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Exercise 1-13 (20 minutes)
a. Purchased land for $4,000 cash.
Exercise 1-14 (15 minutes)
REAL ANSWERS
Income Statement
For Month Ended October 31
Revenues
Consulting fees earned ...................... $14,000
Expenses
Salaries expense ................................. $7,000
Rent expense ....................................... 3,550
Exercise 1-15 (15 minutes)
REAL ANSWERS
Statement of Owner’s Equity
For Month Ended October 31
King, Capital, October 1 ................................... $ 0
Add: Owner’s investment .......................... 84,000
Exercise 1-16 (15 minutes)
REAL ANSWERS
Balance Sheet
October 31
Assets Liabilities
Cash ............................... $11,360 Accounts payable ................. $ 8,500
Accounts receivable .... 14,000
* For the computation of this amount see Exercise 1-15.
Exercise 1-17 (15 minutes)
REAL ANSWERS
Statement of Cash Flows
For Month Ended October 31
Cash flows from operating activities
Cash received from customers ............................................ $ 0
Cash paid to employees1 ...................................................... (1,750)
Cash flows from investing activities
Purchase of office equipment .............................................. (18,000)
Net cash used by investing activities ................................. (18,000)
1$7,000 Salaries Expense - $5,250 still owed = $1,750 paid to employees.
Exercise 1-18 (10 minutes)
Return on assets
=
Net income / Average total assets
=
$40,000 / [($200,000 + $300,000)/2]
=
16%
Interpretation: Swiss Group’s return on assets of 16% is markedly above
the 10% return of its competitors. Accordingly, its performance is
assessed as superior to its competitors.
Exercise 1-19 (10 minutes)
O 1. Cash paid for advertising O 5. Cash paid for rent
Exercise 1-20B (10 minutes)
a. Financing*
Exercise 1-21 (20 minutes)
NINTENDO
Income Statement
For Year Ended March 31, 2011
(Japanese Yen in millions)
Net sales ...................................................................... ¥ 1,014,345
Expenses
Cost of sales ............................................................ ¥626,379
Selling, general and administrative expenses ...... 216,889
PROBLEM SET A
Problem 1-1A (40 minutes)
Part 1
Company A
(a) Equity on December 31, 2012:
(b) Equity on December 31, 2013:
Equity, December 31, 2012 ........................ $30,500
Plus investment by owner ......................... 6,000
(c) Liabilities on December 31, 2013:
Assets .......................................................... $58,000
Part 2
Company B
(a) and (b)
Equity: 12/31/2012 12/31/2013
Assets ................................... $34,000 $40,000
(c) Net income for 2013:
Equity, December 31, 2012 ..................... $12,500
Plus investment by owner ...................... 1,400
Problem 1-1A (Continued)
Part 3
Company C
First, calculate the beginning balance of equity:
Dec. 31, 2012
Assets .......................................................... $24,000
Next, find the ending balance of equity by completing this table:
Equity, December 31, 2012 ........................ $15,000
Plus investment by owner ......................... 9,750
Finally, find the ending amount of assets by adding the ending balance of
equity to the ending balance of liabilities:
Dec. 31, 2013
Liabilities ..................................................... $29,000
Part 4
Company D
First, calculate the beginning and ending equity balances:
12/31/2012 12/31/2013
Assets ...................................... $60,000 $85,000
Then, find the amount of investment by owner during 2013:
Equity, December 31, 2012 .......................... $20,000
Plus investment by owner ........................... ?
Thus, investment by owner must have been $27,000
Problem 1-1A (Concluded)
Part 5
Company E
First, compute the balance of equity as of December 31, 2013:
Assets .......................................................... $113,000
Liabilities ..................................................... (70,000)
Equity .......................................................... $ 43,000
Next, find the beginning balance of equity as follows:
Equity, December 31, 2012 ........................ $ ?
Plus investment by owner ......................... 6,500
Thus, the beginning balance of equity is: $27,500
Finally, find the beginning amount of liabilities by subtracting the
beginning balance of equity from the beginning balance of assets:
Dec. 31, 2012
Problem 1-2A (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
Receives cash
for services
provided
+
+
+
+
3
Pays cash for
employee wages
–
–
–
–
4
Incurs legal
costs on credit
+
–
–
5
Borrows cash
by signing L-T
note payable
+
+
+
6
Owner
withdraws cash
–
–
–
7
Buys land by
signing note
payable
+
+
8
Provides ser-
vices on credit
+
+
+
9
Buys office
equipment
for cash
+/–
–
10
Collects cash
on receivable
from (8)
+/–
+
Problem 1-3A (15 minutes)
Elko Energy Company
Income Statement
For Year Ended December 31, 2013
Revenues ................................................. $55,000
Problem 1-4A (15 minutes)
Amity Company
Balance Sheet
December 31, 2013
Assets .............................. $90,000 Liabilities .................................. $44,000
Problem 1-5A (15 minutes)
ABM Company
Statement of Cash Flows
For Year Ended December 31, 2013
Cash from operating activities ........................ $ 6,000
Cash used by investing activities .................... (2,000)
Cash used by financing activities.................... (2,800)
Problem 1-6A (15 minutes)
Kasio Company
Statement of Owner’s Equity
For Year Ended December 31, 2013
K. Kasio, Capital, Dec. 31, 2012 ...................... $ 7,000
Add: Net income ............................................... 8,000
Fundamental Accounting Principles, 21st Edition
26
Problem 1-7A (60 minutes) Parts 1 and 2
Assets = Liabilities + Equity
Date
Cash
+
Accounts
Receivable
+
Office
Equipment
=
Accounts
Payable
+
H. Graham,
Capital
-
H. Graham,
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
20
+ 2,500
-
2,500
=
22
+
3,200
=
+
3,200
25
+ 3,200
-
3,200
=
26
- 1,890
=
- 1,890
27
=
+ 80
-
80
28
- 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
Problem 1-7A (Continued)
Part 3
The Graham Co.
Income Statement
For Month Ended May 31
Revenues
Consulting services revenue ............ $11,100
Expenses
Rent expense ...................................... $2,200
Salaries expense................................. 1,500
Cleaning expense ............................... 750
The Graham Co.
Statement of Owner’s Equity
For Month Ended May 31
H. Graham, Capital, May 1 ........................................ $ 0
Add: Investment by owner ..................................... 40,000
The Graham Co.
Balance Sheet
May 31
Assets Liabilities
Cash .............................. $42,780 Accounts payable ....................... $ 80
Office equipment .......... 1,890 Equity
Problem 1-7A (Concluded)
Part 3—continued
The Graham 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 paid for telephone ...........................................
(300)
Cash paid for utilities ................................................
(280)
Cash paid to employees ...........................................
(1,500)
Net cash provided by operating activities ..............
$ 6,070
Cash flows from investing activities
Purchase of equipment .............................................
(1,890)
Net cash used by investing activities ......................
(1,890)
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
Cash balance, May 1 .................................................
0
Cash balance, May 31 ...............................................
$42,780
Problem 1-8A (60 minutes) Parts 1 and 2
Assets
=
Liabilities
+
Equity
Date
Cash
+
Accounts
Receivable
+
Office
Supplies
+
Office
Equipment
+
Electrical
Equipment
=
Accounts
Payable
+
H. Ander,
Capital
-
H. Ander,
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
5
- 800
+
$ 800
Bal.
58,400
+
800
+
13,000
=
8,200
+
65,000
-
1,000
6
+ 1,200
+
$1,200
Bal.
59,600
+
800
+
13,000
=
8,200
+
65,000
+
1,200
-
1,000
8
+
$2,530
+ 2,530
Bal.
59,600
+
800
+
2,530
+
13,000
=
10,730
+
65,000
+
1,200
-
1,000
15
+
$5,000
+
5,000
Bal.
59,600
+
5,000
+
800
+
2,530
+
13,000
=
10,730
+
65,000
+
6,200
-
1,000
18
+
350
+ 350
Bal.
59,600
+
5,000
+
1,150
+
2,530
+
13,000
=
11,080
+
65,000
+
6,200
-
1,000
20
- 2,530
- 2,530
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
Problem 1-8A (Continued)
Part 3
Ander Electric
Income Statement
For Month Ended December 31
Revenues
Electrical fees earned ...................... $7,100
Expenses
Rent expense .................................... $1,000
Ander Electric
Statement of Owner’s Equity
For Month Ended December 31
H. Ander, Capital, December 1 .................. $ 0
Add: Investment by owner ..................... 65,000
Ander Electric
Balance Sheet
December 31
Assets Liabilities
Cash ................................. $59,180 Accounts payable .................... $ 8,550
Accounts receivable ...... 900
Office supplies ................ 1,150 Equity
