Chapter 1
description
Transcript of Chapter 1
. Assignment Print View Page 1 of 14
C ila{rcr! |
Answer the following questions. (Hrnf: Use the accounting equation.) (Omit the "$" sign in yourresponse.)
awaro:4 10 pointst .
a. Office Mart has assets equal to $266,000 and liabilities equal to $237,000 at year-end. What is thetotal equity for Office Mart at year-end?
Total equity $ f-29"000
Explanation:
A s s e t s = L i a b i l i t i e s + E q u i t y$ 2 6 6 , 0 0 0 = $ - 2 3 7 , 0 0 0 + $ 2 9 , 0 0 0
View Hint #1
,,1oA, 08o(.72r, *o)
24, aoo
Learning Objective: 01-A1 Define
worksheet il:J;:T5:,:ffTiil3t,"comoonents.
Learning Objective: 01-Pl AnalyzeDifficulty: Medium business transactions using the
accounting equation.
award:
2, 10 points
b. At the beginning of the year, Logan Company's assets are $231,000 and its equity is $173,250.During the year, assets increase $80,000 and liabilities increase $46,000. What is the equity at theend of the year?
Equity at the end of the year $ f-""rAZXA-
Explanation:
Using the accounting equation at the beginning of the year:
A s s e t s = L i a b i l i t i e s + E q u i t y$23'1,000 = $57,750 + $173,250
Using the accounting equation at the end of the year:
A s s e t s = L i a b i l i t i e s + E q u i t y$231,000+$80,000 = $57,750+$46,000 + Equ i ty
$31 1 ,000 = $103,750 + $207 ,250
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Assignment Print View
Difficulty: Medium
Learning Objective: 01-A1 Defineand interpret the accountingequation and each of itscomoonents.
Learning Objective: 01-Pl Analyzebusiness transactions using theaccounting equation.
Page2 of 14
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Y***+Worksheet
awaro:
3. 10 points
c. At the beginning of the year, Keller Company's liabilities equal $74,000. During the year, assetsincrease by $60,000, and at year-end assets equal $190,000. Liabilities decrease $6,000 during theyear. What are the beginning and ending amounts of equity?
Besinnins equity $ l- la6poo DEb A'<r'r'2 lq o' oo o/ , n aoo >Ending equity $ [*D2^ooo '-j"* -
| 3D, e.DExplanation:
Using the accounting equation at the end of the year: tir't f'acuri i3o, oO D
('/", a o)--
{ 'a .mo
Using the accounting equation at the beginning of the year: fuh€O'*f ! 4O, @2
A s s e t s = L i a b i l i t i e s + E q u i t y$190,000 = $74,000-$6,000 + Equ i ty$ 1 9 0 , 0 0 0 = $ 6 8 , 0 0 0 + $ 1 2 2 , 0 0 0
A s s e t s = L i a b i l i t i e s + E q u i t y$190,000-$60,000 = $74,000 + Equ i ty
$130,000 = $74,000 + $56,000
View Hint #1
Worksheet
Diff iculty: Medium
Learning Objective: 01-Al Defineand interpret the accountingequation and each of itscomoonents.
Learning Objective: 01-Pl Analyzebusiness transactions using theaccounting equation.
awaro:A 10 pointsT .
On October 1, Natalie King organized Real Solutions, a new consulting Rrm. On Octobei 31, thecompany's records show the following items and amounts.
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CashAccounts receivableOffice suppliesLandOffice equipmentAccounts payableCommon stock
Cash dividendsConsulting fees earnedRent expenseSalaries expenseTelephone expenseMiscellaneous expenses
$ r*?)66-f 3z4of**T6it-f--"T6"0*
$3qoo*-18,000 |3,240 |7,200 I
760 I580
/
$ 1 1 , 0 0 016,00023,37546,00018,00041,25068,905
Using the above information prepare an October income statement for the business. (lnput all amountsas positive values. Omit the "$" sign in your response.)
REAL SOLUTIONSIncome Statement
For Month Ended October 31Revenues:
Nt*s,,[hrgfeerJsear"ed*TtExpenses:
ffi
$f ls,ooo
f-72i6',t-
$ f q2nBil:i ltffiftt tilmflt tf
Rent exoense
Miscellaneous expenses
WTotal expenses
View Hint #'l
Worksheet Difficulty: Hard
Learning Objective: 01 -P2 ldentifyand prepare basic financialstatements and explain how theyinterrelate.
award:tr 10 points\., .
On OctoOer 1, Natalie King organized Real Solutions, a new consulting firm. On October 31, thecompany's records show the following items and amounts.
tue --tCashAccounts receivableOffice suppliesLandOffice equipmentAccounts payableCommon stock
Cash dividendsConsulting fees earnedRent expenseSalaries expenseTelephone expenseMiscellaneous expenses
$ 1 1 ,20022,00023,80036,00018,00042,00062,260
$ 2,00024,ooo 14,320 ,9,600 j
760 i580 {
clD / 2@o)
pF:r 6 7qo
'a]'4,e.r?-
Using the above information to prepare an October statement of retained earnings for Real Solutions.(Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positivevalues. Omit the "$" sign in your response.)
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."",fft !'??'#lj? t?..,, " n,For Month Ended October 31
f*Tza-
| 8,740
r*?roa-$ | 6,740
Explanation:
REAL SOLUTIONSIncome Statement
For Month Ended October 31Revenues:
Consulting fees earnedExpenses:
Salaries expense $ 9,600Rent expense 4,320Miscellaneous expenses 580Telephone expense 760
Total expenses
Net income
View Hint #1
$ 24,000
15,260
$ 8,740t i Lij j*ryt$11|11!
Difficulty: Hard
award:10 points
On October 1, Natalie King organized Real Solutions, a new consulting firm. On October 31, thecompany's records show the following items and amounts.
Worksheet
CashAccounts receivableOffice suppliesLandOffice equipmentAccounts payableCommon stock
Learning Objective: 0'1 -P2 ldentifyand prepare basic financialstatements and explain how theyinterrelate.
6.
$ 2,500 Cash dividends20,000 Consulting fees earned5,313 Rent expense
36,000 Salar iesexpense28,000 Telephoneexpense9,375 Miscellaneous expenses
77.898
$ 3,36022,000
3,9608,800
660680
Using the above information prepare an October 31 balance sheet for Real Solutions. (Be sure to listthe assets and liabilities in order of their liquidity. Omit the "$" sign in your response.)
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*'A,n?3"'3il?i'Assets
october 31
Total Assets
Liabilities
Equity
Total equity
Total Liabilities and Equity
$ fl-*?soo*f ,o,ooor--rynfzs,aailrc6,40il
$ | e l , 813iiiiNliii iitril'iiilisi'4titti*ii iiii
$f w7s
r-7zrur-r--?J4b*
| 82,438
$ruzEryI ltrs)*)r il$sffisr'aslr
Explanation:
REAL SOLUTIONSIncome Statement
For Month Ended October 31Revenues:
Consulting fees earnedExpenses:
Salaries expenseRent expenseM iscellaneous expensesTelephone expense
Total expenses
Net income
Retained earnings, Oct. 31
View Hint #1
$ 8,8003,960
680660
$ 22,000
14,100
$ 7,900iltMfrlr [p|M
REAL SOLUTIONSStatement of Retained Earnings
For Month Ended October 31Retained earnings, Oct. 1 $ 0Add: Net income 7.900
7,900Less: Cash dividends 3.360
$ 4,540
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Worksheet Difficulty: Hard
[The following information appties to the quteitiois aiiptayea Oetow.]
The following table contains financial.i from 5 different companies:
Company\ Company Company CompanyA \ B C D
December 31,2010AssetsLiabilities
December 31.2011AssetsLiabilities
During year 2Q11Stock issuancesNet income (loss)Cash dividends
Learning Objective: 01 -P2 ldentifyand prepare basic financialstatements and explain how theyinterrelate.
CompanyE
$ 33,00027,060
36,000?
6,0007,7603,500
25,7401 8 , 0 1 8
25,92017,625
1,400?
2,000
$ 21J2011,404
?1 1 , 8 1 8
9,750(1,289)5,875
58,740 $ 90,09040,530 ?
65,520 99,36031,449 78,494
? 6,5008,861 7,348
0 1 1 ,000
7 .award:10 points
Required:Answer the following questions about Company A (Omit the "$" sign in your response):
1a. What is the amount of equity on December 31,2010?
Amount of equity $ f**H!?il
1b. What is the amount of equity on December 31,2Q11?
Amount of equity $ f*?Azoo*
1c. What is the amount of liabilities on December 31.2011?
Amount of liabitities $ lf*?9"SOO
Explanation:
Company A:
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Equity on December 31,2010:AssetsLiabilities
Equity
Equity on December 31,2011:Equity, December 31 , 2010Plus stock issuancesPlus net incomeLess cash dividends
Equity, December 31, 2011
Amount of l iabi l i t ies on December 31,2011:AssetsEquity
Liabilities
$ 33,000(27,060)
b.
$ 5,940ffi^^.i":.&,,,";
$ 5,9406,0007,760
(3,500)
$ 16 ,200t**r*rir*r ir i ilii'i,fu{
$ 36,000(16,200)
$ 19 ,800tutuffidiilr.s
Worksheet
Difficulty: Medium
Learning Objective: 01-A1 Defineand interpret the accountingequation and each of itscomoonents.
Learning Objective: 01-Pl Analyzebusiness transactions using theaccounting equation.
8 . ?t11'n,"Answer the following queJiionl iOout Company a lOmli ihe "$" sign in your response;:
2a. What is the amount of equity on December 31,2010?
Amount of equity $ fZ72T
2b. What is the amount of equity on December 31,2011?
Amount of equity $ f*T2U5-
2c. What is net income for year 2011?
$ tr* 7JZ3Net income
Explanation:
Company B:
a. and b.
Equity:AssetsLiabilities
Equity
12t31t2010 12t31t2011
$ 25,740 $ 25,920(18,018) (17 ,625)
$ 7,722 8,295[#' iilii#*'".H ffiii:r ]!H*ltk
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c.
Net income for 2011:Equity, December 31,2010 $ 7 ,722Plus stock issuancesPlus net incomeLess cash dividends
1,400?
(2,000)
Equity, December 31,2011 $ 8,295+wlitrrw
Therefore, net income must have been $ 1,173.
Learning Objective: 01-A1 Define
worksheet :iliii:"iH:'iffTilJ'''ncomoonents.
Learning Objective: 01-Pl AnalyzeDifficulty: Medium business transactions using the
accounting equation.
award:O 1o pointst t .
3. Calculate the amount of assets for Company C on OeCember 31, 2011. (Omit the "9'; sign in yourresponse)
Amount of Assets $ f*)brue-
Explanation:
Gompany C:First, calculate the beginning balance of equity:
AssetsLiabilities
Equity
D e c . 3 1 , 2 0 1 0$ 21 ,120
(11,404)
$ 9 , 7 1 6
Next, find the ending balance of equity as follows:
Equity, December 31,2010 $ 9,716Plus stock issuances 9.750Plus net income 1,289Less cash dividends (5,875)
Equity, December 31, 201,,l ',,1.,1;19.,,9_'
Finally, find the ending amount of assets by adding the ending balance of equity to the ending balance ofl iabi l i t ies:
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LiabilitiesEquity
Assets
Page 9 of 14
D e c . 3 1 , 2 0 1 1$ 1 1 , 8 1 8
(14,880)
$ 26,698l,.iisWKill!riW
0. itiil,n,"4. Calculate the amount of stock issuances for Company D during year 2011. (Omit the "$" sign in
your response):
Amount of stock issuances
Explanation:
Company D:First, calculate the beginning and ending owner's equity balances:
Worksheet
Difficulty: Medium
AssetsLiabilities
Equity
Learning Objective: 01-A1 Defineand interpret the accountingeouation and each of itscomponenrs.
Learning Objective: 01-Pl Analyzebusiness transactions usino theaccounting equation.
$ l-**ZoAo
12t31t2010 12t31t2011$ 58,740 $ 65,520
(40,530) (31,449)
$ 18,210 34,071li$ffi$triil]{ffi. 11 llll'N$$liwllillilllllili
Then, find the amount of stock issuances during 201'l:
Equity, December 31, 2010Plus stock issuancesPlus net incomeLess cash dividends
Equity, December 31, 2011
$ 1 8 , 2 1 0?
8,861n
$ 34,071
Thus, stock issuances must have been: $ 7,000
Worksheet
Diff iculty: Medium
Learning Objective: 01-A'l Defineand interpret the accountingequation and each of itscomponents,
Learning Objective: 01-Pl Analyzebusiness transactions using theaccounting equation.
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(Omit the "$" sign in your
award:4 4 1o points| | . :
5. Calculate the amount of liabilities for Company E on December 31, 2010.response):
Amount of Liabilities $
Explanation:
Company E:First , compute the balance of equity as of December 31, 2011:
AssetsLiabilities
Equity
$ 99,360(78,494)
$ 20,866
Next, find the beginning balance of equity as follows:
Equity, December 31, 2010Plus stock issuancesPlus net incomeLess cash dividends
Equity, December 31, 201 1
$ ?6,5007,348
jt:oo?$ 20,866
Thus, the beginning balance of equity was $18,018.
Finally, find the beginning amount of liabilities by subtractingbeginning balance of assets:
the beginning balance of equity from the
AssetsEquity
Liabilities
D e c . 3 1 , 2 0 1 0$ 90,090
(18 ,018 )
$ 72,072I i ' r y -
72,072
Worksheet
Difficulty: Medium
Learning Objective: 01-A1 Defineand interpret the accountingequation and each of itscomponents.
Learning Objective: 01-Pl Analyzebusiness transactions using theaccounting equation.
[The following information applies to the questions displayed below.]
J. D. Simpson started The Simpson Co., a new business that began operations on May 1. The SimpsonCo. completed the following transactions during its first month of operations.
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J. D. Simpson invested $43,000 cash in the company in exchange for common stock.The company rented a furnished office and paid $2,500 cash for May's rent.The company purchased $1,950 of office equipment on credit.The company paid $760 cash for this month's cleaning services.The company provided consulting services for a client and immediately collected $5,600 cash.The company provided $2,500 of consulting services for a client on credit.The company paid $800 cash for an assistant's salary for the first half of this month.The company received $2,500 cash payment for the services provided on May 12.The company provided $3,700 of consulting services on credit.The company received $3,700 cash payment for the services provided on May 22.The company paid $1,950 cash for the office equipment purchased on May 3.The company purchased $80 of advertising in this month's (May) local paper on credit; cashpayment is due June 1.The company paid $800 cash for an assistant's salary for the second half of this month.The company paid $400 cash for this month's telephone bill.The company paid $260 cash for this month's util ities.The company paid $1,700 cash for dividends,
award:
4 t 1o pointst L .
Required:2. Enter the amount of each transaction on individual items of the accounting equation. Do not
determine new account balances after each transaction. (Leave no cells blank - be certain to enter"0r' wherever required. Enter all amounts in the given order. Amounts to bededucted, dividends and expenses should be indicated by a minus sign. Omit the "$" sign inyour response.)
May 1135I
1 21 5202225zo27
2830303 1
DateM a y l $
135I
1 21 5202225zo
272830303 1
Cash
rcooor*:fffirl--*--:a-f -160*
f seoof o{- -eoof--Zm'o*r-:0-fT76o*f-:Z?sb*{-:n| -800
f 4oo{*-*:)6"0*l-*?roo
Assets
Accounts+ Receivable +
$ [-?-r-U"-f o
= Liabilities +
Accounts= Pavable +
$ l 0
l-*----?-
l--r-{**-*-x*l u
f ol * jf * ol-* oT-:235?-f"- so"il--* oi l ii-****3-tr -**"0^
Common stock -
$ f?IoAA:r*--?f - of ol o
OfficeEquipmentr 1*-* o{------?-f 1^950f or--*-*t'r-----?-{------?-f-*nf-of-------o-, T of o$*-----a-l----**"0-l-*-*D-r--***?'
r-D-ffi::H| 2,500
r---D-f--Zsoo-r1ro-r -{ffirr-----?-f * or*--*u-f or-*---?)r*----T
r*----3-l 0r*--Tf * or---*r-r*----D-r-----T-| - - -ol*:::*?-{-
*:b*
r*--,il$ f75"630 $ {-*-- o $ l- 7^eso
L ]ry,r
$ f ao $T4p9oillrrrrrrrrrrN se*ir
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Assignment Print View Pase 12 of 14
Worksheet
Difficulty: Hard
Learning Objective: 01-C4 Explaingenerally accepted accountingprinciples and define and applyseveral accounting principles.
Learning Objective: 01-Pl Analyzebusiness transactions using theaccounting equation.
Learning Objective: 01 -P2 ldentifyand prepare basic financialstatements and explain how theyinterrelate.
$ r**ilDa-
award:
1 3. 1o points
3.1 Prepare J. D. Simpson Company's income statement for May. (lnput il l amounts as positivevalues, Omit the "$" sign in your response.)
THE SIMPSON CO.lncome Statement
For Month Ended May 31Revenues:
rylConsulting services revenue I . I
Expenses:
ffi $lSalar ies expense l,:-JAdverstising expense
Cleaning expense
Total expenses f o,edil"
l- ,Joof*7,6ffir----H-f**75,"q-r--?oo-il**-16o-
3.2 Prepare J. D. Simpson Company's statement of retained earnings for May. (lnput all amounts aspositive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$"sign in your response.)
s ."t",l:rfi :l H:8i.i "9"? rn i n s sFor Month Ended May 31
$ f - - q
N"--ozon
| 6,200
f--Z%a-
$ f- 4poo
3.3 Prepare J. D. Simpson Company's Balance Sheet for May 31. (Be sure to list the assets andliabilities in order of their liquidity. Omit the "$" sign in your response.)
11 ,800
Telephone expense
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rHBEaijMP€^o' N€o.
Assets MaY 31
ffiW
Total assets
Liabilities
ffiEquity
ffiffiTotalequity
Total liabilities & equity' ' ' " ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
$rffirctr:
$ N:?zftqlwl4wliiiia
$ l::::3il
t:?ff00.rW,W
$rcmplPYN ffi
3.4 Prepare J. D. Simpson Company's statement of cash flows for May. (Leave no cells blank - becertain to ontsr "0" wherevsr required. Negative amounts should be indicatEd by a minussign. Omit the "$" sign in your response.)
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$rffil-*Zffio*f-*--7m-r-*"oo-il*-"'"60*[--:z6ob*
Page 14 of14
$f*fruc
f-lJ?{c
r"Zffi
$f*76tr{cr----T
I f* esPsctM!v!h!l!!!1!M
,,#5"'ii53:}n?,o"-.cash frows from operating activities:
For Month Ended May 31
Net cash lRrovided bV fuJ operating activitiesCash flows from investing activities:
Net cash Nr."d by _ lif investing activities
Cash flows from financing activities:
N"ffiid."dr t "t".kh"ld"t
Net cash ffiffi"d by *It'financing
activities
f r"r5o
f-kroof{*-"%a-
Worksheet
Difficulty: Hard
Learning Objective: 01-C4 Explaingenerally accepted accountingprinciples and define and applyseveral accounting principles.
Learning Objective: 01 -Pl Analyzebusiness transactions using theaccounting equation.
Learning Objective: 01 -P2 ldentifyand prepare basic financialstatements and explain how theyinterrelate.
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