Problem 1-2A (40 minutes)
Part 1
Company A
(a) Equity on December 31, 2014:
Assets………………..……………………………….. $55,000
(b) Equity on December 31, 2015:
Equity, December 31, 2014…..…………….... $30,500
Plus stock issuances…………………………… 6,000
Plus net income……………………………….….. 8,500
(c) Liabilities on December 31, 2015:
Assets………………..……………………………….. $58,000
Liabilities……………………………………..……... $16 ,500
Part 2
Company B
(a) and (b)
Equity: 12/31/2014 12/31/2015
Assets…………………………….. $34,000 $40,000
(c) Net income for 2015:
Equity, December 31, 2014…..…….…...... $12,500
Plus stock issuances………………………… 1,400
Plus net income…………………………….….. ?
Problem 1-2A (Continued)
Part 3
Company C
First, calculate the beginning balance of equity:
Dec. 31, 2014
Assets………………..……………………………….. $24,000
Next, find the ending balance of equity by completing this table:
Equity, December 31, 2014…..…………….... $15,000
Plus stock issuances…………………………… 9,750
Plus net income……………………………….….. 8,000
Finally, find the ending amount of assets by adding the ending balance of
equity to the ending balance of liabilities:
Dec. 31, 2015
Liabilities……………………………………..……... $29,000
Part 4
Company D
First, calculate the beginning and ending equity balances:
12/31/2014 12/31/2015
Assets………………..…………..…. $60,000 $85,000
Then, find the amount of investment by owner during 2015:
Equity, December 31, 2014……………………… $20,000
Plus stock issuances…………………………….. ?
Plus net income……………………………….……. 14,000
Financial and Managerial Accounting, 6th Edition
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Problem 1-2A (Concluded)
Part 5
Company E
First, compute the balance of equity as of December 31, 2015:
Assets………………..……………………………….. $113,000
Next, find the beginning balance of equity as follows:
Equity, December 31, 2014…..…………….... $ ?
Plus stock issuances…………………………… 6,500
Plus net income……………………………….….. 20,000
Finally, find the beginning amount of liabilities by subtracting the beginning
balance of equity from the beginning balance of assets:
Dec. 31, 2014
Assets………………..……………………………….. $119,000
Problem 1-3A (15 minutes)
Armani Company
Balance Sheet
December 31, 2015
Assets……….……………….. $90,000 Liabilities……………………………. $44,000
Problem 1-4A (15 minutes)
Edison Energy Company
Income Statement
For Year Ended December 31, 2015
Revenues ……………………………..……….…. $55,000
Problem 1-5A (15 minutes)
Kojo Company
Statement of Retained Earnings
For Year Ended December 31, 2015
Retained earnings, Dec. 31, 2014 ................... $ 7,000
Add: Net income………………………………….……. 8 ,000
15,000
Problem 1-6A (15 minutes)
Kia Company
Statement of Cash Flows
For Year Ended December 31, 2015
Cash from operating activities …………….…….. $ 6,000
Cash used by investing activities……………..… (2,000)
Cash used by financing activities……………..… (2 ,800 )
Problem 1-7A (60 minutes) Parts 1 and 2
Assets = Liabilities + Equity
Date Cash + Accounts
Receivable
+Office
Equipment
=Accounts
Payable
+Common
Stock –Dividends + Revenues –Expenses
May 1 +$40,000 = + $40,000
1– 2,200 =–$2,200
3 + $1,890 = + $1,890
5– 750 ` = –750
8 + 5,400 = + $5,400
12 + $2,500 = + 2,500
31 – 1,400 =–$1,400
$42,780 + $ 0 + $1,890 = $ 80 + $40,000 –$1,400 + $11,100 – $5,110
Problem 1-7A (Continued)
Part 3
The Gram Co.
Income Statement
For Month Ended May 31
Revenues
Consulting services revenue ….…….. $11,100
Expenses
Rent expense………………………………… $2,200
Salaries expense………………….…..…… 1,500
Cleaning expense…………………………. 750
The Gram Co.
Statement of Retained Earnings
For Month Ended May 31
Retained earnings, May 1……………….……….………… $ 0
Add: Net income……………..…………………………..….. 5,990
5,990
The Gram Co.
Balance Sheet
May 31
Assets Liabilities
Cash……………………..…..$42,780 Accounts payable…………..…….... $ 80
Problem 1-7A (Concluded)
Part 3—continued
The Gram Co.
Statement of Cash Flows
For Month Ended May 31
Cash flows from operating activities
Cash received from customers…………………………… $11,100
Cash paid for rent………..……….…….…….………………. (2,200)
Cash paid for cleaning………….……………………………. (750)
Cash flows from investing activities
Purchase of equipment………...….…………….…………. (1,890)
Net cash used by investing activities………….......... (1,890)
Cash flows from financing activities
Investment from stockholders……………………………. 40,000
Problem 1-8A (60 minutes) Parts 1 and 2
Assets = Liabilities + Equity
Cash + Accounts
Receivable +Office
Supplies +Office
Equipment +Building =Accounts
Payable +Notes
Payable +Common
Stock –Dividends + Reve-
nues –Expen-
ses
a. +$70,000 + $10,000 + $80,000
b. – 20,000 + $150,000 + $130,000
Bal. 50,000 + 10,000 + 150,000 = + 130,000 + 80,000
c. – 15,000 + 15,000
Bal. 35,000 + 25,000 + 150,000 = + 130,000 + 80,000
d. + $1,200 + 1,700 + $2,900
Bal. 35,000 + 1,200 + 26,700 + 150,000 = 2,900 + 130,000 + 80,000
e. – 500 –$ 500
Bal. 34,500 + 1,200 + 26,700 + 150,000 = 2,900 + 130,000 + 80,000 –500
f. + $2,800 + $2,800
Bal. 34,500 + 2,800 + 1,200 + 26,700 + 150,000 = 2,900 + 130,000 + 80,000 + 2,800 –500
g. + 4,000 + 4,000
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