255) Data for Kennedy Realty are as follows:
Total assets at January 1
$100,000
Total liabilities at January 1
35,000
Total revenues for the year
79,000
Total expenses for the year
47,000
Dividends of $30,000 were paid during the year. There were no stockholder investments. Using
the above data, prepare Kennedy Realty’s Statement of Retained Earnings for the year ended
December 31.
Retained earnings, January 1*
Plus Net income
Less: Dividends
Retained earnings, December 31
*Total assets at January 1
Less total liabilities at January 1
Total stockholders’ equity at January 1
256) Jet Styling has the following beginning cash balance and cash transactions for the month of
January. Using this information prepare a statement of cash flows.
Beginning cash balance……………..
$ 3,200
Cash investment by
stockholders…………..
15,000
Cash payment toward long-term loan
1,000
Cash payment of rent………………..
1,800
Purchased equipment for cash……..
7,500
Purchased store supplies for cash…
1,500
Cash collected from customers…….
7,750
Dividends …………..
2,000
Cash payment of wages…………….
4,000
Cash flows from operating activities:
$ 7,750
(1,500)
(1,800)
(4,000)
Cash flows from operating activities…………………
$ 450
Cash flows from investing activities:
(7,500)
Cash flows from financing activities:
15,000
(2,000)
(1,000)
Cash flows from financing activities………………..
12,000
Net increase in cash…………………………………
$ 4,950
Beginning cash balance…………………………….
3,200
Ending cash balance………………………………..
$ 8,150
116
257) At the end of its first year of operations, the records of Roadmaster Auto Rentals show the
following information. $52,000 of cash dividends were paid during the year. Prepare a December
income statement, a December statement of retained earnings, and a December 30 balance sheet.
Accounts payable
$36,000
Wages expense
$75,000
Insurance expense
2,000
Advertising expense
22,000
Accounts receivable
24,000
Cash
11,000
Common stock
150,000
Office Furniture
15,000
Airplanes
150,000
Maintenance expense
39,000
Notes payable
47,000
Revenues
217,000
Hangar
60,000
118
258) Verity Siding Company, owned by S. Verity, its sole stockholder, began operations in May
and completed the following transactions during that first month of operations. Show the effects
of the transactions on the accounts of the accounting equation by recording increases and
decreases in the appropriate columns in the table below. Do not determine new account balances
after each transaction. Determine the final total for each account and verify that the equation is in
balance.
May
1
S. Verity invested $90,000 cash in the company in exchange for common
stock.
2
The company purchased $25,000 in office equipment. It paid $10,000 in cash
and signed a note payable promising to pay the $15,000 over the next three
years.
2
The company rented office space and paid $3,000 for the May rent.
6
The company installed new vinyl siding for a customer and immediately
collected $5,000.
7
The company paid a supplier $2,000 for siding materials used on the May 6
job.
8
The company purchased a $2,500 copy machine for office use on credit.
9
The company completed work for additional customers on credit in the
amount of $16,000.
15
The company paid its employees’ salaries $2,300 for the first half of the
month.
17
The company installed new siding for a customer and immediately collected
$2,400.
20
The company received $10,000 in payments from the customers billed on May
9.
28
The company paid $1,500 on the copy machine purchased on May 8. It will
pay the remaining balance in June.
31
The company paid its employees’ salaries $2,400 for the second half of the
month.
31
The company paid a supplier $5,300 for siding materials used on the
remaining jobs completed during May.
31
The company paid $450 for this month’s utility bill.
259) ________ is an information and measurement system that identifies, records and
communicates relevant, reliable and comparable information about an organization’s economic
activities.
260) A ________ is a business that is owned by only one person.
261) ________ users of accounting information are not directly involved in running the
organization.
262) ________ is the area of accounting aimed at serving external users by providing them with
general-purpose financial statements.
263) Congress passed the ________ to help curb financial abuses at companies that issue their
stock to the public.
264) ________ are beliefs that separate right from wrong and are considered accepted standards
of good and bad behavior.
265) The assumption that requires that a business be accounted for separately from its owners is
the ________ assumption.
266) The ________ assumption assumes that a business will continue operating indefinitely
instead of being closed or sold.
267) The ________ assumption states that transactions and events are expressed in money units.
268) In accounting, the rule that requires that assets, services, and liabilities be recorded initially
at the cash or cash-equivalent value of what was given up or of the item received is called the
________.
269) A disadvantage of a sole proprietorship is the fact that the owner has ________.
270) There are three major types of business activities. ________ activities are the means
organizations use to pay for resources such as land, building, and equipment to carry out plans.
271) There are three major types of business activities. ________ activities involve the
acquisition and disposal of resources that an organization uses to acquire and sell its products or
services.
272) There are three major types of business activities. ________ activities involve using
resources to research, develop, purchase, produce, distribute, and market products and services
and receiving amounts from selling products and services.
273) Resources such as cash distributed to stockholders by the business are called ________.
274) ________ are the increases in equity from a company’s sales of products and services to
customers.
275) A common characteristic of ________ is their ability to yield expected future benefits to a
business.
276) Creditors’ claims on assets that reflect company obligations to provide assets, products, or
services to others are called ________.
277) The stockholders’ claim on assets, also known as net assets, is called ________.
278) The accounting equation is ________.
279) The term ________ refers to a liability that promises a future outflow of resources.
280) Using the accounting equation, equity is equal to ________.
281) ________, which is one part of accounting, is the recording of transactions and events,
either manually or electronically.
282) ________ is net income divided by average total assets.
283) Risk is the ________ about the return an investor expects to earn.
284) ________ explains changes in the stockholders’ claim on the business’s assets from net
income or loss and dividends over a period of time.
285) The ________ describes a company’s revenues and expenses along with the resulting net
income or net loss over a period of time due to earnings activities.