Case 1-1: Ribbons an Bows, Inc.
Note: This is a new eluding for the twelfth part Edition.
This is an introductory case and it should be taught as an introductory case. in that location will be plenty of time in the scat for the students to learn the correct form of financial statements and details of accounting standards. In short, the instructor should be prepared to allow a variety of formats for the financial statements and tolerate some not sooner correct accounting.
The instructor may want to have students argue Carmens March 31 statement, but the bulk of the mob should focus on the troika case questions. Any preaching of the March 31 statement should deal with the nature of the non-homogeneous accounts (i.e. prepaid rent is rent paid in forward motion of using the property and it is an asset because it has future economic benefits for the company, etc), sort of than the format of the statement. It is better to leave the beginning of the courses instruction in financial statement formats to the assigned case question discussions.
Comments on Information Gathered and Carmens Concerns
1. The three month sales total is the sum of the cash sales ($7,400) and credit sales ($320).
Cost of sales is derived from the following equation
start out ware scroll$3,300
Plus Purchases 2,900
Equals Total available merchandise $6,200
Less Ending merchandise inventory 4,100
Equals Cost of sales$2,100
3. Rent expense is $1,800 of $600 per month times three months. nonrecreational in cash.
4. Part-time employee expenses ($1600) is the sum of cash paid ($1510) summation amount owed ($90).
5. Supplies expense ($80) is beginning supplies inventory ($100) less supplies inventory on hand on March 31 ($20).
6. The prepaid advertising ($150) was run by the local paper on April 2. The benefit of the asset expired so the asset became an expense.
7. The commercial sewing...If you want to get a full essay, order it on our website: Orderessay
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