ACCT 2301 Chapter 1 Homework PDF

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ACCT 2301 Chapter 1 Homework 1. Identify the following users as either External users or Internal users. A Voters EXTERNAL B Chief Financial Officer (CFO) INTERNAL C Budget Officers INTERNAL D External (Independent) Auditors EXTERNAL E Purchasing Managers INTERNAL F Regulators EXTERNAL G Distribution Managers INTERNAL H Labor Unions EXTERNAL I Marketing Managers INTERNAL J Human Resource Managers INTERNAL K Customers EXTERNAL L Internal Auditors INTERNAL 2. Identify the accounting principle or assumption that best explains each situation. 1 In December of this year, Chavez Landscaping received a REVENUE customer’s order and cash prepayment to install sod at a house RECOGNITION that would not be ready for installation until March of next year. PRINCIPLE Chavez should record the revenue from the customer order in March of next year, not in December of this year. 2 Stark Company’s accounting system maintains the equipment GOING-CONCERN account as if the business will continue operating and not close. ASSUMPTION MEASUREMENT 3 Chen Organics purchased a tractor for $20,000 cash. The owner (COST) PRINCIPLE believes the tractor is really worth $30,000. The tractor is still recorded at $20,000 on the balance sheet. 3. A. Total assets of Charter Company equal $870,000 and its equity is $505,000. What is the amount of its liabilities? B. Total assets of Martin Marine equal $670,000 and its liabilities and equity amounts are equal to each other. What is the amount of its liabilities? What is the amount of its equity? ASSETS

= LIABILITIE S = 365,000

+ EQUITY

A 870,00 + 505,000 0 B 670,00 = 335,000 + 335,000 0 4. 1. Use the accounting equation to compute the missing financial statement amounts. 2. Use the expanded accounting equation to compute the missing financial statement amounts. 1 COMPANY 1 2 3

ASSETS 86,000 111,50 0 107,00

= LIABILITIE S = 40,500 = 30,500

+ EQUITY + 45,500 + 81,000

= 31,000

+ 76,000

0 2

COMPANY

ASSETS

=

LIABILITIES

+

COMMON STOCK

-

DIVIDENDS

+

REVENUES

-

EXPENSES

1 2

62,000 = 21,500 + 31,000 - 0 + 23,000 - 13,500 100,90 = 37,500 + 55,000 - 3,100 + 35,000 - 23,500 0 5. Indicate in which financial statement each item would most likely appear, by selecting income statement, balance sheet, or statement of cash flows from the drop down provided.

A Cash from operating activities STATEMENT OF CASH FLOWS B Factory BALANCE SHEET C Advertising Expense INCOME STATEMENT D Utilities Expense INCOME STATEMENT E Common Stock BALANCE SHEET F Taxes Expense INCOME STATEMENT G Delivery Expense INCOME STATEMENT H Net Decrease (or Increase) in Cash STATEMENT OF CASH FLOWS 6. Identify each of the following items as revenues, expenses, or dividends from the drop down provided. 1 Sales Revenue REVENUE 2 Salaries Expense EXPENSE 3 Insurance Expense EXPENSE 4 Consulting Revenue REVENUE 5 Wages Expense EXPENSE 6 Interest Expense EXPENSE 7 Cash Dividends DIVIDENDS 8 Postage Expense EXPENSE 7. Identify each of the following items as assets, liabilities, or equity from the drop down provided. 1 Note Payable LIABILITIES 2 Trucks ASSETS 3 Buildings ASSETS 4 Common Stock EQUITY 5 Accounts Payable LIABILITIES 6 Accounts Receivable ASSETS 8. On December 31, Hawkin’s records show the following accounts. Cash Accounts Receivable Supplies Equipment Accounts Payable Common Stock Retained Earnings, December 1

7300 600 4100 14100 7100 8000 9500

Dividends 3200 Services Revenue 17100 Wages Expense 8000 Rent Expense 2600 Utilities Expense 1800 Use the above information to prepare a December income statement for Hawkin. Hawkin Income Statement For Month Ended December 31 Revenues SERVICES REVENUE Expenses WAGES EXPENSE 8000 RENT EXPENSE 2600 UTILITIES EXPENSE 1800 Total Expenses NET INCOME 9. On December 31, Hawkin’s records show the following accounts.

17100 12400 4700

Cash 7300 Accounts Receivable 600 Supplies 4100 Equipment 14100 Accounts Payable 7100 Common Stock 8000 Retained Earnings, December 1 9500 Dividends 3200 Services Revenue 17100 Wages Expense 8000 Rent Expense 2600 Utilities Expense 1800 Use the above information to prepare a statement of retained earnings for Hawkin for the month ended December 31. HAWKIN STATEMENT OF RETAINED EARNINGS FOR MONTH ENDED DECEMBER 31 RETAINED EARNINGS, DECEMBER 1 ADD: NET INCOME

9500 4700 14200 LESS: DIVIDENDS 3200 RETAINED EARNINGS, DECEMBER 31 11000 10. On December 31, Hawkin’s records show the following accounts. Cash Accounts Receivable

7300 600

Supplies 4100 Equipment 14100 Accounts Payable 7100 Common Stock 8000 Retained Earnings, December 1 9500 Dividends 3200 Services Revenue 17100 Wages Expense 8000 Rent Expense 2600 Utilities Expense 1800 Use the above information to prepare a December balance sheet for Hawkin. HAWKIN Balance Sheet December 31 Assets CASH ACCOUNTS RECEIVABLE SUPPLIES EQUIPMENT

73000 600 4100 14100

Total Assets

26100

Liabilities ACCOUNTS PAYABLE

7100

Equity COMMON STOCK RETAINED EARNINGS

8000 11000

Total Equity Total Liabilities and Equity

19000 26100...