1. Critical Thinking Case CP3-7
Will
Annie
Sarah
Jeff

2. Question 1

3. Accrual Accounting Principles

4. T-Accounts

5. Estela Company Income Statement For the year ended December 31,2009
Revenues
Service Fees Revenue
Expenses
Operating Expenses
Supplies Expenses
Loss from Theft 500
Total Expenses
Net Income

6. Question 3
- Service Fee Revenue is is because this is the amount that Julio earned during Operating Expenses is is because this is the incurred expense. Supplies Expenses is 2500 is because you subtract the supplies that was purchased for used on service jobs that was already paid which was 3200 with the determined amount of supplies on hand that is unused at the end of 2009 which is 700 and you will get The 500 is the cash amount that was stolen from the company which makes it an expense so we have to add that into expense. After you did all that calculation, you subtract the total revenue and the total expenses to get the net income to be

7. Estela company Balance Sheet December 31, 2009
ASSETS
Current Assets
Cash
Accounts Receivable
Supplies
Total Current Assets
Assets
Building
Land
Tools & Equipment
Total Assets
LIABILIIES
Accounts Payable
Unearned revenue
Total Liabilities
STOCKHOLDERS’ EQUITY
Contributed Capital
Retained Earnings
Total Stockholder’s Equity
Total Liabilities and Stockholders’ Equity

8. Cash Flow Statement Operating Activities Cash received 55,000
Cash paid (22, ) (25,200)
Cash Stolen (500)
Cash flows provided by operations 29,300
Cash flows from investing Activities
Purchased Equipment (1000)
Total cash used in investing activity (1000)
Cash flows used in investing activities (2000)
Cash Flows from financing activities
Share issuance
Total cash provided by financing activity 1000
Cash flows provided by financing activities 2000
Increase in cash 29,300
Beginning cash balance 0
Ending Cash Balance 29,300
_____

9. Question number 4 -Expenses -> Could know more
-Non-current assets -> Need to know
We can know their long- term investments
-Short-term investments would show more assets

10. Question number 5 Dear Mr. Julio Estela,
Based on the revised statements and the information that is unknown, we choose not to grant you a loan at this time. Your current liabilities are at $59,000 and your total net income for the year was only $23,000. Even if we knew your long and short term investments, you still owe other parties too much money to possibly be able to pay them and us at the same time.
Thank you