Type of business
activity Transactions
1. Financing Issue common stock.
2. Financing Collect cash from a bank loan.
3. Operating Sell products to customers.
4. Operating Pay workers’ wages.
Account classifications Account Names
1. Asset Accounts Receivable
2. Asset Land
3. Asset Prepaid Rent
4. Expense Salaries Expense
PROBLEMS: SET C
Problem 1-1C
Problem 1-2C
Tiffany’s
Statement of Stockholders’ Equity
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Balance at beginning of the year $60,000 $20,000 $ 80,000
Issuance of common stock 15,000 15,000
Tiffany’s
Balance Sheet
Assets Liabilities
Cash $ 6,400 Accounts payable $ 6,300
Stockholders’ Equity
Common stock 75,000
Problem 1-3C
Tiffany’s
Income Statement
Service revenue $129,300
Expenses:
Advertising 31,200
Salaries 67,800
Problem 1-3C (concluded)
Retained earnings 28,800
Total stockholders’ equity 103,800
(Suggested order of calculation)
On the statement of stockholders’ equity,
$15,000 + (c) = $18,000
$8,000 + $3,000 − (d) = $9,000
From (b),
(a) − $11,000 − $5,000 − $7,000 = $3,000 (b)
From the statement of stockholders’ equity,
From (g) and (h),
$5,000 + $18,000 (g) + $9,000 (h) = (i)
From total liabilities and stockholders’ equity,
From (f),
$6,000 + (e) + $7,000 + $14,000 = $32,000 (f)
Problem 1-4C
Simplex Corporation
Statement of Stockholders’ Equity
For the year ended December 31, 2015
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Balance at January 1 $22,000 $24,500 $46,500
Issuance of common stock 8,000 8,000
Net income for the year 28,900 28,900
* Beginning retained earnings $24,500
+ Net income 28,900
Problem 1-5C
Simplex Corporation
Income Statement
For the year ended December 31, 2015
Service revenue $67,800
Expenses:
Advertising 8,700
Utilities 4,200
Salaries 24,200
Problem 1-5C (concluded)
Simplex Corporation
Balance Sheet
December 31, 2015
Assets Liabilities
Cash $ 5,500 Accounts payable $ 6,700
Accounts receivable 16,700 Salaries payable 3,500
Stockholders’ Equity
Common stock 30,000
Retained earnings 38,000
Total stockholders’ equity 68,000
Assumption violated
1. Going concern
2. Economic entity
3. Periodicity
4. Monetary unit
1. h.
2. g.
3. f.
4. a.
5. d.
6. e.
7. i.
8. b.
Problem 1-6C
Problem 1-7C
9. c.