Equivalents Decrease
Accounts Payable (if not paid in cash) Increase

How is the balance sheet affected by the lease payment for a lease that is classified as an operating lease? Assume even lease payments over the term of the lease.
Account affected Increase or decrease?
Cash Decrease
Accounts Payable (if not paid cash) Increase

How is the income statement affected by the lease payment for a lease that is classified as an operating lease? Assume even lease payments over the term of the lease.
Account affected Increase, decrease, or no change?
Rental Expense Increase

How is the statement of cash flows using the direct method affected by the lease payment for a lease that is classified as an operating lease? Assume even lease payments over the term of the lease.
Operating Activities - list event Cash inflow, cash ...

Solution Summary

The solution determines the effect of transactions on accounts.

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Financial Accounting Analysis

** Please see the attached file for the requisite financial statements **

SAC has developed revolutionary manufacturing techniques utilizing its new spark plug manufacturing technology to offer special-order spark plugs for the auto racing industry. The company is currently using process costing for its spark plugs but is considering using job order costing for the new specialty spark plugs. How does job order costing differ from process costing? Should SAC use process or job order costing for the specialty spark plugs? Make a recommendation for SAC. Be sure to fully back up your recommendation.

Scenario:
The Sparklin Automotive Company (SAC) has been in business since 1930. It began business in the United States supplying spark plugs to automotive manufacturers (OEM, the original equipment market) and the automotive aftermarket.

SAC has introduced a new spark plug manufacturing process in the United States that produces a higher quality spark plug guaranteed to last 100,000 miles. The introduction of this spark plug has been very successful in the United States.

In addition to these types of projects, your responsibilities include creating and analyzing the monthly performance of each plant and consolidating the results into a set of financial statements footnoted with explanations.

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