Chapter 01 – Accounting and Business
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Page 61
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
177. Dave Ryan is the CEO of Ryan’s Arcade. At the end of its accounting period, December 31, Ryan’s Arcade has
assets of $450,000 and liabilities of $125,000. Using the accounting equation, determine the following amounts:
(a)
stockholders’ equity as of December 31 of the current year
(b)
stockholders’ equity as of December 31 at the end of the next year, assuming that assets
increased by $65,000 and liabilities increased by $35,000 during the year
ANSWER:
(a)
(b)
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES
:
FNMN.WAJO.19.01-03 – LO: 01–03
ACCREDITING STANDA
RDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
178. Krammer Company has liabilities equal to one fourth of the total assets. Krammer’s stockholders’ equity is
$45,000. Using the accounting equation, what is the amount of liabilities for Krammer?
ANSWER:
Assets = Liabilities + Stockholders’ Equity
4x = x + $45,000
3x = $45,000
x = $15,000 in liabilities
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
179. Determine the missing amount for each of the following:
Chapter 01 – Accounting and Business
Assets
Liabilities
Stockholders’ Equity
(a)
$38,000
$45,000
$30,000
(b)
$22,000
$53,000
$32,000
(c)
ANSWER:
(a)
$83,000 ($38,000 + $45,000)
(b)
$8,000 ($30,000 – $22,000)
(c)
$21,000 ($53,000 – $32,000)
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
180. Determine the missing amount “X” for each of the following:
Assets
Liabilities
Stockholders’ Equity
(a) $78,500
$37,600
X
(b) X
$53,280
$145,000
(c) $49,500
X
$34,000
ANSWER:
(a) $40,900 ($78,500 − $37,600)
(b) $198,280 ($53,280 + $145,000)
(c) $15,500 ($49,500 − $34,000)
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
181. Use the accounting equation to answer each of the independent questions below.
(a) At the beginning of the year, Norton Company’s assets were $75,000 and its stockholders’ equity was $38,000.
During the year, assets increased by $18,000 and liabilities increased by $4,000. What was the stockholders’ equity at
the end of the year?
(b) At the beginning of the year, Turpin Industries had liabilities of $44,000 and stockholders’ equity of $66,000. If
assets increased by $10,000 and liabilities decreased by $5,000, what was the stockholders’ equity at the end of the year?
ANSWER:
(a) $75,000 − $38,000 = $37,000 beginning of year liabilities
($75,000 + $18,000) − ($37,000 + $4,000) = $52,000 end-of-year stockholders’
equity
(b) $44,000 + $66,000 = $110,000 beginning of year assets
($110,000 + $10,000) − ($44,000 − $5,000) = $81,000 end-of-year stockholders’
equity
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
182. On July 1 of the current year, the assets and liabilities of John Wong, DVM, are as follows: Cash, $27,000; Accounts
Receivable, $12,300; Supplies, $3,100; Land, $35,000; Accounts Payable, $13,900. What is the amount of stockholders’
equity as of July 1 of the current year?
ANSWER:
$63,500
($27,000 Cash + $12,300 Accounts Receivable + $3,100 Supplies + $35,000 Land −
$13,900 Accounts Payable = $63,500)
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
183. At the end of its accounting period, December 31, of Year 1, Hsu’s Financial Services has assets of $575,000 and
Chapter 01 – Accounting and Business
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Page 64
(a) Hsu’s liabilities as of December 31, of Year 1.
(b) Hsu’s liabilities as of December 31, of Year 2, assuming that assets increased by $56,000 and
shareholders’ equity decreased by $32,000.
(c) Net income or net loss during Year 2, assuming that as of December 31, Year 2, assets were $592,000,
liabilities were $450,000, and there were no additional investments or dividends.
ANSWER:
(a) $575,000 − $335,000 = $240,000
(b) ($575,000 + $56,000) − ($335,000 − $32,000) = $328,000
(c) $592,000 − $450,000 = $142,000 shareholders’ equity Year 2
$335,000 − $142,000 = $193,000 net loss
POINTS:
1
DIFFICULTY:
Challenging
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
184. Indicate whether each of the following accounts represents an asset, liability, or stockholders’ equity:
(a)
Accounts Payable
(b)
Wages Expense
(c)
Common Stock
(d)
Accounts Receivable
(e)
Dividends
(f)
Land
ANSWER:
(a)
liability
(b)
stockholders’ equity
(c)
stockholders’ equity
(d)
asset
(e)
stockholders’ equity
(f)
asset
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
185. At December 31 of the current year, Martin Consultants has assets of $430,000 and liabilities of $205,000. Using the
accounting equation and considering each case independently, determine the following:
(a) stockholders’ equity, as of December 31.
(b) stockholders’ equity, as of December 31 of the next year, assuming that assets increased by $12,000
and liabilities increased by $15,000.
(c) stockholders’ equity, as of December 31 of the next year, assuming that assets decreased by $8,000
and liabilities increased by $14,000.
ANSWER:
(a) $430,000 − $205,000 = $225,000
(b) ($430,000 + $12,000) − ($205,000 + $15,000) = $222,000
(c) ($430,000 − $8,000) − ($205,000 + $14,000) = $203,000
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
The accountant for Scott Industries prepared the following list of account balances from the company’s records for the
year ended December 31. Use this information to answer the question that follows.
Fees earned
$165,000
Cash
$30,000
Accounts receivable
16,000
Selling expenses
44,000
Equipment
64,000
Common stock
47,000
Accounts payable
12,000
Interest revenue
3,000
Salaries & wages expense
40,000
Income taxes expense
18,000
Income taxes payable
5,000
Rent expense
20,000
186. Determine the total assets at the end of the current year for Scott Industries.
ANSWER:
$110,000
($30,000 Cash + $16,000 Accounts receivable + $64,000 Equipment = $110,000)
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
PREFACE NAME:
Scott Industries
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Page 67
1.
Received cash from sale of stock, $55,000
2.
Paid creditors on account, $7,000
3.
Billed customers for services on account, $2,565
4.
Received cash from customers on account, $8,450
5.
Paid dividends to stockholders, $2,500
6.
Received the utility bill, $160, to be paid next month
Indicate the effect of each transaction on the accounting equation by:
(a)
Account type – (A)assets, (L)liabilities, (SE)stockholders’ equity, (R)revenue, and
(E)expense
b)
Name of account
c)
The amount by of the transaction
d)
The direction of change (increase or decrease) in the account affected
Note: Each transaction has two entries.
Entry
Entry
Account
Type
(a)
Name of
Account
(b)
Amount
(c)
Increase or
Decrease
(d)
Account
Type
(a)
Name of
Account
(b)
Amount
(c)
Increase or
Decrease
(d)
1
2
3
4
5
6
ANSWER:
Entry
Entry
Account
Type
(a)
Name of
Account
(b)
Amount
(c)
Increase
or
Decrease
(d)
Account
Type
(a)
Name of
Account
(b)
Amount
(c)
Increase
or
Decrease
(d)
1
A
Cash
$55,000
Increase
SE
Common
Stock
$55,000
Increase
2
A
Cash
$7,000
Decrease
L
Accounts
payable
$7,000
Decrease
3
A
Accounts
receivable
$2,565
Increase
R
Fees
earned
$2,565
Increase
4
A
Cash
$8,450
Increase
A
Accounts
receivable
$8,450
Decrease
5
A
Cash
$2,500
Decrease
SE
Dividends
$2,500
Increase
6
L
Accounts
payable
$160
Increase
E
Utilities
expense
$160
Increase
POINTS:
1
DIFFICULTY:
Challenging
Bloom’s: Understanding
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–04 – LO: 01–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic