Chapter 02 – Basic Financial Statements
Financial and Managerial Accounting, 17e 2-7
CHAPTER 2 NAME #
10-MINUTE QUIZ B SECTION
Presented below is the balance sheet for Sabino Family Dentistry on January 1 of the current year.
SABINO FAMILY DENTISTRY
Balance Sheet
January 1, 20__
Assets Liabilities & Stockholders’ Equity
Cash …………………………….. $ 33,000 Liabilities:
Accounts receivable ………… 51,150 Accounts payable …………………………….. $ 74,250
Land …………………………….. 313,500 Total liabilities ……………………………… $ 74,250
Building ………………………… 371,250 Owners’ equity:
Equipment ……………………… 57,750 Capital stock …………………………………. 752,400
Total liabilities and
Total assets…………………….. $826,650 owners’ equity …………………………………… $826,650
During the first few days of January, the following transactions occurred:
Jan 1 The business borrowed $99,000 from the bank, giving a note payable due in 90 days.
3 Additional capital stock was issued in exchange for $44,550 cash.
3 Equipment was purchased for $62,700 on credit.
5 The business collected $26,400 of its accounts receivable and paid $37,950 of its accounts
payable.
Indicate your answer to each of the following questions in the space provided.
1 On January 6, total assets of the business amount to:
a $826,650. b $994,950 c $957,000. d $950,400.
2 On January 6, owners’ equity amounts to:
a $752,400. b $44,550. c $796,950. d $895,950.
3 On January 6, the accounts payable balance is:
a $136,950. b $36,300. c $24,750. d $99,000.
4 On January 6, the accounts receivable balance is:
a $24,750. b $38,775. c $77,550. d $63,525.
5 On January 6, the cash balance is:
a $127,050. b $138,600. c $165,000. d $202,950
Chapter 02 – Basic Financial Statements
CHAPTER 2 NAME #
10-MINUTE QUIZ C SECTION
Presented below is the balance sheet for Manhattan Family Dentistry on January 1 of the current year.
MANHATTAN FAMILY DENTISTRY
Balance Sheet
January 1, 20__
Assets Liabilities & Stockholders’ Equity
Cash …………………………….. $ 20,000 Liabilities:
Accounts receivable ………… 31,000 Accounts payable …………………………….. $ 45,000
Land …………………………….. 190,000 Total liabilities ……………………………… $ 45,000
Building ………………………… 225,000 Owners’ equity:
Equipment ……………………… 35,000 Capital stock …………………………………. 456,000
Total liabilities and
Total assets…………………….. $501,000 owners’ equity …………………………………… $501,000
During the first few days of January, the following transactions occurred:
Jan 2 Equipment was purchased for $38,000 on credit.
2 The business collected $16,000 of its accounts receivable and paid $23,000 of its accounts
payable.
3 The business borrowed $60,000 from the bank, giving a note payable due in 90 days.
3 Additional capital stock was issued in exchange for $27,000 cash.
Complete the following balance sheet for Manhattan Family Dentistry on January 4 of the current year.
MANHATTAN FAMILY DENTISTRY
Balance Sheet
January 4, 20__
Assets Liabilities & Owners’ Equity
Cash …………………………… $ Liabilities:
Accounts receivable ……….. Notes payable ……………………………….. $
Land ……………………………. Accounts payable…………………………….
Building ……………………….. Total liabilities ……………………………. $
Equipment …………………….. Owners’ equity:
Capital stock ………………………………..
Total liabilities and
Total assets…………………… $ owners’ equity ………………………………… $
Chapter 02 – Basic Financial Statements
Financial and Managerial Accounting, 17e 2-9
CHAPTER 2 NAME #
10-MINUTE QUIZ D SECTION
Complete the January 31, 20__, balance sheet of Countrywide Legal Services using the following
information.
(1) Stockholders’ equity at January 1, 20__, included capital stock of $140,000.
(2) The land and building were purchased by the business for a total price of $200,000 on January 25,
20__, from a company forced out of business. On January 31, an appraiser valued the property at
$260,000.
(3) Additional capital stock was issued in exchange for $50,000 cash.
(4) Retained earnings at January 31, 20___, amounted to $49,400.
COUNTRYWIDE LEGAL SERVICES
Balance Sheet
January 31, 20__
Assets
Liabilities & Owners’ Equity
Cash …………………………
$ 90,000
Accounts receivable ……
Notes payable …………………………………..
$
Land …………………………
135,000
Accounts payable ……………………………..
45,600
Building ……………………
Total liabilities ………………………………
$
Equipment …………………
35,000
$
_______
_______
Total assets………………..
$
owners’ equity ………………………………….
$375,000
Chapter 02 – Basic Financial Statements
SOLUTIONS TO CHAPTER 2 10-MINUTE QUIZZES
QUIZ A QUIZ B
Learning Objective: Learning Objective:
2, 4, 5, 6 3, 4
QUIZ C
MANHATTAN FAMILY DENTISTRY
Balance Sheet
January 4, 20__
Assets Liabilities & Owners’ Equity
Cash …………………………….. $ 100,000a Liabilities:
Chapter 02 – Basic Financial Statements
Financial and Managerial Accounting, 17e 2-11
QUIZ D
COUNTRYWIDE LEGAL SERVICES
Balance Sheet
January 31, 20__
Assets
Liabilities & Owners’ Equity
Cash …………………………
$ 90,000
Accounts receivable ……
50,000c
Notes payable …………………………………..
$ 90,000f
Land …………………………
135,000
Accounts payable ……………………………..
45,600
Building ……………………
65,000b
Total liabilities ………………………………
$135,600
Equipment …………………
35,000
$190,000d
49,400
$239,400
_______
Total assets………………..
$375,000a
owners’ equity ………………………………….
$375,000
Chapter 02 – Basic Financial Statements
Assignment Guide to Chapter 2
Brief
Exercises
Exercises
Problems
Cases
Net
1 – 10
1 – 17
1
2
3
4
5
6
7
8
9
10
1
2
3
4
5
6
7
Time estimate (in minutes)
< 10
< 15
15
15
15
15
20
20
35
40
35
30
30
30
30
30
35
30
25
Difficulty rating
E
E
E
E
M
M
M
M
M
S
S
S
M
S
M
M
M
E
E
Learning Objectives:
1. Explain the nature and general purpose of
financial statements.
2. Explain certain accounting principles that are
important for an understanding of financial
statements and how professional judgment by
accountants may affect the application of those
principles.
4, 10
3. Demonstrate how certain business transactions
affect the elements of the accounting equation:
Assets = Liabilities + Owner’s Equity.
1, 2
1, 5, 6, 7
4. Explain how the statement of financial
position, often referred to as the balance sheet,
is an expansion of the basic accounting
equation.
3, 4
2, 3, 16
5. Explain how the income statement reports an
enterprise’s financial performance for a period
of time in terms of the relationship of revenues
and expenses.
5, 6
12, 13, 16,
17 (M)
6. Explain how the statement of cash flows
presents the change in cash for a period of
time in terms of the company’s operating,
investing, and financing activities.
7
11, 14, 16
7. Explain how the statement of financial
position (balance sheet), income statement, and
statement of cash flows relate to each other.
10
8. Explain common forms of business ownership–
sole proprietorship, partnership, and
corporation–and demonstrate how they differ
in terms of their statements of financial
position.
8, 9
8
9. Discuss the importance of financial statements
to a company and its investors and creditors
and why management may take steps to
improve the appearance of the company in its
financial statements.
9, 15