ORIE 3150 Homework #1 Fall 2020 PDF

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ORIE 3150 Homework #1 This homework is on material in Chapter 1. Due September 9, 2020 by 11:00 PM on Gradescope Please follow the Gradescope instructions carefully. Please use a dark pencil or dark pen on white paper if you are hand writing your work. Usually a mechanical pencil will NOT provide a dark enough mark for a legible scan. Please use the Scannable or Genius Scan apps if you are using a smartphone to scan your work. Please be sure to complete step #4, that is, indicate which page contains the answer to each question. 1. The Prisco Corporation purchased a machine for their factory. The corporation paid $83,000 for the machine. The corporation also had to pay $4,000 in shipping costs to transport the machine from Long Beach, California to their factory in Boise, Idaho. Subsequently, the corporation had to pay $2,000 for installation of the machine in the factory. What dollar value should be assigned to this machine? 2. A building is offered for sale at $500,000 but is currently assessed at $400,000. The purchaser of the building believes the building is worth $475,000 but ultimately purchases the building at $450,000. How much will the purchaser assign to the value of the building in their financial records? 3. If the assets of a company increased by $100,000 during the year and liabilities increased by $35,000 in the same year, then the change in the stockholders’ equity of the company during the year must have been what amount? 4. Brunswick borrowed $50,000 cash from Third National Bank. How does this transaction affect the accounting equation for Brunswick? 5. Geek Squad performed services for a customer and billed the customer for $500. How would this transaction affect the accounting equation for Geek Squad? 6. Use the accounting equation to compute the missing amounts in the following table Company A B C

Assets $75,000 $85,000

Liabilities $25,000 $20,000

Stockholders’ Equity $40,000 $70,000

7. Fill in the missing amounts in the following table Company

Assets

Liabilities

A B

$40,000 $80,000

$16,000 $32,000

Common Stock $20,000 $44,000

Dividends

Revenues

Expenses

$24,000

$8,000 $18,000

$0

8. Show the effect of each of these transactions on the accounting equation. The answer to the first one is given as an example. a. The company completed consulting work for a client and immediately collected $5,000 in cash. Assets increase, Stockholders Equity increases b. The company completed consulting work and sent a bill to the customer for $4,000. c. The company paid an employee $1,400 as wages. d. The company collected $4,000 cash as payment for the amount owed by the client in transaction b. e. The company paid $700 cash for this period’s cleaning services to the Cayuga Commercial Cleaners company. 9. Indicate in which financial statement (balance sheet, income statement, cash flow statement, or statement of retained earnings) each item would appear. a. assets b. cash from operating activities c. equipment d. wages expense e. bank loan payable f. cash from financing activities g. sales revenue h. total liabilities and stockholders’ equity i. accounts receivable j. accounts payable k. dividends

10. As of December 31, 2019 the Armani company’s financial records show the following items and amounts Cash $20,000 Accounts receivable $9,000 Supplies $7,000 Equipment $4,000 Accounts payable $11,000 Common stock $14,000 Retained earnings on December 31, 2018 $3,000 Retained earnings on December 31, 2019 $5,000 Dividends $13,000 Consulting revenue $55,000 Salaries expense $20,000 Rent expense $12,000 Selling and administrative expenses $8,000 Bank loan payable $10,000 a. Provide a simple balance sheet in the proper form. Be sure to include the title block, the total assets, the total liabilities, the total stockholders’ equity, and the total liabilities and stockholders’ equity. b. Provide a simple income statement. Be sure to include the title block....