ACCT 4A
Great City BuilderGreat City Builder's balance sheet data at May 31, 2018, and June 30, 2018, follow: May 31, 2018 June 30, 2018 Total Assets $155000 202000 Total Liabilities $144000 77000 Begin by identifying the accounting equation and the formula to calculate the change in the stockholders' equity during a period For each of the following situations that occurred in June, 2018 with regard to common stock and dividends of a corporation, compute the amount of net income or net loss during June 2018. a. The company issued $7,500 of common stock and paid no dividends. b. The company issued no common stock. It paid cash dividends of $9,000. c. The company issued $ 12 comma 000$12,000 of common stock and paid cash dividends of $8,000.
Accounting equation: Assets= liabilities + equity Stockholders equity equation: Beg. equity + Common stock issued + Net income or - Net loss - Dividends = End. equity May 31 2018 Assets- liabilities = equity 155000-144000= 11000 June 30 2018 202000-77000= 125000 a. Ending equity - Beg equity - common stock + dividends = Net income/ loss 125000-11000-7500+0=106,5000 b. 123,000 c. 110,000
For each of the users of accounting information, identify whether the user is an external decision maker (E) or an internal decision maker (I): a. customer b. company manager c. Internal Revenue Service d. lender e. investor f. controller g. cost accountant h. SEC
a. E b. I c. E d. E e. E f. I g. I h. E
Michael McNamee is the proprietor of a property management company, Apartment Exchange, near the campus of Penscola State College. The business has cash of $8,000 and furniture that cost $9,000 and has a market value of $13,000. The business debts include accounts payable of $6,000. Michael's personal home is valued at $400,000, and his personal bank account has a balance of $1,200. Identify the principle or assumption that best matches the situation: a. Michael's personal assets are not recorded on the Apartment Exchange's balance sheet. b. The Apartment Exchange records furniture at its cost of $9,000, not its market value of $13,000. c. The Apartment Exchange reports its financial statements in U.S. dollars. d. Michael expects the Apartment Exchange to remain in operations for the foreseeable future.
a. Michael's personal assets are not recorded on the company's balance sheet: ANS: the economic entity assumption. b. The company records furniture at its cost of $9,000, not its market value of $13,000: ANS: the cost principle c. The company records its financial statements in U.S. dollars: ANS: the monetary unit assumption. d. Michael expects the company to remain in operations for the foreseeable future: ANS: the going concern assumption.
