Question

The following items and amounts were taken from Blossom Company’s 2017 income statement and balance sheet. Cash $ 88,000 Retained earnings 122,500 Cost of goods sold 436,300 Salaries and wages expense 117,000 Prepaid insurance 8,100 Inventory 64,300 Accounts receivable 90,500 Sales revenue 581,700 Notes payable 6,300 Accounts payable 55,500 Service revenue 5,500 Interest expense 1,830

Answer 1

Cash - $88,000 (Assets)

Retained earnings - $122,500 (equity)

Cost of goods sold - $436,300 ( expense)

Salaries and wages expense - $117,000 (expense)

Prepaid insurance - $8,100 (asset)

Inventory - $64,300 (asset)

Accounts receivable - $90,500 (asset)

Sales revenue - $581,700 (revenue)

Notes payable - $6,300 (liabilities)

Accounts payable - $55,500 (liabilities)

Service revenue- $5,500 (revenue)

Interest expense - $1,830 (expense)

Step-by-step explanation:

The complete question reads; In each case, identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item.

To answer this, the elements of a balance sheet are assets, liabilities and equity.

While assets include fixed assets, cash, inventories, account receivables etc, liabilities include accounts payable, loans payable, accrued expenses etc.

Equity which represents the amount owed to the owners of the business includes retained earnings (which is the accumulation of the net income/loss over the years less dividends paid) and common shares.

Revenue and expenses are elements of income statement.