Problem 10-20 Service Versus Manufacturing Companies

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Solution Guide / Answer Key:

ACCOUNTING

Survey of Accounting
Second (2nd) Edition
Thomas Edmonds, Philip Olds, Frances McNair, Bor-Yi Tsay
Problem 10-20 Service Versus Manufacturing Companies

Mazzel Company began operations on January 1, 2008, by issuing common stock for $33,000 cash. During 2008, Mazzel received $39,000 cash from revenue and incurred costs that required $66,000 of cash payments.

Required
Prepare an income statement, balance sheet, and statement of cash flows for Mazzel for 2008, under each of the following independent scenarios.
a. Mazzel is a promoter of rock concerts. The $66,000 was paid to provide a rock concert that produced the revenue.
b. Mazzel is in the car rental business. The $66,000 was paid to purchase automobiles. The automobiles were purchased on January 1, 2008, had four-year useful lives and no expected salvage value. Mazzel uses straight-line depreciation. The revenue was generated by leasing the automobiles.
c. Mazzel is a manufacturing company. The $66,000 was paid to purchase the following items.

AND SO ON

Check:
a. Net loss: $27,000
b. Total assets: $55,500
c. Net income: $11,225

FILE: MS WORD