accounting week 1

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


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 )


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


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


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


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).


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


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 .


prepare financial statements.

( S O6, 7, 8)


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.


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


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


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 .

accounting week 1

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