Chapter 1 Exercises PDF

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Financial Accounting exercises first year UB...

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CHAPTER 1

BRIEF EXERCISES Be. 177 Use the following information to calculate for the year ended December 31, 2018 (a) net income (net loss), (b) ending retained earnings, and (c) total assets. Supplies $ 500 Operating expenses 10,000 Accounts payable 11,000 Accounts receivable 4,000 Common stock 10,000 Retained earnings (beginning) 5,000

Revenues Cash Dividends Notes payable Equipment

Be. 189 Reinhardt’s Carpet Cleaning has the following balance sheet items: Buildings Accounts Payable Cash Supplies Accounts Receivable

Notes Payable Common Stock Retained Earnings Equipment

Identify which items are (1) Assets (2) Liabilities (3) Stockholders’ Equity

2

$18,000 15,000 6,000 1,000 9,500

CHAPTER 1

EXERCISES

Ex. 192 Prepare an income statement, a retained earnings statement, and a balance sheet for the medical practice of Linda Denny, MD, from the items listed below for the month of October 2018. Retained earnings (October 1) Common stock Accounts payable Equipment Service revenue Dividends Supplies expense Cash Utilities expense Supplies Salaries and wages expense Accounts receivable Rent expense

$15,000 30,000 6,000 29,000 23,000 6,000 3,500 13,000 700 2,800 7,000 10,000 2,000

LINDA DENNY, MD Income Statement For the Month Ended October 31, 2018 ___________________________________________________________________________ Revenues

$

Expenses

$

Total expenses Net income

$

3

t

CHAPTER 1

Ex. 192

(Cont.)

LINDA DENNY, MD Retained Earnings Statement For the Month Ended October 31, 2018 ___________________________________________________________________________ Retained Earnings, October 1 Add:

$

Less: $

t

LINDA DENNY, MD Balance Sheet October 31, 2018 ___________________________________________________________________________ Assets $ Total assets $

t

Liabilities and Stockholders’ Equity Liabilities $ Stockholders’ Equity $ Total liabilities and stockholders’ equity

$

4

t

CHAPTER 1

Ex. 193 Use the following accounts and information to prepare, in good form, an income statement, a retained earnings statement, and a balance sheet for Pierce Industries for the month ended August 31, 2018. Accounts payable Accounts receivable Buildings Cash Service revenue Common stock Retained earnings (beginning)

$ 1,100 5,400 63,000 20,600 25,700 52,000 25,900

Dividends Insurance expense Supplies Notes payable Rent expense Salaries expense

$ 3,000 1,200 1,400 3,300 3,400 10,000

PIERCE INDUSTRIES Income Statement For the Month Ended August 31, 2018 ___________________________________________________________________________ Revenues $ Expenses $ Total expenses Net income

$

t

PIERCE INDUSTRIES Retained Earnings Statement For the Month Ended August 31, 2018 ___________________________________________________________________________ Retained Earnings, August 1 Add:

$

Less: Retained Earnings, August 31

$

5

t

CHAPTER 1

Ex. 193

(Cont.)

PIERCE INDUSTRIES Balance Sheet August 31, 2018 ___________________________________________________________________________ Assets $

Total assets $

t

Liabilities and Stockholders’ Equity Liabilities $ $ Stockholders’ Equity $ Total liabilities and stockholders’ equity

$

6

t

CHAPTER 1 Ex. 196 Here are incomplete financial statements for Brandon, Inc. BRANDON, INC. Balance Sheet Assets Cash Inventory Buildings Total assets

Liabilities and Stockholders' Equity Liabilities Accounts payable $ 5,000 Stockholders' equity Common stock (a) Retained earnings (b) Total liabilities and stockholders' equity $55,000

$ 5,000 10,000 40,000 $55,000

Income Statement Revenues Cost of goods sold Administrative expenses Net income

$80,000 (c) 10,000 $ (d)

Retained Earnings Statement Beginning retained earnings Net income Dividends Ending retained earnings

$10,000 (e) 5,000 $29,000

Instructions Calculate the missing amounts.

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CHAPTER 1 Ex. 197 Sleep Cheap is a private camping ground near the Boulder Peak Recreation Area. It has compiled the following financial information as of December 31, 2017. Revenues during 2017: camping fees Revenues during 2017: general store Accounts payable Cash Equipment

$137,000 Dividends 25,000 Notes payable 13,000 Expenses during 2017 13,500 Supplies 113,000 Common stock Retained earnings (1/1/2017)

$ 8,000 50,000 133,000 2,500 40,000 5,000

Instructions (a) Determine net income from Sleep Cheap for 2017. (b) Prepare a retained earnings statement and a balance sheet for Sleep Cheap as of December 31, 2017.

Ex. 199 The summaries of data from the balance sheet, income statement, and retained earnings statement for two corporations, Bates Corporation and Wilson Enterprises, are presented below for 2018. Bates Corporation Beginning of year Total assets Total liabilities Total stockholders' equity End of year Total assets Total liabilities Total stockholders' equity Changes during year in retained earnings Dividends Total revenues Total expenses

Wilson Enterprises

$110,000 70,000 (a)

$130,000 (d) 90,000

(b) 120,000 70,000

190,000 65,000 (e)

(c) 225,000 165,000

5,000 (f) 80,000

Instructions Determine the missing amounts. Assume all changes in stockholders' equity are due to changes in retained earnings.

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CHAPTER 1

Ex. 200 This information is for Campo Corporation for the year ended December 31, 2018. Cash received from lenders Cash received from customers Cash paid for new equipment Cash dividends paid Cash paid to suppliers Cash balance 1/1/17

$20,000 65,000 30,000 6,000 18,000 12,000

Instructions Prepare the 2018 statement of cash flows for Campo Corporation.

Ex. 201 One item is omitted in each of the following summaries of balance sheet and income statement data for three different corporations, A, B, and C. Determine the amounts of the missing items, identifying each corporation by letter.

Beginning of the Year: Assets Liabilities End of the Year: Assets Liabilities During the Year: Additional Investment by stockholders Dividends

A

Corporation B

$410,000 250,000

$150,000 115,000

$199,000 166,000

430,000 280,000

195,000 95,000

195,000 169,000

?

79,000

78,000

70,000

Revenue

195,000

Expenses

155,000

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83,000 ? 113,000

C

? 187,000 183,000

CHAPTER 1 COMPREHENSIVE PROBLEM FROM CHAPTER 1

In November 2018, after having incorporated Cookie Creations Inc., Natalie begins operations. She has decided not to pursue the offer to supply cookies to Biscuits. Instead, she will focus on offering cooking classes. The following events occur.

Nov.

8

Natalie cashes in her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.

8

Natalie opens a bank account for Cookie Creations Inc.

8

Natalie purchases $500 of Cookie Creations' common stock.

11

Cookie Creations purchases paper and other office supplies for $95. (Use Supplies.)

14

Cookie Creations pays $125 to purchase baking supplies, such as flour, sugar, butter, and chocolate chips. (Use Supplies.)

15

Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. She has an excellent top-of-the-line food processor and mixer that originally cost her $550. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $300, and she transfers the equipment into the business in exchange for additional common stock.

16

The company needs more cash to sustain its operations. Natalie's grandmother lends the company $2,000 cash, in exchange for a two-year, 9% note payable. Interest and the principal are repayable at maturity.

17

Cookie Creations pays $900 for additional baking equipment.

18

Natalie schedules her first class for November 29. She will receive $100 on the date of the class.

25

Natalie books a second class for December 5 for $150. She receives a $60 cash down payment, in advance.

29

Natalie teaches her first class, booked on November 18, and collects the $100 cash.

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CHAPTER 1 30

Natalie's brother develops a website for Cookie Creations Inc. that the company will use for advertising. He charges the company $600 for his work, payable at the end of December. (Because the website is expected to have a useful life of two years before upgrades are needed, it should be treated as an asset called Website.)

30

Cookie Creations pays $1,200 for a one-year insurance policy.

30

Natalie teaches a group of elementary school students how to make Santa Claus cookies. At the end of the class, Natalie leaves an invoice for $300 with the school principal. The principal says that he will pass it along to the business office and it will be paid some time in December.

30

Natalie receives a $50 invoice for use of her cell phone. She uses the cell phone exclusively for Cookie Creations Inc. business. The invoice is for services provided in November, and payment is due on December 15.

Instructions

(a) Prepare journal entries to record the November transactions. (b) Post the journal entries to the general ledger accounts. (c) Prepare a trial balance at November 30, 2018.

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