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Cash basis& accrual basis-income statement & Balance sheet

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Chapter 3: Mini-Exercise M3-2
Mostert Music Company had the following transactions in March:
1. Sold instruments to customers for $10,000; received $6,000 in cash and the rest on account.
The cost of the instruments was $7,000
2. Purchased $4,000 of new instruments inventory; paid $1,000 in cash and owed the rest on account.
3. Paid $600 in wages for the month.
4. Received a $200 bill for utilities that will be paid in April.
5. Received $1,000 from customers as deposits on orders of new instruments to be sold to the customers in April.
Complete the following statements:
Chapter 3: Mini-Exercise M3-2 (2 points)

Cash Basis
Income Statement Accrual Basis
Income Statement
Cash sales
Customer deposits

$ Revenues:
Sales to customers

Inventory purchases
Wages paid

$ Expenses:
Cost of sales
Wages expense
Utilities expense


Cash Income
Net Income

Chapter 1: Problem 1-30A (Part A only) (6 points)

O'Shea Enterprises started the 2002 accounting period with $30,000 of assets (all cash), $18,000 of liabilities, and $4,000 of common stock. During the year, O'Shea earned cash revenues of $48,000, paid cash expenses of $32,000, and paid a cash dividend to stockholders of $2,000. O'Shea also acquired $10,000 of additional cash from the sale of common stock and paid $6,000 cash to reduce the liability owed to a bank.


a. Prepare an income statement, statement of changes in stockholders' equity, period-end balance sheet, and statement of cash flows for the 2002 accounting period.

O'Shea Enterprises
Income Statement
For the Period Ended December 31, 2002

Revenue $
Expenses $
Net Income $

O'Shea Enterprises
Statement of Changes in Stockholders' Equity
For the Period Ended December 31, 2002

Beginning Common Stock $
Plus: Common Stock Issued $
Ending Common Stock $

Beginning Retained Earnings $
Plus: Net Income $
Less: Dividends $
Ending Retained Earnings $

Total Stockholders' Equity $

O'Shea Enterprises
Balance Sheet
As of December 31, 2002

Cash $
Total Assets $

Liabilities $

Stockholders' Equity
Common Stock $
Retained Earnings $
Total Stockholders' Equity $

Total Liabilities and Stockholders' Equity $

O'Shea Enterprises
Statement of Cash Flows
For the Year Ended December 31, 2002

Cash Flows From Operating Activities:
Cash Receipts from Customers $
Cash Payments for Expenses $
Net Cash Flow from Operating Activities $

Cash Flows From Investing Activities $

Cash Flows From Financing Activities:
Cash Receipts from Stock Issue $
Cash Payments to Creditors $
Cash Dividend to Stockholders $
Net Cash Flow from Financing Activities $

Net Increase in Cash $
Plus: Beginning Cash Balance $
Ending Cash Balance $

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Solution Summary

The answer contains the preparation of income statement and balance sheet under cash and accrual basis of accounting