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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
1-1
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
1-2
Chapter 01 - Accounting in Business
Problem 1-6A (15 minutes)
1-3
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
1-4
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
1-6
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
1-7
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
1-9
Chapter 01 - Accounting in Business
1-10
