ACCT 2100 Chapter 1 HW

The balance sheet of the Algonquin Company reported assets of $50,000, liabilities of $22,000 and common stock of $15,000. Based on this information only, the amount or balance for retained earnings must be:

$13,000. Assets = Liabilities + Equity; Equity includes common stock and retained earnings. $50,000 = $22,000 + $15,000 + Retained earnings; Retained earnings = $13,000

As of December 31, 2018, Moss Company had total cash of $195,000, notes payable of $90,500, and common stock of $84,500. During 2019, Moss earned $42,000 of cash revenue, paid $24,000 for cash expenses, and paid a $3,000 cash dividend to the stockholders. a. Determine the amount of retained earnings as of December 31, 2018.

$20,000 Retained earnings = $195,000 − $90,500 − $84,500 = $20,000

If Ballard Company reported assets of $500 and liabilities of $200, Ballard's stockholders' equity equals:

$300. In the accounting equation, assets equal claims (liabilities + equity). If assets are $500, total claims must also be $500. Therefore, equity must be $500 − $200, or $300.

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $40,000 2) borrowed $25,000 from its bank 3) provided consulting services for $39,000 cash 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment for $12,000 cash 7) paid $3,000 dividends to stockholders 8) paid employees' salaries of $21,000 What is Yowell's net income for Year 1?

$9,000. $39,000 revenue − $9,000 rent expense − $21,000 salaries expense = $9,000 net income

All-Star Automotive Company experienced the following accounting events during 2018: 1. Performed services for $25,000 cash. 2. Purchased land for $6,000 cash. 3. Hired an accountant to keep the books. 4. Received $50,000 cash from the issue of common stock. 5. Borrowed $5,000 cash from State Bank. 6. Paid $14,000 cash for salary expense. 7. Sold land for $9,000 cash. 8. Paid $10,000 cash on the loan from State Bank. 9. Paid $2,800 cash for utilities expense. 10. Paid a cash dividend of $5,000 to the stockholders. a. Indicate how each of the events would be classified on the statement of cash flows as operating activities (OA), investing activities (IA), financing activities (FA), or not applicable (NA).

1. OA 2. IA 3. NA 4. FA 5. FA 6. OA 7. IA 8. FA 9. OA 10. FA

Jackson Company paid $500 cash for salary expenses. Which of the following choices accurately reflects how this event affects the company's financial statements?

Assets (500) = Liab. (NA) + Equity (500) Rev. (NA) - Exp. 500 = Net Inc. (500) . Cash Flow (500) OA

The following account titles were drawn from the general ledger of Holt Food Supplies, Incorporated (HFSI): Computers, Operating Expenses, Rent Revenue, Building, Cash, Notes Payable, Land, Utilities Payable, Utilities Expense, Trucks, Gasoline Expense, Retained Earnings, Supplies, Accounts Payable, Office Furniture, Salaries Expense, Common Stock, Service Revenue, Interest Expense, Dividends, Supplies Expense. a. List each account title under the element of the accounting equation to which it belongs.

Assets: Computers, Building, Cash, Land, Trucks, Office Furniture, Supplies Liabilities: Notes Payable, Utilities Payable, Accounts Payable Stockholders' Equity: Operating Expenses, Rent Revenue, Gasoline Expense, Salaries Expense, Utilities Expense, Common Stock, Retained Earnings, Dividends, Interest Expense, Service Revenue, Supplies Expense

All-Star Automotive Company experienced the following accounting events during 2018: 1. Performed services for $25,000 cash. 2. Purchased land for $6,000 cash. 3. Hired an accountant to keep the books. 4. Received $50,000 cash from the issue of common stock. 5. Borrowed $5,000 cash from State Bank. 6. Paid $14,000 cash for salary expense. 7. Sold land for $9,000 cash. 8. Paid $10,000 cash on the loan from State Bank. 9. Paid $2,800 cash for utilities expense. 10. Paid a cash dividend of $5,000 to the stockholders. b. Prepare a statement of cash flows for 2018. Assume All-Star Automotive Company had a beginning cash balance of $9,000 on January 1, 2018.

Cash flows from operating activities: ~Cash receipts from revenue: 25,000 ~Cash payment for salary expense: -14,000 ~Cash payments for utilities expense -2,800 Net cash flow from operating activities: 8,200 Cash flows from investing activities: ~Cash from the sale of land: 9,000 ~Cash paid to purchase land: -6,000 Net cash flow from investing activities: 3,000 Cash flows from financing activities: ~Cash receipts from stock issue: 50,000 ~Cash receipts from loan: 5,000 ~Cash payment on loan: -10,000 ~Cash payments for dividends: -5,000 Net cash flow from financing activities: 40,000 Net increase in cash: 51,200 Plus: Beginning cash balance: 9,000 Ending cash balance: 60,200

As of December 31, 2018, Moss Company had total cash of $195,000, notes payable of $90,500, and common stock of $84,500. During 2019, Moss earned $42,000 of cash revenue, paid $24,000 for cash expenses, and paid a $3,000 cash dividend to the stockholders. b.&c. Record the beginning account balances, revenue, expense, and dividend events under the appropriate elements of the accounting equation.

MOSS COMPANY Effect of 2019 Transactions on the Accounting Equation Event | Assets (Cash) | = | Liabilities (Notes Payable) | + | Stockholders' Equity (Common Stock + Retained Earnings) Beginning balance: 195,000 = 90,500 + 84,500 + 20,000 1. Earned revenue: Cash- 42,000, Retained Earnings- 42,000 2. Paid expenses: Cash- (-24,000), Retained Earnings- (-24,000) 3. Paid dividend: Cash- (-3,000), Retained Earnings- (-3,000) Ending balance: 210,000 = 90,500 + 84,500 +35,000

The following account titles were drawn from the general ledger of Holt Food Supplies, Incorporated (HFSI): Computers, Operating Expenses, Rent Revenue, Building, Cash, Notes Payable, Land, Utilities Payable, Utilities Expense, Trucks, Gasoline Expense, Retained Earnings, Supplies, Accounts Payable, Office Furniture, Salaries Expense, Common Stock, Service Revenue, Interest Expense, Dividends, Supplies Expense. b. Will all businesses have the same number of accounts?

No. The type of accounts will vary depending on the type of business. Some business will have only one revenue account; other business may have more than one type of revenue account. For instance, a business may have both service revenue and interest revenue. Also, the expense accounts that a business has are somewhat dependent on the type and complexity of the business. For instance, if a business owns its own building, it will not have rent expense. If a business does not have employees, it will not have salaries expense. The level of detail desired by the business will also affect the type of revenue and expense accounts that a business will have.