Problem 1-2A (Continued)
Part 3
Company C
First, calculate the beginning balance of equity:
Dec. 31, 2015
Next, find the ending balance of equity by completing this table:
Finally, find the ending amount of assets by adding the ending balance of
equity to the ending balance of liabilities:
Dec. 31, 2016
Part 4
Company D
First, calculate the beginning and ending equity balances:
12/31/2015 12/31/2016
Then, find the amount of investment (stock issuances) during 2016:
Equity, December 31, 2015 …………………….. $20,000
Problem 1-2A (Concluded)
Part 5
Company E
First, compute the balance of equity as of December 31, 2016:
Next, find the beginning balance of equity as follows:
Equity, December 31, 2015 …………………… $ ?
Finally, find the beginning amount of liabilities by subtracting the
beginning balance of equity from the beginning balance of assets:
Dec. 31, 2015
Problem 1-3A (15 minutes)
Armani Company
Balance Sheet
December 31, 2016
Problem 1-4A (15 minutes)
Edison Energy Company
Income Statement
For Year Ended December 31, 2016
Revenues …………………………………………. $55,000
Problem 1-5A (15 minutes)
Kojo Company
Statement of Retained Earnings
For Year Ended December 31, 2016
Problem 1-6A (15 minutes)
Kia Company
Statement of Cash Flows
For Year Ended December 31, 2016
Cash from operating activities …………………… $ 6,000
Problem 1-7A (60 minutes) Parts 1 and 2
Assets = Liabilities + Equity
Date
Cash
+
Accounts
Receivable
+
Office
Equipment
=
Accounts
Payable
+
Common
Stock
–
Dividends
+
Revenues
–
Expenses
May
1
+$40,000
=
+
$40,000
1
– 2,200
=
–
$2,200
5
=
–
+
=
+
=
–
+ 2,500
=
+ 3,200
=
– 1,890
=
– 1,890
=
+ 80
–
=
–
=
–
=
–
– 1,400
=
Problem 1-7A (Continued)
Part 3
The Gram Co.
Income Statement
For Month Ended May 31
Revenues
Consulting services revenue ………… $11,100
Expenses
The Gram Co.
Statement of Retained Earnings
For Month Ended May 31
Retained earnings, May 1 ………………………………….. $ 0
The Gram Co.
Balance Sheet
May 31
Assets Liabilities
Cash ………………………….$42,780 Accounts payable …………………… $ 80
Problem 1-7A (Concluded)
Part 3—continued
The Gram Co.
Statement of Cash Flows
For Month Ended May 31
Cash flows from operating activities
Cash received from customers …………………………..
$11,100
Cash paid for rent ………………………………………………
(2,200)
Cash paid for cleaning ……………………………………….
Cash paid for telephone …………………………..…………
Cash paid for utilities …………………………………………
Cash paid to employees …………………………………….
Net cash provided by operating activities …………..
Cash flows from investing activities
Purchase of equipment ………………………………………
Net cash used by investing activities ………………….
Cash flows from financing activities
Investment from stockholders …………………………...
Cash dividends ………………………………………………….
Net cash provided by financing activities ……………
Net increase in cash …………………………………………..
Cash balance, May 1 ………………………………………….
Problem 1-8A (60 minutes) Parts 1 and 2
Assets
=
Liabilities
+
Equity
Cash
+
Accounts
Receivable
+
Office
Supplies
+
Office
Equipment
+
Building
=
Accounts
Payable
+
Notes
Payable
+
Common
Stock
–
Dividends
+
Reve-
nues
–
Expen-
ses
a.
+$70,000
+
$10,000
+
$80,000
Bal.
+
+
=
+
+
80,000
Bal.
+
+
=
+
+
80,000
+
+
+ $2,900
Bal.
34,500
+
1,200
+
26,700
+
150,000
=
2,900
+
130,000
+
80,000
–
500
f.
+
$2,800
+
$2,800
Bal.
34,500
+
1,200
+
26,700
+
150,000
=
2,900
+
130,000
+
80,000
+
–
500
+ 4,000
+
Bal.
38,500
+
1,200
+
26,700
+
150,000
=
2,900
+
130,000
+
80,000
+
–
500
1,800
Problem 1-8A (Concluded)
Part 3
Financial Accounting, 8th Edition
30
Problem 1-9A (60 minutes) Parts 1 and 2
Assets
=
Liabilities
+
Equity
Date
Cash
+
Accounts
Receivable
+
Office
Supplies
+
Office
Equipment
+
Electrical
Equipment
=
Accounts
Payable
+
Common
Stock
–
Dividends
+
Revenues
–
Expenses
Dec.
1
+$65,000
=
+
$65,000
2
– 1,000
–
$1,000
Bal.
64,000
=
65,000
–
1,000
3
– 4,800
+
+ $8,200
Bal.
+
=
8,200
+
65,000
–
1,000
5
– 800
+
$ 800
Bal.
58,400
+
800
+
13,000
=
8,200
+
65,000
–
1,000
6
+ 1,200
+
$1,200
Bal.
+
800
+
13,000
=
8,200
+
65,000
+
1,200
–
1,000
8
+
$2,530
+ 2,530
Bal.
+
+
2,530
+
13,000
=
10,730
+
65,000
+
1,200
–
1,000
+
$5,000
+
5,000
+
5,000
+
800
+
2,530
+
13,000
=
10,730
+
65,000
+
6,200
–
1,000
+
+ 350
+
5,000
+
1,150
+
2,530
+
13,000
=
11,080
+
65,000
+
6,200
–
1,000
– 2,530
+
5,000
+
1,150
+
2,530
+
13,000
=
8,550
+
65,000
+
6,200
–
1,000
+
+
+
5,900
+
1,150
+
2,530
+
13,000
=
8,550
+
65,000
+
7,100
–
1,000
+ 5,000
+
+
1,150
+
2,530
+
13,000
=
8,550
+
65,000
+
7,100
–
1,000
– 1,400
–
1,400
Bal.
–
– 540
–
Bal.
+
+
1,150
+
2,530
+
13,000
=
8,550
+
65,000
+
7,100
–
2,940
– 950
Problem 1-9A (Continued)
Part 3
Sony Electric
Income Statement
For Month Ended December 31
Revenues
Electrical fees earned …………………. $7,100
Sony Electric
Statement of Retained Earnings
For Month Ended December 31
Sony Electric
Balance Sheet
December 31
Assets Liabilities
Problem 1-9A (Concluded)
Part 3—continued
Sony Electric
Statement of Cash Flows
For Month Ended December 31
Cash flows from operating activities
Cash received from customers1 …………………………...
$ 6,200
Cash paid for rent ………………………………………………..
Cash paid for supplies …………………………………………
Cash paid for utilities …………………………………………..
Cash paid to employees ……………………………………….
Net cash provided by operating activities ……………..
Cash flows from investing activities
Purchase of office equipment ……………………………….
Purchase of electrical equipment ………………………….
Net cash used by investing activities ……………………
Cash flows from financing activities
Investments from stockholders …………………………….
Cash dividends ……………………………………………………
Net increase in cash …………………………………………….
Cash balance, Dec. 1 ……………………………………………
Part 4
If the December 1 investment had been $49,000 cash instead of $65,000 and
Problem 1-10A (15 minutes)
1. Return on assets is net income divided by the average total assets.
2. Return on assets seems satisfactory for the risk involved in the
4. We know from the accounting equation that total financing (liabilities
Problem 1-11A (20 minutes)
1. Return on assets equals net income divided by average total assets.
4. The reported figures suggest that Coca-Cola yields a marginally higher
return on assets than PepsiCo. Based on this information alone, we
Problem 1-12AA (20 minutes)
Risk: Very low; it is the risk of the financial institution not
paying interest and principal.
Problem 1-13AB (15 minutes)
Problem 1-14AB (15 minutes)
An organization pursues three major business activities: financing,
investing, and operating.
PROBLEM SET B
Problem 1-1B (25 minutes)
Balance Sheet
Income
Statement
Statement of
Cash Flows
Transaction
Total
Assets
Total
Liab.
Total
Equity
Net
Income
Operating
Activities
Investing
Activities
Financing
Activities
1
Owner invests
cash for its stock
+
+
+
2
Buys building by
signing note
payable
+
+
ment for cash
vices for cash
5
Pays cash for
+
Problem 1-2B (40 minutes)
Part 1
Company V
(a) and (b)
Calculation of equity: 12/31/2015 12/31/2016
Assets ………………………..
$54,000
$59,000
(c) Calculation of net income for 2016:
Part 2
Company W
(a) Calculation of equity at December 31, 2015:
(b) Calculation of equity at December 31, 2016:
Equity, December 31, 2015 …………………… $20,000
(c) Calculation of the amount of liabilities at December 31, 2016:
Problem 1-2B (Continued)
Part 3
Company X
First, calculate the beginning and ending equity balances:
12/31/2015 12/31/2016
Then, find the amount of investment (stock issuances) during 2016:
Equity, December 31, 2015 …………………………. $ 73,000
Part 4
Company Y
First, calculate the beginning balance of equity:
Dec. 31, 2015
Assets …………………………………………………. $92,500
Next, find the ending balance of equity as follows:
Equity, December 31, 2015 …………………… $41,000
Finally, find the ending amount of assets by adding the ending balance of
equity to the ending balance of liabilities:
Dec. 31, 2016
Liabilities …………………………………………….. $ 42,000
Problem 1-2B (Concluded)
Part 5
Company Z
First, calculate the balance of equity as of December 31, 2016:
Next, find the beginning balance of equity as follows:
Equity, December 31, 2015 …………………… $ ?
Plus stock issuances …………………………... 60,000
Finally, find the beginning amount of liabilities by subtracting the
beginning balance of equity from the beginning balance of assets:
Dec. 31, 2015
Problem 1-3B (15 minutes)
Safari Company
Balance Sheet
December 31, 2016
Assets ………………………. $114,000 Liabilities …………………………. $ 64,000
Problem 1-4B (15 minutes)
Solar Company
Income Statement
For Year Ended December 31, 2016
Problem 1-5B (15 minutes)
Audi Company
Statement of Retained Earnings
For Year Ended December 31, 2016
Retained earnings, Dec. 31, 2015 ……………. $49,000
Problem 1-6B (15 minutes)
Banji Company
Statement of Cash Flows
For Year Ended December 31, 2016
Cash used by operating activities …………………. $(3,000)