a.
PROBLEM 2.2B
15 Minutes, Easy
PROSPERITY COMPAN
Y
Description of transactions:
Purchased furniture for cash at a cost of $800.
Education.
15 Minutes, Medium
Owners’
Assets = Equity
Office Notes
A
ccounts Capital
Cash + Equipment
+
Building + Land = Payable + Payable + Stock
December 31 balances 12,000$ 41,300$ 66,000$ 80,000$ 42,000$ 7,300$ 150,000$
(1) 40,000 40,000
Balances 52,000$ 41,300$ 66,000$ 80,000$ 42,000$ 7,300$ 190,000$
(5) (6,000) (6,000)
Balances 48,000
$
49,300
$
116,000
$
110,000
$
124,000
$
9,300
$
190,000
$
DELTA CORPORATIO
N
Liabilities +
PROBLEM 2.3B
15 Minutes, Medium
Owners’
Assets = Equity
A
ccounts Office Notes
A
ccounts Capital
Cash + Receivable + Trucks + Equipment = Payable + Payable + Stock
December 31 balances 4,700$ 8,300$ 72,000$ 3,000$ 10,000$ 8,000$ 70,000$
(1) (2,600) 2,600 –
Balances 2,100$ 8,300$ 72,000$ 5,600$ 10,000$ 8,000$ 70,000$
(2) 2,500 (2,500)
Balances 4,600$ 5,800$ 72,000$ 5,600$ 10,000$ 8,000$ 70,000$
MAXX TRUCKIN
G
Liabilities +
PROBLEM 2.4B
$
$
$
$
$
$
$
a.
Liabilities & Owners’ Equity
Cash * 9,150$ Liabilities:
Total 630,250$ Total 630,250$
*
b.
PROBLEM 2.5B
CIRCUS WORLD
20 Minutes, Medium
The loss of an asset, Tents, from a fire would require a revised balance sheet that reflects a decrease
in total assets. When total assets are decreased, the other balance sheet total (that is, the total of
liabilities and owners’ equity) must also decrease. Since there is no change in liabilities as a result of
CIRCUS WORLD
Balance Sheet
June 30, 2015
Assets
Total liabilities and owners’ equity, $630,250, minus total of all other assets, $621,100
a.
Liabilities & Owners’ Equity
Cash 9,300$ Liabilities:
Accounts receivable 15,000 Notes payable 65,000$
Apple trees 84,000 Accounts payable 8,100
Livestock 5,000 Property taxes payable 4,700
Irrigation system 10,200 Wages payable 1,200
b.
PROBLEM 2.6B
MAPLE VALLEY FARM
S
20 Minutes, Medium
The loss of an asset, Barns and Sheds, from a tornado would cause a decrease in total assets. When
total assets are decreased, the balance sheet total of liabilities and owners’ equity must also decrease.
MAPLE VALLEY FARMS
Balance Sheet
September 30, 2015
Assets
a.
Liabilities & Owners’ Equity
Cash 4,100$ Liabilities:
Accounts receivable 8,200 Notes payable 40,000$
Supplies 7,000 Accounts payable 7,000
Equipment & fixtures 25,000 Salaries payable 3,700
b.
Liabilities & Owners’ Equity
Cash 26,100$ Liabilities:
Accounts receivable 8,200 Notes payable 40,000$
Supplies 8,000 Accounts payable 6,000
Equipment & fixtures 31,000 Salaries payable 3,700
Balance Sheet
Assets
July 5, 2015
July 1, 2015
Assets
Balance Sheet
PROBLEM 2.7B
($100,000).
*Retained earnings ($33,600) = Total assets ($184,300), less total liabilities ($50,700) + capital stock
COLLIER BUTCHER SHOP
COLLIER BUTCHER SHO
P
35 Minutes, Medium
COLLIER BUTCHER SHOP
Cash flows from operating activities:
(7,000)$
(1,000)
Cash used in operating activities (8,000)$
None
Cash balance, July 5, 2015 26,100$
c.
PROBLEM 2.7B
COLLIER BUTCHERSHOP
(
concluded
)
COLLIER BUTCHER SHOP
Statement of Cash Flows
For the Period July 1-5, 2015
Collier Butcher Shop is in a stronger financial position on July 5 than it was on July 1.
Cash payment of accounts payable
Cash purchase of supplies
Cash flows from financing activities:
Cash flows from investing activities:
a.
Liabilities & Owners’ Equity
Cash 6,900$ Liabilities:
Accounts receivable 5,000 Notes payable * 50,000$
Supplies 3,000 Accounts payable 6,800
Furniture and fixtures 9,000 Total liabilities 56,800$
b.
Liabilities & Owners’ Equity
Cash 34,000$ Liabilities:
Accounts receivable 5,000 Notes payable 50,000$
Supplies 3,900 Accounts payable 8,000
Furniture and fixtures 17,000 Total liabilities 58,000$
8,000$
*Total assets, $175,900 less owners’ equity, $119,100 less accounts payable, $6,800, equals notes
p
a
y
able.
THE SWEET SHOP
Income Statement
For the Period October 1-6, 2015
Revenues
Assets
THE SWEET SHOP
PROBLEM 2.8B
THE SWEET SHO
P
40 Minutes, Strong
THE SWEET SHOP
Balance Sheet
October 6, 2015
Balance Sheet
September 30, 2015
Assets
Cash flows from operating activities:
8,000$
Cash paid for expenses (3,200)
Cash paid for accounts payable (6,800)
(900)
(2,900)$
None
30,000$
c. The Sweet Shop is in a stronger financial position on October 6 than on September 30. On
Statement of Cash Flows
For the Period October 1-6, 2015
Cash received from revenues
Cash paid for supplies
Cash flows from financing activities:
Cash flows from investing activities:
PROBLEM 2.8B
THE SWEET SHOP
(
concluded
)
THE SWEET SHOP
Cash used in operating activities
Cash received from sale of capital stock
Education.
a
.
Liabilities & Owner’s Equity
Cash 18,400$ Liabilities:
Accounts receivable 10,000 Notes payable 15,000$
Props and costumes 18,000 Accounts payable 6,000
Lighting equipment 10,000 Salaries payable 2,000$
Total liabilities 23,000$
b. (1)
(2)
(
3
)
(
)
The cash in Jaffe’s personal savings account is not an asset of the business entity Old Town
Playhouse. Therefore, it should not appear in the balance sheet of the business. The money on
$18,400.
PROBLEM 2.9B
OLD TOWN PLAYHOUS
E
35 Minutes, Strong
OLD TOWN PLAYHOUSE
Balance Sheet
September 30, 2015
Assets
Only the amount receivable from Dell, Inc. ($10,000) should be included in the company’s
accounts receivable as of September 30. The amounts expected from future tickets sales do not
relate to completed transactions and are not yet assets of the business.
The props and costumes should be shown in the balance sheet at their cost, $18,000 , not at just
(8)
PROBLEM 2.9B
OLD TOWN PLAYHOUSE
(
concluded
)
The amount owed to stagehands for work done through September 30 is the result of completed
transactions and should be included among the liabilities of the business. Even if agreement has