Problem 3-1 1. 2. 3. 30 points The following information is available for two different types of businesses for the 2025 accounting period. Blenheim CPAs is a service business that provides accounting services to small businesses. Picton Inc is a merchandising business that sells sports clothing, trophies and medals to college students. Data for Picton Inc 4. Data for Blenheim CPAs 1. Borrowed 2. Provided and earned 3. Paid salary expense of REQUIRED Borrowed Purchased $450,000 from the bank to start the business. $288,000 inventory for cash. Inventory costing $165,600 was sold for $270,000 cash. Paid hint: transaction 3 is 2 transactions. Think 3a and 3b. $37,800 cash for operating expenses. $450,000 from the bank to start the business. $315,000 of services to customers and collected $225,000 $3 a. Prepare an income statement, a balance sheet, and a statement of cash flows for each of the companies. This is different than completing a horizontal model. A horizontal model can help organize the transactions. b. Why does the CPA firm not compute gross margin on its income statement? c. Which of the two businesses would have product costs or cost of goods? Why? d. Compare the assets of both companies. What assets do they have in common? What assets are different? Why?
Problem 3-1 1. 2. 3. 30 points The following information is available for two different types of businesses for the 2025 accounting period. Blenheim CPAs is a service business that provides accounting services to small businesses. Picton Inc is a merchandising business that sells sports clothing, trophies and medals to college students. Data for Picton Inc 4. Data for Blenheim CPAs 1. Borrowed 2. Provided and earned 3. Paid salary expense of REQUIRED Borrowed Purchased $450,000 from the bank to start the business. $288,000 inventory for cash. Inventory costing $165,600 was sold for $270,000 cash. Paid hint: transaction 3 is 2 transactions. Think 3a and 3b. $37,800 cash for operating expenses. $450,000 from the bank to start the business. $315,000 of services to customers and collected $225,000 $3 a. Prepare an income statement, a balance sheet, and a statement of cash flows for each of the companies. This is different than completing a horizontal model. A horizontal model can help organize the transactions. b. Why does the CPA firm not compute gross margin on its income statement? c. Which of the two businesses would have product costs or cost of goods? Why? d. Compare the assets of both companies. What assets do they have in common? What assets are different? Why?
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter1: The Role Of Accounting In Business
Section: Chapter Questions
Problem 1.1E
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Transcribed Image Text:Problem 3-1
1.
2.
3.
30 points
The following information is available for two different types of businesses for the 2025
accounting period. Blenheim CPAs is a service business that provides accounting services to
small businesses. Picton Inc is a merchandising business that sells sports clothing, trophies and medals
to college students.
Data for Picton Inc
4.
Data for Blenheim CPAs
1. Borrowed
2.
Provided and earned
3. Paid salary expense of
REQUIRED
Borrowed
Purchased
$450,000 from the bank to start the business.
$288,000 inventory for cash.
Inventory costing
$165,600 was sold for
$270,000 cash.
Paid
hint: transaction 3 is 2 transactions. Think 3a and 3b.
$37,800 cash for operating expenses.
$450,000 from the bank to start the business.
$315,000 of services to customers and collected
$225,000
$3
a. Prepare an income statement, a balance sheet, and a statement of cash flows for each of the
companies. This is different than completing a horizontal model. A horizontal model can help organize the transactions.
b. Why does the CPA firm not compute gross margin on its income statement?
c. Which of the two businesses would have product costs or cost of goods? Why?
d. Compare the assets of both companies. What assets do they have in common? What assets
are different? Why?
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