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PROBLEM SET B
Problem 1-1B (25 minutes)
Balance Sheet
Income
Statement
Statement of
Cash Flows
Transaction
Total
Assets
Total
Liab.
Total
Equity
Net
Income
Operating
Activities
Financing
Activities
Investing
Activities
1 Owner invests
cash in business + + +
2 Buys building by
signing note
payable
+ +
Problem 1-2B (40 minutes)
Part 1
Company V
(a) and (b)
Calculation of equity: 12/31/2014 12/31/2015
Assets............................. $54,000 $59,000
(c) Calculation of net income for 2015:
Equity, December 31, 2014........................ $29,000
Part 2
Company W
(a) Calculation of equity at December 31, 2014:
Assets........................................................ $80,000
(b) Calculation of equity at December 31, 2015:
Equity, December 31, 2014........................ $20,000
(c) Calculation of the amount of liabilities at December 31, 2015:
Problem 1-2B (Continued)
Part 3
Company X
First, calculate the beginning and ending equity balances:
12/31/2014 12/31/2015
Then, find the amount of investments by owner during 2015 as follows:
Equity, December 31, 2014............................... $ 73,000
Plus investments by owner.............................. ?
Part 4
Company Y
First, calculate the beginning balance of equity:
Dec. 31, 2014
Assets........................................................ $92,500
Next, find the ending balance of equity as follows:
Equity, December 31, 2014........................ $41,000
Finally, find the ending amount of assets by adding the ending balance of
equity to the ending balance of liabilities:
Dec. 31, 2015
Liabilities................................................... $ 42,000
Problem 1-2B (Concluded)
Part 5
Company Z
First, calculate the balance of equity as of December 31, 2015:
Assets........................................................ $170,000
Next, find the beginning balance of equity as follows:
Equity, December 31, 2014........................ $ ?
Plus investments by owner...................... 60,000
Finally, find the beginning amount of liabilities by subtracting the beginning
balance of equity from the beginning balance of assets:
Dec. 31, 2014
Problem 1-3B (15 minutes)
Safari Company
Balance Sheet
December 31, 2015
Problem 1-4B (15 minutes)
Solar Company
Income Statement
For Year Ended December 31, 2015
Problem 1-5B (15 minutes)
Audi Company
Statement of Owner’s Equity
For Year Ended December 31, 2015
A. Audi, Capital, Dec. 31, 2014 .................... $49,000
Add: Net income....................................... 5 ,000
Problem 1-6B (15 minutes)
Banji Company
Statement of Cash Flows
For Year Ended December 31, 2015
Cash used by operating activities ...................... $(3,000)
Cash from investing activities............................. 1,600
Problem 1-7B (60 minutes) Parts 1 and 2
Assets = Liabilities + Equity
Date Cash +Accounts
Receivable +Equipment =Accounts
Payable +N. Niko,
Capital -N. Niko,
Withdrawals +Revenues -Expenses
June 1 +$130,000 = + $130,000
2- 6,000 =-$6,000
4 + $2,400 = + $2,400
6- 1,150 =- 1,150
8 + 850 = + $ 850
Problem 1-7B (Continued)
Part 3
Niko’s Maintenance Co.
Income Statement
For Month Ended June 30
Revenues
Maintenance services revenue.......... $16,925
Expenses
Rent expense..................................... $6,000
Niko’s Maintenance Co.
Statement of Owner’s Equity
For Month Ended June 30
N. Niko, Capital, June 1.................................... $ 0
Add: Investment by owner............................ 130,000
Niko’s Maintenance Co.
Balance Sheet
June 30
Assets Liabilities
Cash.................................$130,060 Accounts payable.........................$ 0
Problem 1-7B (Concluded)
Part 3—continued
Niko’s Maintenance Co.
Statement of Cash Flows
For Month Ended June 30
Cash flows from operating activities
Cash received from customers1................................. $ 16,250
Cash paid for rent....................................................... (6,000)
Problem 1-8B (60 minutes) Parts 1 and 2
Assets =Liabilities +Equity
Cash +Accounts
Receivable +Office
Supplies +Office
Equipment +Building =Accounts
Payable +Notes
Payable +N. Nadal,
Capital -
N. Nadal,
With-drawal
s
+Reve-nu
es -Expen-se
s
a. + $90,000 + $10,000 + $100,000
b. - 40,000 + $150,000 + $110,000
Bal. 50,000 + 10,000 + 150,000 = 110,000 + 100,000
c. - 25,000 + 25,000
Bal. 25,000 + 35,000 + 150,000 = 110,000 + 100,000
d. + $1,200 + 1,700 + $2,900
Bal. 25,000 1,200 + 36,700 + 150,000 =2,900 + 110,000 + 100,000
e. - 750 -$ 750
Problem 1-8B (Concluded)
Part 3
1-11
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