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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
