Accounting Chapter 1 Homework Owners Are Generally Willing Provide Bankers With

CHAPTER 1 Introduction to Accounting and Business

Prob. 1–5B (Continued)

2. = +

+++

=+

Capital

Stock +–

Bal. 21,000 80,000 11,000 85,000 31,500 71,000 0

(d) + 72,000

Bal. 21,000 152,000 11,000 85,000 31,500 71,000 0

(e) – 20,000 – 20,000

Bal. 116,000 75,000 19,000 85,000 19,500 71,000 0

(i) + 29,450

Bal. 116,000 75,000 19,000 85,000 48,950 71,000 0

(j) – 29,200

98,500

Dividends

Stockholders’ Equity

98,500

Retained

Earnings

Accts.

PayableCash

Assets

Accts.

Rec.

Liabilities

Supplies Land

CHAPTER 1 Introduction to Accounting and Business

Prob. 1–5B (Continued)

+– – – ––––

Bal.

(a)

Bal.

(b)

Bal.

(c) – 4,000

Bal. – 4,000

Stockholders’ Equity (Continued)

Utilities

Exp.

Dry

Cleaning

Revenue

Dry

Cleaning

Exp.

Wages

Exp.

Rent

Exp.

Truck

Exp.

Misc.

Exp.

Supplies

Exp.

CHAPTER 1 Introduction to Accounting and Business

Prob. 1–5B (Continued)

3.

Dry cleaning revenue $110,000

Expenses:

Dry cleaning expense $29,450

Retained earnings, November 1, 2014 $ 98,500

Net income for November $40,150

Cash $ 81,800 Accounts payable $ 48,950

Accounts receivable 75,000

Assets Liabilities

BEV’S DRY CLEANERS

Income Statement

For the Month Ended November 30, 2014

BEV’S DRY CLEANERS

Retained Earnings Statement

For the Month Ended November 30, 2014

BEV’S DRY CLEANERS

Balance Sheet

November 30, 2014

CHAPTER 1 Introduction to Accounting and Business

Prob. 1–5B (Concluded)

4. (Optional)

Cash flows from operating activities:

Cash received from customers* $115,000

Deduct cash payments for expenses

BEV’S DRY CLEANERS

Statement of Cash Flows

For the Month Ended Novemer 30, 2014

CHAPTER 1 Introduction to Accounting and Business

Prob. 1–6B

a. Wages expense, $203,200 ($288,000 – $48,000 – $17,600 – $14,400 – $4,800)

b. Net income, $112,000 ($400,000 – $288,000)

CHAPTER 1 Introduction to Accounting and Business

1. = +

++=+–+

June 1 + 4,000 + 4,000

Bal. 5,525 350 350 4,000 3,500

June 12 – 350

Bal. 5,175 350 350 4,000 3,500

June 13 – 100 – 100

Bal. 6,535 1,000 350 250 4,000 6,200

June 30 – 400

Bal. 6,135 1,000 350 250 4,000 6,200

June 30 – 300

Bal. 5,835 1,000 350 250 4,000 6,200

CONTINUING PROBLEM

Dividends

Stockholders’ Equity

Accts.

PayableCash

Assets

Accts.

Rec.

Liabilities

Supplies

Capital

Stock

Fees

Earned

CHAPTER 1 Introduction to Accounting and Business

Continuing Problem (Continued)

– – –––– – –

June 1

June 2

Bal.

June 8 – 675

Bal. – 800 – 675 – 500

June 12 – 350

June 30

Bal. – 590 – 800 – 675 – 500

June 30 – 400

Bal. – 590 – 800 – 675 – 500 – 400

June 30 – 300

Misc.

Exp.

Stockholders’ Equity (Continued)

Supplies

Exp.

Wages

Exp.

Music

Exp.

Office

Rent

Exp.

Equip.

Rent

Exp.

Adver-

tising

Exp.

Utilities

Exp.

CHAPTER 1 Introduction to Accounting and Business

Continuing Problem (Concluded)

2.

Fees earned: $6,200

Expenses:

Music expense $1,590

3.

Retained earnings, June 1, 2014 $0

4.

Cash $3,920 Accounts payable $ 250

Accounts receivable 1,000

Balance Sheet

June 30, 2014

Assets Liabilities

PS MUSIC

Income Statement

For the Month Ended June 30, 2014

PS MUSIC

Retained Earnings Statement

For the Month Ended June 30, 2014

PS MUSIC

CHAPTER 1 Introduction to Accounting and Business

CP 1–1

1. Acceptable professional conduct requires that Colleen Fernandez supply First

Federal Bank with all the relevant financial statements necessary for the bank

2. a. Owners are generally willing to provide bankers with information about the

operating and financial condition of the business, such as the following:

●Operating Information:

●Description of business operations

●Results of past operations

Owners are normally reluctant to provide the following types of information

to bankers:

●Proprietary Operating Information. Such information, which might hurt

the business if it becomes known by competitors, might include special

processes used by the business or future plans to expand operations

into areas that are not currently served by a competitor.

●Personal Financial Information. Owners may have little choice here

because banks often require owners of small businesses to pledge their

CASES & PROJECTS

CHAPTER 1 Introduction to Accounting and Business

CP 1–2

The difference in the two bank balances, $55,000 ($80,000 – $25,000), may not be

pure profit from an accounting perspective. To determine the accounting profit for

the six-month period, the revenues for the period would need to be matched with

CP 1–3

1. =+

+=+ – + ––––

(a) + 950 + 950

(b) – 300 + 300

Bal. 650 300 950

(c) – 275 – 275

Owner’s Equity

Supplies

Accts.

Payable

Liabilities

Lisa

Duncan,

Capital

Fees

Earned

Rent

Expense

Misc.

Exp.

Salaries

ExpenseCash

Lisa

Duncan,

Drawing

Supplies

Expense

Assets

CHAPTER 1 Introduction to Accounting and Business

CP 1–3 (Continued)

2.

Fees earned: $3,650

Expenses:

3.

Lisa Duncan, capital, September 1, 2014 $0

Investment on September 1, 2014 $ 950

4.

Cash $2,435 Accounts payable $ 150

Supplies 180

SERVE-N-VOLLEY

Income Statement

For the Month Ended September 30, 2014

SERVE-N-VOLLEY

Statement of Owner’s Equity

For the Month Ended September 30, 2014

SERVE-N-VOLLEY

Balance Sheet

September 30, 2014

Assets Liabilities

CHAPTER 1 Introduction to Accounting and Business

CP 1–3 (Concluded)

5. a. Serve-N-Volley would provide Lisa with $715 more income per month than

working as a waitress. This amount is computed as follows:

b. Other factors that Lisa should consider before discussing a long-term

arrangement with the Phoenix Tennis Club include the following:

Lisa should consider whether the results of operations for September are

indicative of what to expect each month. For example, Lisa should consider

whether club members will continue to request lessons or use the ball

CHAPTER 1 Introduction to Accounting and Business

CP 1–4

Note to Instructors: The purpose of this activity is to familiarize students with the

certification requirements and their online availability. You might use this as an

opportunity to discuss the advantages and disadvantages of careers in public

CP 1–5

First Second Third

Year Year Year

Net cash flows from operating activities negative positive positive

CP 1–6

As can be seen from the balance sheet data in the case, Enron was financed

largely by debt as compared to equity. Specifically, Enron’s stockholders’ equity

represented only 17.5% ($11,470 ÷ $65,503) of Enron’s total assets. The remainder

of Enron’s total assets, 82.5%, was financed by debt. When a company is financed