PA2-3 (continued)
Req. 3
Cash (A)
Accounts
Receivable (A)
Inventory (A)
Beg.
106
Beg.
13
142
(b)
20
30
(a)
30
(d)
10
80
(c)
End.
26
End.
13
172
Short-term Investments (A)
Equipment (A)
Software (A)
Beg.
13
Beg.
290
50
(c)
170
End.
13
End.
460
50
End.
Beg.
150
Beg.
Beg.
10
90
(c)
(b)
11
End.
240
End.
End.
321
Beg.
321
End.
Beg.
Beg.
End.
End.
Fundamentals of Financial Accounting, 5/e 2-42
PA2-3 (continued)
Req. 5 ETHAN ALLEN INTERIORS, INC.
Balance Sheet
At December 31, 2013
(in millions of dollars)
Assets
Current Assets
Cash
$ 26
Short-term Investments
13
Accounts Receivable
13
Inventory
172
Prepaid Rent
23
Total Current Assets
247
Equipment
460
Software
50
Total Assets
$757
Liabilities
Current Liabilities
Accounts Payable
$ 121
Salaries and Wages Payable
23
Notes Payable (short-term)
11
Total Current Liabilities
155
Notes Payable (long-term)
240
Total Liabilities
395
Stockholders’ Equity
Common Stock
41
Retained Earnings
321
Total Stockholders’ Equity
362
Total Liabilities and Stockholders’ Equity
$757
Req. 6
As of December 31, 2013, the financing for Ethan Allen’s investment in assets has
Req. 7
As of September 30, 2013, Ethan Allen had $297 of current assets ($106 + 13 + 13 +
Fundamentals of Financial Accounting, 5/e 2-43
ANSWERS TO GROUP B PROBLEMS
PB2-1
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Equipment
Buildings
Notes
Payable
Common
Stock
Retained
Earnings
(a)
+109,000
=
+109,000
(b)
+186,000
=
+186,000
(c)
No effect
=
(d)
–200,000
+200,000
=
(e)
–12,000
+44,000
=
+32,000
(f)
+4,000
–4,000
=
+87,000
+40,000
+200,000
=
+218,000
+109,000
Req. 2
The transaction between the stockholder and another investor (event c) was not
Req. 3
(a) Beginning total assets $2,255,000 + Changes $327,000 = $2,582,000 Ending total
assets
Fundamentals of Financial Accounting, 5/e 2-44
PB2-1 (continued)
Req. 4
PB2-2
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
a.
Cash
+600,000
Common
Stock
+600,000
b.
Cash
+60,000
Note
Payable
(long-term)
+60,000
c.
Buildings
Cash
+166,000
-66,000
Note
Payable
(long-
term)
+100,000
d.
Equipment
Cash
+90,000
-90,000
e.
Supplies
+90,000
Accounts
Payable
+90,000
Req. 2
a.
Cash (+A) …………………………………………………………………
600,000
Common Stock (+SE) ……………………………………………
600,000
b.
Cash (+A) …………………………………………………………………
60,000
Note Payable (long-term) (+L) …………………………………
60,000
c.
Buildings (+A) ……………………………………………………………
166,000
Cash (-A) ……………………………………………………………..
66,000
Note Payable (long-term) (+L) …………………………………
100,000
d.
Equipment (+A) ………………………………………………………..
90,000
Cash (-A) ……………………………………………………………..
90,000
e.
Supplies (+A) …………………………………………………………….
90,000
Accounts Payable (+L) …………………………………………..
90,000
PB2-2 (continued)
Req. 3
Cash (A)
Supplies (A)
Equipment (A)
Beg.
90,000
Beg.
9,000
148,000
(a)
600,000
66,000
(c)
(e)
90,000
90,000
(b)
60,000
90,000
(d)
End.
594,000
End.
99,000
238,000
Buildings (A)
Land (A)
Beg.
500,000
Beg.
444,000
(c)
166,000
End.
666,000
End.
444,000
50,000
Beg.
Beg.
90,000
(e)
(b)
(c)
End.
End.
Beg.
Beg.
(a)
End.
End.
Debits
Cash
Supplies
Equipment
Buildings
Accounts Payable
Notes Payable
Common Stock
Retained Earnings
TOTALS
$2,041,000
$2,041,000
Fundamentals of Financial Accounting, 5/e 2-46
PB2-2 (continued)
Req. 5 BEARINGS & BRAKES CORPORATION
Balance Sheet
At July 31
Assets
Liabilities
Current Assets
Current Liabilities
Cash
$ 594,000
Accounts Payable
$ 140,000
Supplies
99,000
Total Current Liabilities
140,000
Total Current Assets
693,000
Notes Payable
165,000
Total Liabilities
305,000
Equipment
238,000
Stockholders’ Equity
Buildings
666,000
Common Stock
770,000
Land
444,000
Retained Earnings
966,000
Total Stockholders’ Equity
1,736,000
Total Assets
$ 2,041,000
Total Liabilities &
Stockholders’ Equity
$ 2,041,000
Req. 6
As of July 31, most of B&B’s financing has come from stockholders’ equity.
Stockholders’ equity has financed $1,736,000 of B&B’s assets and liabilities financed
$305,000.
PB2-3
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
a.
Intangible
Assets
Cash
+1,000
-1,000
b.
Cash
+10,000
Common Stock
+10,000
c.
Equipment
Cash
+13,500
-4,000
Note
Payable
+9,500
d.
Cash
–800
Salaries
and
Wages
Payable
–800
e.
No effect.
Req. 2
a.
Intangible Assets (+A) ……………………………………………….
1,000
Cash (-A) ……………………………………………………………..
1,000
b.
Cash (+A) …………………………………………………………………
10,000
Common Stock (+SE) ……………………………………………
10,000
c.
Equipment (+A) ………………………………………………………..
13,500
Cash (-A) ……………………………………………………………..
4,000
Note Payable (+L) …………………………………………………
9,500
d.
Salaries and Wages Payable (-L) …………………………………
800
Cash (-A) ……………………………………………………………..
800
e.
No effect.
PB2-3 (continued)
Req. 3
Cash (A)
Accounts
Receivable (A)
Inventory (A)
Beg.
2,560
Beg.
560
Beg.
1,110
(b)
10,000
1,000
(a)
4,000
(c)
800
(d)
End.
6,760
End.
560
End.
1,110
Prepaid Rent (A)
Beg.
570
End.
570
Equipment (A)
Intangible Assets (A)
Beg.
3,220
Beg.
2,850
(c)
13,500
(a)
1,000
End.
16,720
End.
3,850
Beg.
4,140
Beg.
10,000
(b)
End.
End.
Short-term
Investments (A)
Beg.
660
End.
660
PB2-3 (continued)
Req. 4
The negotiations to purchase a coffee farm were not included in the transactions.
Because event (e) involves only negotiations, it does not constitute an exchange of
cash, goods, or services and thus is not a transaction.
Req. 5 STARBUCKS