EXERCISE 1-13
CHENG COMPANY
Balance Sheet
December 31, 2017
Assets
Cash ………………………………………………………………………………….. $15,000
Accounts receivable …………………………………………………………… 6,500
Liabilities and Owner’s Equity
Liabilities
Accounts payable ………………………………………………………… $21,000
Owner’s equity
Owner’s capital ($67,500 – $13,000) ………………………………. 54,500
Total liabilities and owner’s equity …………………………. $75,500
EXERCISE 1-14
(a) Camping fee revenues …………………………………………………. $140,000
(b) CLEAR VIEW PARK
Balance Sheet
December 31, 2017
Assets
Cash ……………………………………………………………………………. $ 23,000
Accounts Receivable ……………………………………………………. 17,500
Equipment …………………………………………………………………… 105,500
Total assets ………………………………………………………….. $146,000
EXERCISE 1-14 (Continued)
CLEAR VIEW PARK
Balance Sheet (Continued)
December 31, 2017
Liabilities and Owner’s Equity
Liabilities
Notes payable …………………………..…………………………... $ 60,000
EXERCISE 1-15
SEA LEGS CRUISE COMPANY
Income Statement
For the Year Ended December 31, 2017
Revenues
Ticket revenue ………………………………………….. $410,000
Expenses
Salaries and wages expense ……………………… $142,000
Maintenance and repairs expense ……………… 95,000
EXERCISE 1-16
ALICE HENNING, ATTORNEY
Owner’s Equity Statement
For the Year Ended December 31, 2017
Owner’s capital, January 1 ……………………………………………. $ 34,000 (a)
Add: Net income …………………………………………………………. 124,000 (b)
EXERCISE 1-16 (Continued)
Supporting Computations
(a) Assets, January 1, 2017 ……………………………………………….. $ 96,000
Liabilities, January 1, 2017 ……………………………………………. 62,000
Capital, January 1, 2017 ……………………………………………….. $ 34,000
PROBLEM 1-1A
(a) SPENGEL’S TRAVEL AGENCY
Owner’s Equity
Cash
Accounts
Receivable
Supplies
Equipment
Accounts
Payable
+
Owner’s
Capital
–
Owner’s
Drawings
+
Revenues
–
Expenses
1.
2.
3.
4.
5.
+$15,000
+ 15,000
+ –600
+ 14,400
+ –3,000
+ 11,400
+000,000
+ 11,400
+ –900
+ 10,500
+$900
+ 900
+$3,000
+ 3,000
+00,000
+ 3,000
+00,000
+ 3,000
+$700
+ 700
+0000
+ 700
+
+
+$15,000
+ 15,000
+
+ 15,000
+000,000
+ 15,000
+
+ 15,000
+000,000
+ 15,000
–$600
–600
–600
–700
–1,300
–1,300
PROBLEM 1-1A (Continued)
(b) Service revenue ……………………………………………… $10,000
Expenses
Salaries and wages ………………………………….. $2,500
PROBLEM 1-2A
(a) JUDI SALEM, ATTORNEY AT LAW
Owner’s Equity
Cash
+
Accounts
Receivable
+
Supplies
+
Equipment
=
Notes
Payable
+
Accounts
Payable
+
Owner’s
Capital
–
Owner’s
Drawings
+
Revenues
–
Expenses
Bal.
1.
2.
3.
$5,000
+1,200
6,200
–2,800
3,400
+3,000
+
+
+
$1,500
–1,200
300
00,000
300
+4,500
+
+
+
$500
0000
500
0000
500
0000
+
+
+
$6,000
00,000
6,000
00,000
6,000
00,000
=
=
=
$4,200
00,000
4,200
–2,800
1,400
00,000
+
+
+
$8,800
000,000
8,800
000,000
8,800
+$7,500
PROBLEM 1-2A (Continued)
(b) JUDI SALEM, ATTORNEY AT LAW
Income Statement
For the Month Ended August 31, 2017
Revenues
Service revenue……………………………………… $7,500
Expenses
Salaries and wages expense …………………… $2,500
JUDI SALEM, ATTORNEY AT LAW
Owner’s Equity Statement
For the Month Ended August 31, 2017
Owner’s capital, August 1 ……………………………………………… $ 8,800
PROBLEM 1-2A (Continued)
JUDI SALEM, ATTORNEY AT LAW
Balance Sheet
August 31, 2017
Assets
Cash …………………………………………………………………………….. $ 3,500
Accounts receivable ……………………………………………………… 4,800
Liabilities and Owner’s Equity
Liabilities
Notes payable …………………………..……………………………. $ 2,000
Accounts payable …………………………………………………… 3,270
PROBLEM 1-3A
(a) DIVINE DESIGNS CO.
Income Statement
For the Month Ended June 30, 2017
Revenues
Service revenue…………………………………….. $6,500
Expenses
Rent expense ………………………………………… $1,600
DIVINE DESIGNS CO.
Owner’s Equity Statement
For the Month Ended June 30, 2017
Owner’s capital, June 1 ………………………………… $ 0
Add: Investments ………………………………………. $12,000
DIVINE DESIGNS CO.
Balance Sheet
June 30, 2017
Assets
Cash …………………………………………………………………………….. $10,150
Accounts receivable ……………………………………………………… 2,800
PROBLEM 1-3A (Continued)
DIVINE DESIGNS CO.
Balance Sheet (Continued)
June 30, 2017
Liabilities and Owner’s Equity
Liabilities
(b) DIVINE DESIGNS CO.
Income Statement
For the Month Ended June 30, 2017
Revenues
Service revenue ($6,500 + $900) …………….. $7,400
Expenses
DIVINE DESIGNS CO.
Owner’s Equity Statement
For the Month Ended June 30, 2017
Owner’s capital, June 1 …………………………..…… $ 0
Add: Investments………………………………………. $12,000
PROBLEM 1-4A
(a) MATRIX CONSULTING
Assets
=
Liabilities
+
Owner’s Equity
Date
Cash
+
Accounts
Receivable
+
Supplies
+
Equipment
=
Notes
Payable
+
Accounts
Payable
+
Owner’s
Capital
–
Owner’s
Drawings
+
Revenues
–
Expenses
May 1
2
3
5
9
12
($ 7,000)
(900)
(125)
(4,000)
(1,000)
$600
($ 600)
$7,000)
($1,000)
$ 4,000
($ 900)
(125)
PROBLEM 1-4A (Continued)
(b) MATRIX CONSULTING
Income Statement
For the Month Ended May 31, 2017
Revenues
Service revenue ($4,000 + $5,400) ……………. $9,400
Expenses
Salaries and wages expense …………………… $2,500
Rent expense …………………………………………. 900
(c) MATRIX CONSULTING
Balance Sheet
May 31, 2017
Assets
Cash …………………………………………………………………………….. $14,600
Accounts receivable ……………………………………………………… 1,400
Liabilities and Owner’s Equity
Liabilities
Notes payable …………………………..……………………………. $ 5,000
Accounts payable …………………………………………………… 4,200
Total liabilities …………………………………………………. 9,200
Owner’s equity
PROBLEM 1-5A
(a)
Alpha
Company
Beta
Company
Psi
Company
Omega
Company
(a)
$ 39,000
(d)
$50,000
(g)
$129,000
(j)
$ 60,000
(b) ALPHA COMPANY
Owner’s Equity Statement
For the Year Ended December 31, 2017
Owner’s capital, January 1 ……………………………. $39,000
Add: Investment ………………………………………… $ 9,000
Net income ………………………………………… 17,000 26,000
65,000
(c) The sequence of preparing financial statements is income statement,
owner’s equity statement, and balance sheet. The interrelationship of
CC1 CONTINUING COOKIE CHRONICLE
(a) Natalie has a choice between a sole proprietorship and a corporation. A
partnership is not an option since she is the sole owner of the business.
A proprietorship is the easiest to create and operate because there
are no formal procedures involved in creating the proprietorship.
However, if she operates the business as a proprietorship she will
personally have unlimited liability for the debts of the business.
Operating the business as a corporation would limit her liability to her
(b) Yes, Natalie will need accounting information to help her operate her
business. She will need information on her cash balance on a daily or
weekly basis to help her determine if she can pay her bills. She will
need to know the cost of her services so she can establish her prices.
She will need to know revenue and expenses so she can report her net
income for personal income tax purposes, on an annual basis. If she
CC1 (Continued)
(c) Assets: Cash, Accounts Receivable, Supplies, Equipment, Prepaid
Insurance
Liabilities: Accounts Payable, Unearned Service Revenue, Notes Payable
(d) Natalie should have a separate bank account. This will make it easier
to prepare financial statements for her business. The business is a