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7/23/2019 Accounting Week 1
1/4
E x e r c i s e s 3 9
Craig Mills
Cantrel Enterprises
Beginning of year :
Tota l assets 95,000 129,000
Tota l l iabi l i t ies 85,000 (c)
Tota l equ ity (a) 80,000
End of year :
Tota l assets 160,000 180,000
Tota l l iabi l i t ies 120,000 50,000
Tota l equ ity 40,000 130,000
Changes dur ing year in equi ty :
Ad di t ion a l inves tm ent (b) 25 ,000
Div idend s 24,000 (d)
Tota l reven ues 215,000 100,000
Tota l expen ses 175,000 55,000
I n s t r u c t i o n s
De t e r m i ne t he m i s s i ng a m oun t s .
E 1 - 1 2 The fo llowing informat ion re la tes to Lind a Stanley Co. for the year
2011.
Re t a i ne d e a r n i ngs , J a nua r y 1,2011 48,000 Ad vert ising exp ens e 1,800
Di v i de nds du r i ng 2011
6,000
Re nt expe nse 10,400
Service reve nue 62,500 Ut i l i t i es expen se 3 ,100
Salar ies expe nse 30,000
I n s t r u c t i o n s
Afte r ana lyz ing the da ta , pre pa re an incom e s ta tem ent and a re ta in ed earnings s t a tem ent for the
y e a r e n d in g D e c e m b e r 31 ,2011 .
E 1 - 1 3 Ma ry Close i s the bo ok ke ep er for Me nde z Com pany . Mary has been t ry ing to ge t the
s ta te me nt of f inanc ia l pos i t ion of M end ez Com pan y to ba lan ce . Me ndez 's s t a teme nt of f inanc ia l
pos i t ion i s show n be low .
Prepare income statement and
retained earnings
statement
SO
8)
Correct an incorrectly prepared
statement of financial position.
(SO 8 )
M EN DEZ C O M PAN Y
Statement o f F inanc ia l Pos i t ion
D e c e m b e r
3 1 , 2 0 1 1
As s e t s
E q u i p m e n t
Suppl ies
Cash
Di v i de nds
Total assets
46,000
8,000
15,000
10,000
79,000
Liabil i t ies
Sha r e c a p i t a l or d i na r y 50 ,000
Re ta ine d earnings 17,500
Acc oun ts payab le 20,000
Acc oun ts rece ivable (8 ,500)
Tota l equi ty and
liabi l i t ies 79,000
I ns t r uc t io ns
Prepare a cor rec t s t a tement of f inanc ia l pos i t ion .
E 1 - 1 4
De e r Pa r k , a pub l ic c a m p i ng g r ound ne a r t he La k e M e a d Na t i ona l Re c r e a t i on A r e a ,
has compi led the fo l lowing f inancia l informat ion as of December 31 ,2011 .
Re ven ues dur ing 2011 camping fees 140,000
Re ve nue s du r i ng 2011 genera l s tore 50,000
Ac cou nts payab le 11,000
Cash on han d 23,000
Or igin a l cos t of equ ipm ent 105,500
M ark et va lue of equ ipm ent 140,000
Not e s pa ya b l e
Expe n s e s du r i ng 2011
Suppl ies on hand
Sha r e c a p i t a l or d i na r y
Re t a i ne d e a r n i ngs
60,000
150,000
2,500
20,000
7
I ns t r uc t io ns
a) De t e r m i ne De e r Pa r k ' s ne t i nc om e f o r 2011.
b) P rep are a s t a te me nt of f inanc ia l pos i t ion for Dee r Park as of D ece mb er 31 ,2011 .
Compute net income and
prepare a statement of
financial position.
(SO 8 )
7/23/2019 Accounting Week 1
2/4
4 0 C h a p t e r 1 A c c o u n t i n g in A c t i o n
Prepare an income statement.
(SO 8 )
Prepare a retained earnings
statement.
( SO 8 )
Prepare a cash flow statement.
( SO 8 )
E 1 - 1 5 Pre sen ted be low i s f inancia l informa t ion re la te d to the 2011 ope ra t ion s of Si lva Crui se
C o m p a n y .
M a i n t e na nc e e xpe ns e R 95 ,000
Pro per ty t ax expe nse (on dock fac il i ti es ) 10 ,000
Salar ies expe nse 142,000
Ad ver t i s in g expe nse 3 ,500
Ticket reve nue 325,000
I n s t r u c t i o n s
Prepare the 2011 income s ta tement for Si lva Crui se Company.
E 1 - 1 6 Pre sen ted be low i s informat ion re la ted to Kev in and John son, At t orn eys at Law.
Re t a i n e d e a r n i ngs , J a nua r y 1,2011 23,000
Leg al se rvice reve nue 201 1 350,000
Tota l expense s2 011 211,000
As s e t s , J a nua r y
1,2011
85,000
Liabi l i t ies , Januar y
1,2011
62,000
As s e t s , De c e m b e r 31 ,2011 168,000
Liabi l i t ies , D ece mb er 31,2 011 85,000
Dividends2011 79,000
I n s t r u c t i o n s
Pre par e the 2011 re ta in ed earnings s t a tem ent for Kevin and John son, At to rney s a t Law.
E 1 - 1 7 Th i s i n f o r m a t i on is f o r Bor ne o Com pa ny f o r t he ye a r e nde d De c e m b e r
31,
2011 ( in
t hous a nds ) .
Cas h rece ived f rom reven ues f rom cus to mers Rp600,000
Cas h rece ived for i s suance of ordin ary share s 350,000
Cash pa id for new equ ipm ent 100,000
Cash div idend s pa id 20,000
Cas h pa id for expe nses 410,000
Ca s h ba l a nc e 1/1/11 30,000
I n s t r u c t i o n s
Prepare the 2011 s ta tement of cash f lows for Borneo Company.
P R O B L E M S : S E T
Analyze transactions and
compute net income.
(SO 6 , 7 )
( a ) To ta l r e ta ined ea rn ing s
2 , 0 6 0
P 1 - 1 A Ba r o ne ' s Re p a i r L t d . wa s s t a r t e d on M a y
I .
A summary of May t ransac t ions i s pre
sented be low.
1. Shareholders inves ted 10,000 cash in the bus iness in exchange for ordinary shares .
2 . Purchased equipment for 5 ,000 cash .
3 .
Paid 400 cash for May office ren t .
4.
Paid 500 cash for supplies.
5
Incur red 250 of adver t i s ing cos t s in the
Beacon News
on accoun t .
6.
Received 5,100 in cash f rom cus tomers for repa i r se rvice .
7.
De clar ed and pa id a 1 ,000 cash d iv idend.
8.
Paid par t - t ime employee sa la r i es 2 ,000.
9. Paid ut i l i ty bi l ls 140.
10 . Provided repa i r se rvice on account to cus tomers 750.
11 .
Co llec ted cash of 120 for services bi l led in t ran sac t ion (1 0).
I n s t r u c t i o n s
a ) Pr e pa r e a t a bu l a r a na l y s i s o f t he t r a n s a c t i ons , u s i ng t he f o ll owi ng c o l um n h e a d i ngs :
Ca s h , Ac c oun t s Re c e i va b l e , Supp l i e s, Eq u i pm e n t , Ac c ou n t s Pa ya b l e , Sha r e C a p i t a l , a nd
Re t a i n e d Ea r n i ngs ( wi t h s e pa r a t e c o l um ns f o r Re ve nu e s , Expe ns e s , a nd Di v i de nds ) . I nc l ude
7/23/2019 Accounting Week 1
3/4
Problems Set A 41
m a r g i n e x p l a n a t i o n s for any c h a n g e s in R e t a i n e d E a r n i n g s . R e v e n u e is cal led Serv ice
R e v e n u e .
b) F r o m ananalysisoft he Re t a i ne d Ea r n i ngs c o l um ns , c om pu t e t he neti nc om eor net lossfor
b)N e t i n c o m e 3 , 0 6 0
May.
P 1 - 2 A On A u g u s t 3 1 ,the s t a t e m e n t of f inancia l pos i t ion of Na s hv i l l e Ve t e r i na r y C l i n i c
s how e d Ca s h 9 ,000, Ac c oun t s Re c e i va b l e 1 ,700 , Supp l i e s 600 , Of f ic e Eq u i pm e n t 6 ,000 ,
A c c o u n t s P a y a b l e 3 , 6 00 , S h a r e C a p i t a l 1 3 , 0 00 ,
and
R e t a i n e d E a r n i n g s 7 0 0 . D u r i n g
Se p t e m be r t he f o ll owi ng t r a ns a c t i ons oc c u r r e d .
1. Paid 2,900 cashfora c c oun t s pa ya b l e due .
2. Col le c ted 1 ,300of accounts rece ivable .
3 .
Pur c ha s e d a dd i t i ona l o f f i c e e qu i pm e n t for 2,100, paying 800 in cash and theb a l a n c e on
a c c oun t .
4. E a r n e d r e v e n u eof 8,000, of which 2 ,500 i s pa id in cash and the ba lan ce i s due in O ctob er .
5 . De c l a r e d a nd pa i da 1,000 cash d iv idend.
6. Paid sa la r i es 1 ,700, rentforSe ptem ber 900, and adver t i s ing expe nse 300.
7. Incu r red u t i l it i es expe nse for mo nth onaccou nt 170.
8.
Re c e i ve d 10 ,000 f r om Ca p i t a l Ba n k on
a
6- m on t h n o t e pa y a b l e .
Instructions
a ) P r e p a r e
a
tabu lar ana lys is of the Sep tem ber t ran sac t ion s beginning wi th Aug us t3 balances .
The column headings should be as fo l lows: Cash Ac c oun t s Re c e i va b l e Suppl ies Office
E q u i p m e n t = Not e s Pa ya b l e Ac c oun t s Pa ya b l e S h a r e C a p i t a l O r d i n a r y R e t a i n e d
E a r n i n g s
R e v e n u e s E x p e n s e s
-
Di v i de nds .
b)
P r e p a r e
an
i nc om e s t a t e m e n t
for
S e p t e m b e r ,
a
r e t a i ne d e a r n i ngs s t a t e m e n t
for
S e p t e m b e r ,
a nd as t a t e m e n t off inancia l p os i t ionat Se p t e m be r 30 .
Analyze transactions and pre-
pare income statement retained
earnings statement and statement
of financial position.
( S O6, 7, 8)
Check figures next to some
Problems giveyouakey
number tolet youknow if you
areon he right track with your
solution.
( a ) End ing re ta ined ea rn ings
4 , 6 3 0
(b )Netinco m e 4 , 9 3 0
To ta l a sse ts 2 9 , 8 0 0
P 1 - 3 A O n May 1 , Yoon Flying Schoo l , a com pan y tha t prov ides fly ing lessons , was s t a r t ed w i th
a n i nve s t m e n tofW45,000,000 cash in the b us iness . Fol lowing are the asse t s and l i abi li t iesof the
c o m p a n y o n M a y
3 1 , 2 0 1 1 ,
a nd t he re ve nue s a n d e xpe ns e sfor t he m on t h ofM a y ( in t ho us a nd s ) .
Ca s h W 5,600
Ac cou nts Rece ivable 7 ,200
Equ i pm e n t 64 ,000
Le s s on Re v e nue 7 ,500
Adve r t i s i ng Expe ns e
500
Not e s Pa ya b l e
R e n t E x p e n s e
R e p a i r E x p e n s e
Fue l Expe ns e
I ns u r a nc e Expe ns e
Ac c oun t s Pa ya b l e
W30,000
1,200
400
2,500
400
800
Prepare income statement re-
tained earnings statement and
statement
of
financial position.
( S O8)
No a dd i t i ona l i nve s t m e n t s we r e m a de in May, but the c om pa ny pa i d d i v i de nds of W l ,500 ,000
dur i ng t he m on t h .
Instructions
a ) Pr e pa r e a n i nc om e s t a t e m e n t a nd
a
r e t a i ne d e a r n i ngs s t a t e m e n t
for
the m o n t h
of
M a y a nd
a
s t a t e m e n t of financial posi t ion atM a y 3 ( s how num be r s i n t hous a nds ) .
b) P r e p a r e an i nc om e s t a t e m e n t and a r e t a i ne d e a r n i ngs s t a t e m e n t forMa y assum ing the fo l
lowing da ta a re not inc luded above: (1) W900,000ofreve nue was earne d and bi l l ed butnot
col lec ted atM a y 31 ,and (2) W l ,500,000offue l expense was incur red b ut not pa id .
(a )Neti n c o m e W 2 . 5 0 0
T o t a l a s s e t s W 7 6 . 8 0 0
(b )Neti n c o m e W 1 . 9 0 0
P 1 - 4 A
Ma rk Mi l l e r s t a r t ed
a
del ivery service , Mi l l e r De l iver ies , on Jun e 1 ,2011. Th e fo l lowing
t ransac t ions occur red dur ing the month of June .
J u n e 1 Sha reho lders inves ted 10,000 cashin the bus iness in exchangefor ordinary shares .
2 Pu r c ha s e d a used van for del iver ies for 12,000. M ark paid 2,000 cash ands igned a
note payable for the remaining ba lance .
3 Paid 500for office rentfort he m on t h .
5 Per formed 4 ,400ofservices on a ccou nt .
9 De clared and pa id 200 in cash d iv idends .
12 Purc hase d suppl iesfor 150 on account .
15 Re c e i ve d
a
ca s h pa ym e n t
of
1,250
for
services prov ided on Jun e 5 .
17 Purc hase d gasol inefor 100 on account .
Analyze transactions and
prepare financial statements.
( S O6, 7, 8)
7/23/2019 Accounting Week 1
4/4
4 2
C h a p t e r 1 A c c o u n t i n g i n A c t i o n
( a ) Re ta ined ea rn ings 3 , 8 5 0
20 Rece ived a cash paym ent of 1 ,500 for se rvices prov ided.
23 Ma de a cash pay me nt of 500 on the note payab le .
26 Paid 250 for ut i l i t ies.
29 Pa id for the gasol ine purchased on account on June 17.
30 Paid 1,000 for em plo yee salaries.
I n s t r u c t i o n s
a )
Show the e f fec t s of the previous t ransac t ions on the account ing equat ion us ing the fo l lowing
format .
Assets
Liabilities Equity
Date Cash
Account s
Receivable
Supplies
Del ivery
Van
Notes Account s
Payable Payable
Share
Capital
Retained Earnings
Rev.
E xp.
Div.
( b ) Ne t i n co m e 4 , 0 5 0
( c ) Ca sh 8 , 2 0 0
Determine financial statement
amounts and prepare retained
earnings statement.
(SO 7 , 8 )
Inc lude margin explana t ions for any changes in the Reta ined Earnings account in your ana lys i s .
b) Prepare an income s ta tement for the month of June .
c) Prepare a s t a tement of f inanc ia l pos i t ion a t June 3 0 , 2 0 1 1 .
P 1 - 5 A Financia l s t a te me nt informat ion abo ut four d i f fe rent com panie s i s as fo llows .
K a r m a Y a t e s M c C a i n D e n c h
C o m p a n y C o m p a n y C o m p a n y C o m p a n y
J a nua r y 1,2011
As sets 95,000 110,000 (g) 170,000
Liabil i t ies 50,000 (d) 75,000 ( i )
Eq uity (a) 60,000 45,000 90,000
D e c e m b e r 3 1 , 2 0 1 1
As sets (b) 137,000 200,000 (k)
Liab i l i t ies 55,000 75,000 (h) 80,000
Eq uity 60,000 (e) 130,000 170,000
Equi ty changes in year
Ad di t ion a l inves tmen t (c ) 15 ,000 10,000 15,000
Di vid end s 25,000 (f) 14,000 20,000
Tota l reven ues 350,000 420,000
0)
520,000
Tota l expe nses 320,000 385,000 342,000
(0
I n s t r u c t i o n s
a) De t e r m i ne t he m i s s i ng a m oun t s . {Hint: For example , to so lve for ( a ) ,As sets - Liabi l i t ies =
Eq uity = 45,000.)
b) Pr e pa r e t he r e t a i ne d e a r n i ngs s t a t e m e n t f o r Ya te s Com pa ny . As s um e be g i nn i ng r e t a i ne d
earning s was 20,000.
c) m m m - - - W r i t e a m e m or a ndum e xp l a i n i ng t he s e que nc e f o r p r e pa r i ng f i na nc i a l s t a t e
ments and the in te r re la t ionship of the re ta ined earnings s t a tement to the income s ta tement
and s ta tement of f inanc ia l pos i t ion .
P R O B L E M S : S E T B
Analyze transactions and
compute net income.
(SO 6 , 7 )
P 1 - 1 B On Apr i l 1 , Jenn y Russo es tabl i shed Mat r ix Trave l Agency. Th e fo l lowing t ransac t ions
we r e c om pl e t e d du r i ng t he m on t h .
1. Shareholders inves ted 10,000 cash in the bus iness in exchange for ordinary shares .
2 .
Paid 400 cash for Ap ri l off ice r ent .
3 . Purchased of f i ce equipment for 2 ,500 cash .
4. Incu r red 30 0 of adver t i s ing cos t s in the Chicago Tribune on account .
5 . Paid 600 cash for off ice supplies.
6. Earned 9,500 for se rvices provided: 3 ,000 cash i s rece ived f rom cus tomers , and the ba l
ance of 6 .500 is b i l l ed to cus tomers on accou nt .