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Slides MS PowerPoint
Introduction to Accounting
Preparing for a User’s Perspective
Identify the impact of common transactions
on a new company’s financial statements
By Kevin C. Kimball, CPA
with support from
Debits and Credits Trainer
www.canvas.net
Free Jan. 2014
Available on the
Google Play Store
Idea (USHC), Management Skill? (just a beginner),
Resources (where to get them?)
Piggybank
Dad
(as lender
or investor)
But where can he get the
$ he needs to get started?
#1 – Original owner invests
On 1/1/X6 Spencer invested $51 of his own
(piggybank) money into Utah Straw Hat Co (USHC)
thereby obtaining 100% ownership.
#2 – Partner invests
1/2/X6 Dad becomes a partner and invests $49
thus receiving 49% ownership.
(Spencer’s ownership now only claims 51% of USHC’s assets).
# 3 – Bank loans
1/3/X6 USHC borrows $200 from
St. George Intl. Bank (SGIB) for one year at 12%
simple interest to be paid annually.
# 4 – Co. orders inventory
1/4/X6 USHC creates and sends a purchase order
to China Hat Company (CHC), its vendor, to
purchase 100 hats at $.50 per hat.
!!No Current Impact on Financials!!
BUT it will be recorded in his accounting system (such as Quickbooks)
1) to remember it, 2) to document its authorization, 3) to receive the goods.
# 5 – Co. receives inventory
1/5/X6 CHC delivers 100 hats (Invoice #452). Total
invoice amount is $60 as follows $50 hats, $7
shipping, $3 sales tax.
# 6 – Co. sells inventory
1/6/X6 USHC sells 10 hats, on account, to Ali’i Turf Co. for
$21 ($20 sales price plus $1 sales tax).
The 10 hats cost $6 (i.e. ($60/100)*10)
# 7 – Co. pays for inventory
1/7/X6 USHC writes check number 1 to
pay off the $60 invoice from CHC.
# 8 – Co. receives customer payment
1/8/X6 USHC received payment for sale
to Ali’i Turf in the amount of $21.
Co. prepares draft of unadjusted
financial statements
• Additional information:
– Interest expenses have not been recorded yet.
They will be recorded at the end of the month
when the “adjusted” financial statements are
prepared.
Introduction to Accounting
Preparing for a User’s Perspective
Identify the impact of common transactions
on a new company’s financial statements
By Kevin C. Kimball, CPA
with support from
Debits and Credits Trainer
www.canvas.net
Free Jan. 2014
Available on the
Google Play Store

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