Question

Coates Inc. experienced the following events in 2014, in its first year of operation: (1) Received $20,000 cash from the issue of common stock. (2) Performed services on account for $38,000. (3) Paid the utility expense of $2,500. (4) Collected $21,000 of the accounts receivable. (5) Recorded $15,000 of accrued salaries at the end of the year. (6) Paid a $2,000 cash dividend to the shareholders.Record the events in general ledger accounts under an accounting equation.

Answer 1

Coates Inc. needs to record six transactions that include issuing stock, performing services, paying expenses, collecting receivables, accruing salaries, and paying dividends. For the calculation of accounting profit, the firm's explicit costs are subtracted from revenues, resulting in a profit of $50,000.

Step-by-step explanation:

Coates Inc. needs to record the following transactions in general ledger accounts under an accounting equation:

1. Received $20,000 cash from the issue of common stock.
2. Performed services on account for $38,000.
3. Paid the utility expense of $2,500.
4. Collected $21,000 of the accounts receivable.
5. Recorded $15,000 of accrued salaries at the end of the year.
6. Paid a $2,000 cash dividend to the shareholders.

For the self-check question:

Step 1. First you have to calculate the costs. Combine the explicit costs:

• Labor: $600,000

• Capital: $150,000

• Materials: $200,000

• Total explicit costs: $950,000

Step 2. Subtracting the explicit costs from the revenues gives you the accounting profit:

• Revenues: $1,000,000

• Explicit costs: -$950,000

• Accounting profit: $50,000

Answer 2

Step-by-step explanation:

Please see attached file