Problem 1-1B (LO 1-2)
Type of business
activity Transactions
1. Operating Pay for advertising
2. Financing Pay dividends to stockholders
3. Operating Collect cash from customer for previous sale
4. Investing Purchase a building to be used for operations
5. Investing Purchase equipment
6. Investing Sell land
7. Financing Receive a loan from the bank by signing a note
8. Operating Pay suppliers for purchase of supplies
9. Operating Provide services to customers
10. Investing Invest in securities of another company
PROBLEMS: SET B
Problem 1-2B (LO 1-2)
Account classifications Account Names
1. Asset Cash
2. Revenue Service Revenue
3. Asset Supplies
4. Asset Buildings
5. Expense Advertising Expense
6. Asset Equipment
7. Expense Interest Expense
8. Liability Accounts Payable
9. Dividends Dividends
10. Liability Notes Payable
Problem 1-3B (LO 1-3)
Gator Investments
Income Statement
Service revenue $127,600
Expenses:
Advertising $33,500
Salaries 65,100
Utilities 15,500
Interest 3,500
Gator Investments
Statement of Stockholders’ Equity
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Beginning balance $100,000 $30,300 $130,300
Issuance of common stock 11,000 11,000
Add: Net income 10,000 10,000
Problem 1-3B (concluded)
Gator Investments
Balance Sheet
Assets Liabilities
Cash $ 5,500 Accounts payable $ 6,400
Equipment 27,000 Notes payable 30,000
Buildings 150,000 Total liabilities 36,400
Stockholders’ Equity
Common stock 111,000
Retained earnings 35,100
Total stockholders’ equity 146,100
Total liabilities and
Problem 1-4B (LO 1-3)
(Suggested order of calculation)
On the statement of stockholders’ equity,
$14,000 + (c) = $17,000
$7,000 + $5,000 − (d) = $8,000
From (b),
(a) − $13,000 − $7,000 − $5,000 = $5,000 (b)
From the statement of stockholders’ equity,
From (g) and (h),
$4,000 + $17,000 (g) + $8,000 (h) = (i)
From total liabilities and stockholders’ equity,
From (f),
$1,100 + (e) + $6,000 + $16,000 = $29,000 (f)
Problem 1-5B (LO 1-3)
Tar Heel Corporation
Income Statement
For the year ended December 31, 2015
Service revenues $69,400
Expenses:
Advertising $10,400
Utilities 6,000
Salaries 26,700
Tar Heel Corporation
Statement of Stockholders’ Equity
For the year ended December 31, 2015
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Beginning balance $21,000 $26,800 $47,800
Issuance of common stock 6,000 6,000
Add: Net income 24,200 24,200
* Beginning retained earnings $26,800
+ Net income 24,200
Problem 1-5B (concluded)
Tar Heel Corporation
Balance Sheet
December 31, 2015
Assets Liabilities
Cash $ 5,200 Accounts payable $ 7,700
Accounts receivable 13,200 Salaries payable 3,300
Supplies 4,600 Note payable 25,000
Building 80,000 Total liabilities 36,000
Stockholders’ Equity
Common stock 27,000
Retained earnings 40,000
Total stockholders’ equity 67,000