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178. Identify each of the following as either internal or external users of accounting information.
179. Determine the missing amount for each of the following:
Assets
Liabilities
Stockholders’ Equity
(a)
$38,000
$45,000
$30,000
(b)
$22,000
$53,000
$ 32,000
(c)
180. Identify each of the following as an (1) increase in stockholders’ equity, or a (2) decrease in stockholders’
equity.
(a)
Fees Earned
(b)
Wages Expense
(c)
Dividends
(d)
Lawn Care Revenue
(e)
Issue Capital Stock
(f)
Supplies Expense
181. Selected transactions completed by a corporation are described below. Indicate the effects of each
transaction on assets, liabilities, and stockholders’ equity by inserting "+" for increase and "-" for decrease in
the appropriate columns at the right. If appropriate, you may insert more than one symbol in a column.
A
L
SE
(a)
Received cash from issuing capital stock
_____
_____
_____
(b)
Purchased supplies on account
_____
_____
_____
(c)
Paid rent for the current month
_____
_____
_____
(d)
Received cash for services sold to customers
_____
_____
_____
(e)
Returned some defective supplies purchased in (b)
_____
_____
_____
(f)
Paid insurance premiums in advance
_____
_____
_____
(g)
Paid cash to creditor for purchases in (b)
_____
_____
_____
(h)
Charged customers for services sold on account
_____
_____
_____
(i)
Paid cash to a customer as a refund for an overcharge
_____
_____
_____
(j)
Received cash on account from customers
_____
_____
_____
(k)
Paid cash dividends
_____
_____
_____
(l)
Recorded the cost of supplies used during the year
_____
_____
_____
(m)
Received invoice for electricity used
_____
_____
_____
(n)
Paid wages
_____
_____
_____
(o)
Purchased a truck for cash
_____
_____
_____
182. From the following list of accounts taken from Lamar’s accounting records, identify those that would
appear on the income statement.
(a)
Rent Expense
(b)
Land
(c)
Capital Stock
(d)
Fees Earned
(e)
Dividends
(f)
Wages Expense
(g)
Taxes Payable
183. Identify which of the following accounts appear on a balance sheet.
(a)
Cash
(b)
Fees Earned
(c)
Capital Stock
(d)
Wages Payable
(e)
Rent Expense
(f)
Prepaid Advertising
(g)
Land
184. Indicate whether each of the following activities would be reported on the statement of cash flows as an
operating activity, an investing activity, a financing activity, or not at all.
(a)
Cash paid for building
(b)
Cash paid to suppliers
(c)
Cash paid for dividends
(d)
Cash received from customers
(e)
Cash received from issuing capital stock
(f)
Cash received from the sale of a building
(g)
Borrowed cash from a bank
185. For each of the following, determine the amount of net income or net loss for the year.
(a)
Revenues for the year totaled $71,300 and expenses totaled $35,500. Additional capital stock of $15,000 was issued for cash
during the year.
(b)
Revenues for the year totaled $220,500 and expenses totaled $175,000. Dividends paid during the year were $40,000. No
additional stock was issued.
(c)
Revenues for the year totaled $149,000 and expenses totaled $172,000. Capital stock of $12,000 was issued for cash and
dividends of $16,000 were paid during the year.
(d)
Revenues for Konner Co. totaled $198,150 and expenses totaled $174,200. Cash dividends of $35,000 were paid during the
year. No additional stock was issued.
186. The total assets and total liabilities of Paul’s Pools, a corporation, at the beginning and at the end of the
current fiscal year are as follows:
Jan. 1
Dec. 31
Total assets
$280,000
$475,000
Total liabilities
205,000
130,000
(a)
Determine the amount of net income earned during the year. No capital stock was issued and no dividends were paid during
the year.
(b)
Determine the amount of net income during the year. The assets and liabilities at the beginning and at the end of the year are
unchanged from the amounts presented above. Dividends of $53,000 were paid in cash during the year. No capital stock was
issued.
(c)
Determine the amount of net income earned during the year. The assets and liabilities at the beginning and at the end of the
year are unchanged from the amounts presented above. Capital stock of $35,000 was issued for cash and no dividends were
paid.
(d)
Determine the amount of net income earned during the year. The assets and liabilities at the beginning and at the end of the
year are unchanged from the amounts presented above. Capital stock of $12,000 was issued for cash and $1,500 of dividends
were paid each month during the year.
187. Selected transaction data of a business for September are summarized below. Determine the following
amounts for September: (a) total revenue, (b) total expenses, (c) net income.
Service sales charged to customers on account during September
$33,000
Cash received from cash customers for services performed in September
28,000
Cash received from customers on account during September:
Services performed and charged to customers prior to September
13,000
Services performed and charged to customers during September
18,000
Expenses incurred prior to September and paid during September
6,500
Expenses incurred and paid in September
36,250
Expenses incurred in September but not paid in September
5,000
Expenses for supplies used and insurance (not included above) applicable to September
2,000
188. On March 1, 2014, Cook’s Catering Company Capital Stock balance was $30,000 and the balance of
Retained Earnings was $120,000. During March, dividends of $31,000 were declared and paid by the
business. Assets, liabilities, revenues, and expenses at March 31, 2014, were as follows:
Accounts Payable
$ 10,250
Accounts Receivable
45,950
Cash
23,840
Fees Earned
64,950
Insurance Expense
1,275
Land
85,400
Miscellaneous Expense
1,210
Prepaid Insurance
3,000
Rent Expense
9,000
Salary Expense
20,300
Supplies
900
Supplies Expense
525
Utilities Expense
2,800
Present, in good form, (a) an income statement for March, (b) a retained earnings statement for March, and (c) a balance sheet as of March 31.
189. Simpson Designers began operations on April 1, 2011. The financial statements for Simpson Designers
are shown below for the month ended April 30, 2011 (the first month of operations). Determine the missing
amounts for letters (a) through (o).
Simpson Designers
Income Statement
For the Month Ended April 30, 2011
Fees earned
$27,000
Operating expenses:
Wages expense
$5,250
Rent expense
(a)
Supplies expense
4,600
Utilities expense
400
Miscellaneous expense
1,250
Total operating expenses
(b)
Net income
$ (c)
Simpson Designers
Retained Earnings Statement
For the Month Ended April 30, 2011
Retained Earnings, April 1, 2011
0
Net income for April
$ (d)
Less dividends
6,000
Increase in retained earnings
(e)
Retained Earnings, April 30, 2011
$ (f)
Simpson Designers
Balance Sheet
April 30, 2011
Assets
Liabilities
Cash
$ (g)
Accounts payable
$ (i)
Supplies
8,100
Stockholders’ Equity
Land
(h)
Capital stock $ (j)
Total assets
$55,900
Retained earnings (k)
Total stockholders’ equity
38,100
Total liabilities and stockholders’ equity
$ (l)
Simpson Designers
Statement of Cash Flows
For the Month Ended April 30, 2011
Cash flows from operating activities:
Cash received from customers
$23,000
Deduct cash payments for expenses and payments to
creditors
4,200
Net cash flow from operating activities
$ 18,800
Cash flows from investing activities:
Cash payments for acquisition of land
(17,000)
Cash flows from financing activities:
Cash received from sale of capital stock
$ (m)
Deduct cash dividends
(n)
Net cash flow from financing activities
(o)
Net cash flow and April 30, 2011, cash balance
$ (p)
Place your answers in the space provided below. Hint: Use the interrelationships among the financial statements to solve this problem.
(a)
___________
(b)
___________
(c)
___________
(d)
___________
(e)
___________
(f)
___________
(g)
___________
(h)
___________
(i)
___________
(j)
___________
(k)
___________
(l)
___________
(m)
___________
(n)
___________
(o)
___________
(p)
___________
190. CPA Associates was organized on January 1, 2011, as a corporation. List the errors that you find in the
following financial statements and prepare the corrected statements for the three months ended March 31, 2011.
CPA Associates
Income Statement
For the Three Months Ended March 31, 2011
Fees earned
$42,000
Operating expenses:
Salary expense
$9,735
Rent expense
5,200
Advertising expense
3,950
Utilities expense
3,225
Miscellaneous expense
4,000
Answering service expense
2,550
Supplies expense
4,000
Total operating expenses
28,000
Net income
$14,000
CPA Associates
Retained Earnings Statement
March 31, 2011
Retained earnings, January, 1, 2011
$ 0
Net income for the 3 months
$ 14,000
Less dividends
5,000
Increase in stockholders’ equity
11,000
Retained earnings, January, 31, 2011
$11,000
Balance Sheet
For the Three Months Ended
March 31, 2011
Assets
Stockholders’ Equity
Land
$13,000
Capital stock $20,000
Cash
10,860
Retained earnings 11,000
Accounts payable
2,670
Total stockholders’ equity
$31,000
Supplies
925
Liabilities
Total assets
$33,225
Accounts receivable
2,225
Total liab. & stockholders’ equity
$33,225
Errors in the CPA Associates financial statements include the following:
(1)
Miscellaneous expense is incorrectly listed after utilities expense in the income statement. Miscellaneous expense should be listed as the
last expense, regardless of the amount.
(2)
The operating expenses are incorrectly added. Instead of $28,000, the total should be $32,660.
(3)
Because operating expenses are incorrectly added, the net income is incorrect. It should be listed as $9,340.
(4)
The retained earnings statement should be for a period of time instead of a specific date. That is, the retained earnings statement should
be reported "For the Three Months Ended March 31, 2011."
(5)
The amount of the retained earnings is incorrect. It should be $4,340.
(6)
The name of the company is missing from the balance sheet heading.
(7)
The balance sheet should be as of "March 31, 2011," not "For the Three Months Ended March 31, 2011."
(8)
Cash, not Land, should be the first asset listed on the balance sheet.
(9)
Accounts payable is incorrectly listed as an asset on the balance sheet. Accounts payable should be listed as a liability.
(10)
Liabilities should be listed on the balance sheet ahead of stockholders’ equity.
(11)
Accounts receivable is incorrectly listed as a liability on the balance sheet. Accounts receivable should be listed as an asset.
(12)
The total assets and the total liabilities and stockholders’ equity do not add.
191. Given below are the accounts and amounts for Bright Futures Company as of August 31, 2011. All of the
revenue and expense amounts are for the month of August.
Telephone Expense
$ 1,150
Cash
3,000
Accounts Payable
1,540
Dividends
800
Fees Earned
15,700
Rent Expense
1,400
Supplies
140
Accounts Receivable
1,500
Computer Equipment
20,000
Capital Stock
10,000
Wages Expense
4,800
Utilities Expense
750
Notes Payable
2,400
Retained Earnings
4,320
Office Expense
420
Based on the data provided for Bright Futures Company, prepare in good format an income statement for the month ended August 31, 2011.
192. Given below are the accounts and amounts for Bright Futures Company as of August 31, 2011. All of the
revenue and expense amounts are for the month of August.
Telephone Expense
$ 1,150
Cash
3,000
Accounts Payable
1,540
Dividends
800
Fees Earned
15,700
Rent Expense
1,400
Supplies
140
Accounts Receivable
1,500
Computer Equipment
20,000
Capital Stock
10,000
Wages Expense
4,800
Utilities Expense
750
Notes Payable
2,400
Retained Earnings
4,320
Office Expense
420
Based on the data provided for Bright Futures Company, prepare in good format a retained earnings statement for the month ended August 31,
2011.
193. Given below are the accounts and amounts for Bright Futures Company as of August 31, 2011. All of the
revenue and expense amounts are for the month of August.
Telephone Expense
$ 1,150
Cash
3,000
Accounts Payable
1,540
Dividends
800
Fees Earned
15,700
Rent Expense
1,400
Supplies
140
Accounts Receivable
1,500
Computer Equipment
20,000
Capital Stock
10,000
Wages Expense
4,800
Utilities Expense
750
Notes Payable
2,400
Retained Earnings
4,320
Office Expense
420
Based on the data provided for Bright Futures Company, prepare in good format a balance sheet as of August 31, 2011.
194. Trendsetter Travel Services began business on January 1, 2014. Balances at December 31, 2014, are listed
below.
Accounts Payable
$12,000
Capital Stock
$10,000
Accounts Receivable
14,000
Supplies
1,000
Cash
18,000
Taxes Expense
1,300
Computer Equipment
21,000
Dividends
8,000
Fees Earned
78,000
Wages Expense
25,000
Rent Expense
10,000
Supplies Expense
1,700
Prepare an income statement, retained earnings statement, and a balance sheet for Trendsetter Travel Services.
195. Flagger Company began operations on January 1, 2011. The accountant prepared the following list of
account balances from the company’s records for the first year ended December 31, 2011:
Fees Earned
$165,000
Cash
$ 30,000
Accounts Receivable
14,000
Selling Expenses
44,000
Equipment
42,000
Capital Stock
36,000
Accounts Payable
12,000
Interest Income
3,000
Salaries & Wages Expense
40,000
Rent Expense
51,000
Income Taxes Payable
5,000
Prepaid Rent
2,000
Notes Payable
20,000
Income Taxes Expense
18,000
Prepare an income statement for Flagger Company in good form.
196. Schultz Tax Services, a tax preparation business had the following transactions during the month of June:
1. Received cash for providing accounting services, $3,000.
2. Billed customers on account for providing services, $7,000.
3. Paid advertising expense, $800.
4. Received cash from customers on account, $3,800.
5. paid cash dividends, $1,500.
6. Received telephone bill, $220.
7. Paid telephone bill, $220
Based on the information given above, calculate the balance of Cash at June 30. (Hint: Use the following
reconciliation.)
