Practice4thPeriodEvents

Buy10Tshirts@$1each,cash

Sell20Tshirts@$5each:10forcashand
10onAccount

PartyRevenue
Period
Reasoning

3
Aggressive

Conservative

$50.00

4
$50.00

Reveuneisrecognizedwhencashis
received;violatestheRealization
Principle

$100.00

Revenuerecognizedwhenthepuppy
appearsatthepartyinaccordancewith
theRealizationPrinciple

Monday'sinclassExampleincludedselling20T
Shirts@$5eachwhichadds20x$5=$100for
eachApproachinthe4thperiod.

Period 0123

456 AND AGGRESSIVE

IncomeStatement

TheOpeningBalanceSheet
Cash

$ 292

Receivables

10

(Allowancefor
BadDebt)

80

PrepaidExpenses

11

Supplies

15

(AccumulatedD
&A

124
(116)

Payables
Accrued
Expenses
Dividends
Declared

150

Cash

375

(COS)

(80)

Receivables

60

GrossProfit

70

(SGA)

(16)

EBITDA

54

(D&A)

(8)

Debt

100

EBIT=Operating
Income

46

PinK

200

Interest
(Expense)Income

(7)

RecurringIncome

39

Gains(Losses)

NetIncome

39

Treasury
Stock
Retained
Earnings

Totals

Revenue

Inventory

FixedAssets

Advances

416

ClosingBalanceSheet

109
416

Allowancefor
BadDebt

10

Prepaid

Expenses

10

Supplies

124

FixedAssets

D&A

Payables

Inventory

Accumulated

Advances

(124)

Accrued

Expenses
Dividends
Declared

Debt

100

PinK

200

Treasury

Stock
Retained

148

Earnings
455

455

TheStatementofCashFlows(IndirectFormat)
OperatingActivities

InvestingActivities

NetIncome

39

Addback
Depreciation/Amortization

Lessthe inCurrentWorking
Assets

36

Plusthethe inCurrent
WorkingLiabilities

ReportedLosses(Gains)

C.F.O.A.

$ 83

ReportedGains(Losses)
Lessthe inNBVof
FixedAssetsless,i.e.
excluding,current
Depreciation

Financingactivities

DebtIssued(Repaid)

StockSales(RePurchases)

(CashDividendsPaid)

TotalCash
Flow
C.F.I.A.

$
AGG 4

C.F.F.A.

$ 83

Period 0123

456 AND CONSERVATIVE

IncomeStatement

TheOpeningBalanceSheet
Cash

$ 292

Receivables

10

(Allowancefor
BadDebt)

30

PrepaidExpenses

11

Supplies

15

(AccumulatedD
&A

100
(100)

Payables
Accrued
Expenses
Dividends
Declared

200

Cash

375

(COS)

(30)

Receivables

60

GrossProfit

170

(SGA)

(16)

EBITDA

154

(D&A)

50

Debt

100

EBIT=Operating
Income

154

PinK

200

Interest
(Expense)Income

(7)

RecurringIncome

147

Gains(Losses)

NetIncome

147

Treasury
Stock
Retained
Earnings

Totals

Revenue

(10)

Inventory

FixedAssets

Advances

348

ClosingBalanceSheet

(9)
348

Allowancefor
BadDebt

10

Prepaid

Expenses

10

Supplies

100

FixedAssets

D&A

Payables

(10)

Inventory

Accumulated

Advances

(100)

Accrued

Expenses
Dividends
Declared

Debt

100

PinK

200

Treasury

Stock
Retained

138

Earnings
445

445

TheStatementofCashFlows(IndirectFormat)
OperatingActivities

InvestingActivities

NetIncome

147

Addback
Depreciation/Amortization

Lessthe inCurrentWorking
Assets

(14)

Plusthethe inCurrent
WorkingLiabilities

(50)

ReportedLosses(Gains)

C.F.O.A.

$ 83

ReportedGains(Losses)
Lessthe inNBVof
FixedAssetsless,i.e.
excluding,current
Depreciation

Financingactivities

DebtIssued(Repaid)

StockSales(RePurchases)

(CashDividendsPaid)

TotalCash
Flow
C.F.I.A.

$
CONS 4

C.F.F.A.

$ 83