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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-. t-y_-) n ._C/U f ,

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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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Assignment Print View

$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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