Chapter 01 – Accounting in Business
Problem 1-2A (Concluded)
Part 5
Company E
First, compute the balance of equity as of December 31, 2015:
Assets……………………………………………….… $113,000
Liabilities…………………………………..……….. (70 ,000)
Equity…………………….…………………………… $ 43 ,000
Next, find the beginning balance of equity as follows:
Finally, find the beginning amount of liabilities by subtracting the beginning
balance of equity from the beginning balance of assets:
Dec. 31, 2014
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Chapter 01 – Accounting in Business
Problem 1-3A (15 minutes)
Armani Company
Balance Sheet
December 31, 2015
Problem 1-4A (15 minutes)
Edison Energy Company
Income Statement
For Year Ended December 31, 2015
Revenues ……………………………..………….. $55,000
Expenses………………………..………………… 40 ,000
Net income………………………………………… $15 ,000
Problem 1-5A (15 minutes)
Kojo Company
Statement of Owner’s Equity
For Year Ended December 31, 2015
K. Kojo, Capital, Dec. 31, 2014 …………………… $ 7,000
Add: Net income………………………………..……… 8 ,000
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Chapter 01 – Accounting in Business
Problem 1-6A (15 minutes)
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Chapter 01 – Accounting in Business
Problem 1-7A (60 minutes) Parts 1 and 2
Assets = Liabilities + Equity
Date Cash + Accounts
Receivable
+Office
Equipment
=Accounts
Payable
+G. Gram,
Capital –G. Gram,
With-
drawals
+ 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
15 – 750 =–750
30 – 300 =–300
30 – 280 =–280
31 – 1,400 =–$1,400
$42,780 + $ 0 + $1,890 = $ 80 + $40,000 –$1,400 + $11,100 – $5,110
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Chapter 01 – Accounting in Business
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
Net income………………………….………………. $ 5 ,990
The Gram Co.
Statement of Owner’s Equity
For Month Ended May 31
G. Gram, Capital, May 1………….…………………………. $ 0
Add: Investment by owner……..……………………….. 40,000
Net income……………………………………….…….. 5,990
45,990
Less: Withdrawals by owner………….…………………. 1,400
G. Gram, Capital, May 31……….………………………….. $44,590
The Gram Co.
Balance Sheet
May 31
Assets Liabilities
1-5
Education.
Chapter 01 – Accounting in Business
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 financing activities
Investment by owner…………………………………………. 40,000
Withdrawal by owner…………………………………………. (1,400)
Net cash provided by financing activities............... 38,600
Net increase in cash……………….…….…………………… $42,780
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Education.
Chapter 01 – Accounting in Business
Problem 1-8A (60 minutes) Parts 1 and 2
Assets = Liabilities + Equity
Cash + Accounts
Receivable +Office
Supplies +Office
Equipment +Building =Accounts
Payable +Notes
Payable +L. Lopez,
Capital –
L. Lopez,
With-
drawals
+Reve-
nues –Expen-
ses
a. +$70,000 + $10,000 + $80,000
b. – 20,000 + $150,000 + $130,000
h. – 3,275 –$3,275
Bal. 35,225 + 2,800 + 1,200 + 26,700 + 150,000 = 2,900 + 130,000 + 80,000 –3,275 + 6,800 –500
i. + 1,800 –1,800
Bal. 37,025 + 1,000 + 1,200 + 26,700 + 150,000 = 2,900 + 130,000 + 80,000 –3,275 + 6,800 –500
j. – 700 – 700
Bal. 36,325 + 1,000 + 1,200 + 26,700 + 150,000 = 2,200 + 130,000 + 80,000 –3,275 + 6,800 –500
k. – 1,800 –1,800
Bal. $34,525 + $1,000 + $1,200 + $26,700 + $150,000 = $2,200 + $130,000 + $80,000 –$3,275 + $6,800 –$2,300
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Chapter 01 – Accounting in Business
Problem 1-8A (Concluded)
Part 3
Biz Consulting’s net income = $6,800 – $2,300 = $4,500
1-8
Chapter 01 – Accounting in Business
Problem 1-9A (60 minutes) Parts 1 and 2
Assets = Liabilities + Equity
Date Cash + Accounts
Receivable +Office
Supplies +Office
Equipment +Electrical
Equipment =Accounts
Payable +S. Sony,
Capital –
S. Sony,
With-
drawals
+ Revenues –Expenses
Dec. 1 +$65,000 = + $65,000
2– 1,000 –$1,000
Bal. 64,000 = 65,000 –1,000
3– 4,800 + $13,000 + $8,200
Bal. 59,200 + 13,000 = 8,200 + 65,000 –1,000
Bal. 57,070 + 5,000 + 1,150 + 2,530 + 13,000 = 8,550 + 65,000 + 6,200 –1,000
24 + 900 + 900
Bal. 57,070 + 5,900 + 1,150 + 2,530 + 13,000 = 8,550 + 65,000 + 7,100 –1,000
28 + 5,000 – 5,000
Bal. 62,070 + 900 + 1,150 + 2,530 + 13,000 = 8,550 + 65,000 + 7,100 –1,000
29 – 1,400 –1,400
Bal. 60,670 + 900 + 1,150 + 2,530 + 13,000 = 8,550 + 65,000 + 7,100 –2,400
30 – 540 –540
Bal. 60,130 + 900 + 1,150 + 2,530 + 13,000 = 8,550 + 65,000 + 7,100 –2,940
31 – 950 –$950
Bal. $59,180 + $ 900 + $1,150 + $2,530 + $13,000 = $8,550 + $65,000 –$950 + $7,100 –$2,940
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Chapter 01 – Accounting in Business
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