ACC 202 - HW Module 1

Identify whether a debit or credit results in the indicated change for each of the following accounts. (a) To increase Furniture (b) To decrease Cash (c) To increase Salaries Expense (d) To increase Rental Revenue (e) To decrease Salaries Payable (f) To decrease Supplies (g) To increase Utilities Payable (h) To increase Insurance Expense (i) To increase Accounts Payable (j) To increase Store Supplies

(a) Debit (b) Credit (c) Debit (d) Credit (e) Debit (f) Credit (g) Credit (h) Debit (i) Credit (j) Debit

The transactions of Spade Company appear below. (a) K. Spade, owner, invested $11,000 cash in the company in exchange for common stock. (b) The company purchased supplies for $319 cash. (c) The company purchased $6,083 of equipment on credit. (d) The company received $1,298 cash for services provided to a customer. (e) The company paid $6,083 cash to settle the payable for the equipment purchased in transaction c. (f) The company billed a customer $2,332 for services provided. (g) The company paid $510 cash for the monthly rent. (h) The company collected $979 cash as partial payment for the account receivable created in transaction f. (i) The company paid a $900 cash dividend to the owner (sole shareholder). #3 Part a) Prepare general journal entries to record the transactions of Spade Company by using the following accounts: Cash; Accounts Receivable; Supplies; Equipment; Accounts Payable; Common Stock; Dividends; Services Revenue; and Rent Expense.

(a) Debit: Cash (11,000) Credit: Common Stock (11,000) (b) Debit: Supplies (319) Credit: Cash (319) (c) Debit: Equipment (6083) Credit: Accounts Payable (6083) (d) Debit: Cash (1298) Credit: Services Revenue (1298) (e) Debit: Accounts Payable (2332) Credit: Cash (2332) (f) Debit: Accounts Receivable (510) Credit: Services Revenue (510) (g) Debit: Rent Expense Credit: Cash (h) Debit: Cash (979) Credit: Accounts Receivable (979) (i) Debit: Dividends (900) Credit: Cash (900)

At the end of its annual accounting period, the company must make three adjusting entries. (a) Adjust the Unearned Revenue account to recognize earned services revenue. (b) Accrue utilities expense. (c) Accrue salaries expense. For each of these adjusting entries, indicate the account to be debited and the account to be credited.

(a) Debit: Unearned Revenue Credit: Service Revenue (b) Debit: Utilities Expense Credit: Accounts Payable (c) Debit: Salaries Expense Credit: Salaries Payable

(a) Depreciation on the company's equipment for the year is computed to be $16,000. (b) The Prepaid Insurance account had a $7,000 debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the company's insurance policies showed that $1,420 of unexpired insurance coverage remains. (c) The Supplies account had a $330 debit balance at the beginning of the year, and $2,680 of supplies were purchased during the year. The December 31 physical count showed $389 of supplies available. (d) One-fourth of the work related to $11,000 of cash received in advance was performed this period. (e) The Prepaid Rent account had a $5,100 debit balance at December 31 before adjusting for the costs of expired prepaid rent. An analysis of the rental agreement showed that $3,680 of prepaid rent had expired. (f) Wage expenses of $6,000 have been incurred but are not paid as of December 31. Prepare adjusting journal entries for the year ended December 31 for each separate situation.

(a) To record depreciation expense for the year: Depreciation Expense $16,000 Accumulated Depreciation $16,000 (b) To adjust the Prepaid Insurance account for expired coverage: (7,000 - 1,420 = $5,580) Insurance Expense $5,580 Prepaid Insurance $5,580 (c) To adjust the Supplies account for the supplies used: (330 + 2,680 - 389 = $2,621) Supplies Expense $2,621 Supplies $2,621 (d) To recognize the revenue earned this period: (11,000 * 1/4 = $2,750) Unearned Revenue $2,750 Service Revenue $2,750 (e) To adjust the Prepaid Rent account for expired prepaid rent: Rent Expense $3,680 Prepaid Rent $3,680 (f) To record wage expenses incurred but not yet paid: Wage Expense $6,000 Wage Payable (Accrued Liabilities) $6,000

(a) M&R Company provided $3,300 in services to customers in December, which are not yet recorded. Those customers are expected to pay the company in January following the company's year-end. (b) Wage expenses of $2,300 have been incurred but are not paid as of December 31. (c) M&R Company has a $6,300 bank loan and has incurred (but not recorded) 7% interest expense of $441 for the year ended December 31. The company will pay the $441 interest in cash on January 2 following the company's year-end. (d) M&R Company hired a firm that provided lawn services during December for $630. M&R will pay for December lawn services on January 15 following the company's year-end. (e) M&R Company has earned $330 in interest revenue from investments for the year ended December 31. The interest revenue will be received on January 15 following the company's year-end. (f) Salary expenses of $1,030 have been earned by supervisors but not paid as of December 31. Prepare year-end adjusting journal entries for M&R Company as of December 31 for each of the above separate cases.

(a) Unrecorded Services Revenue: To recognize the services revenue earned but not yet recorded: Accounts Receivable $3,300 Service Revenue $3,300 (b) Accrued Wage Expenses: To record wage expenses incurred but not yet paid: Wage Expense $2,300 Wage Payable (Accrued Liabilities) $2,300 (c) Unrecorded Interest Expense: To recognize the interest expense incurred but not yet recorded: Interest Expense $441 Interest Payable $441 (d) Accrued Lawn Services Expense: To record the expense for lawn services provided but not yet paid: Lawn Services Expense $630 Lawn Service Payable (Accrued Liabilities) $630 (e) Unearned Interest Revenue: To recognize the interest revenue earned but not yet received: Interest Receivable $330 Interest Revenue $330 (f) Accrued Salary Expenses: To record salary expenses earned by supervisors but not yet paid: Salary Expense $1,030 Salary Payable (Accrued Liabilities) $1,030

#8 Part b) Use the expanded accounting equation to compute the missing financial statement amounts. Company: Assets = Liabilities + Common Stock - Dividends + Rev - Expense 1 $66,000 = $22,500 + $33,000 - $0 + X - $14,500 2 $104,700 = $38,500 + $57,000 - X + $37,000 - $24,500

1) 66,000 = 22,500 + 33,000 - 0 + X - 14,500 66,000 = 55,500 + X - 14,500 66,000 + 14,500 - 55,500 = X X = $25,000 2) 104,700 = 38,500 + 57,000 - X + 37,000 - 24,500 104,700 = 95,500 - X + 12,500 104,700 - 95,500 - 12,500 = X X = $3,300

#8 Part a) Use the accounting equation to compute the missing financial statement amounts. Company: Assets = Liabilities + Equity 1 $88,000 = X + $46,500 2 X = $31,500 + $83,000 3 $111,000 = $33,000 + X

1) 88,000 = X + 46,500 X = $41,500 2) X = 31,500 + 83,000 X = $114,500 3) 111,000 = 33,000 + X X = $78,000

#2 Part B) Identify the following users as either an Internal user or an External user. 1) SEC regulator 2) Ingredient supplier 3) Shareholder 4) Creditor 5) Production supervisor 6) Research and development executive 7) Customer 8) Human resources executive

1) External User 2) External User 3) External User 4) External User 5) Internal User 6) Internal User 7) External User 8) Internal User

Determine whether each of the following accounting duties mainly involves financial accounting, managerial accounting, or tax accounting. 1) Reviewing financial statements for criminal investigations 2) Enforcing tax laws 3) Estate planning 4) Analyzing external financial reports 5) Consulting with treasurer on cash flows 6) Internal auditing 7) Planning transactions to minimize taxes 8) External auditing

1) Financial accounting 2) Tax accounting 3) Tax accounting 4) Financial accounting 5) Managerial accounting 6) Managerial accounting 7) Tax accounting 8) Financial accounting

#2 Part A) Identify the following questions as most likely to be asked by an Internal user or an External user of accounting information. 1) How well has our new salesperson performed? 2) What are the costs of our service to customers? 3) How did the nonprofit organization use our donations? 4) What are the costs of our product's ingredient? 5) Which inventory items are out of stock? 6) Which companies are under IRS investigation for tax fraud 7) Which companies are at risk of strike by its labor union?

1) Internal User 2) Internal User 3) External User 4) Internal User 5) Internal User 6) External User 7) External User

Match each of the descriptions with the term or phrase it best reflects. 1) Amount a business earns in excess of all expenses and costs associated with its sales and revenues 2) A government agency that enforces proper use of GAAP 3) An assessment of whether financial statements follow GAAP 4) Accounting professionals who provide services to many clients 5) A group that sets accounting principles in the United States

1) Net Income 2) SEC 3) Audit 4) Public accountants 5) FASB

A manufacturing company reports the following information. Current Year 1 Year Ago 2 Years Ago Raw materials inventory, ending $ 150,000 $ 192,100 $ 199,100 Raw materials used 2,052,600 2,738,400 2,925,000 1. Compute raw materials inventory turnover for the most recent two years. 2. Is the current year change in raw materials inventory turnover ratio favorable or unfavorable? 3. Compute days' sales in raw materials inventory for the current year.

1) Raw Materials Inventory Turnover: Inventory Turnover = Cost of goods sold / Average inventory Current Year = $2,052,600 / (($150,000 + $192,100) / 2) Current Year = $2,052,600 / $171,050 Current Year = 12 Times 1 Year Ago = $2,738,400 / (($192,100 + $199,100) / 2) 1 Year Ago = $2,738,400 / $195,600 1 Year Ago = 14 times 2) Unfavorable -> Inventory turnover is decreasing. 3) Days' Sales in Raw Materials Inventory = (Ending Raw Materials Inventory / COGS) * 365 Current Year = ($150,000 / $2,052,600) * 365 Current Year = 26.7 days

Diez Company produces sporting equipment, including leather footballs. Assume that the cost object is a football. Classify each of the following costs as direct or indirect. 1. Depreciation on factory building 2. Labor used on the football production line 3. Salary of manager who supervises the entire plant 4. Depreciation on maintenance equipment used in the plant 5. Factory insurance used up

1. Indirect cost 2. Direct cost 3. Indirect cost 4. Indirect cost 5. Indirect cost

Classify each of the following costs as either a product cost or a period cost for a manufacturer. 1. Direct materials used in making goods 2. Factory utilities 3. Office supplies used 4. Depreciation on office equipment 5. Indirect labor used in making goods 6. Office building insurance used up 7. Tax accountant salary 8. Factory insurance

1. Product cost 2. Product cost 3. Period cost 4. Period cost 5. Product cost 6. Period cost 7. Period cost 8. Product cost

The following transactions were completed by the company: a) The company completed consulting work for a client and immediately collected $6,700 cash. b) The company completed commission work for a client and sent a bill for $5,200 to be received within 30 days. c) The company paid an assistant $2,000 cash as wages for the period. d) The company collected $2,600 cash as a partial payment for the amount owed by the client in transaction b. e) The company paid $940 cash for this period's cleaning services.

A = L + E (Cash + AR) = (AP) + (Common Stock - Dividends + R - E) a) Cash: $6,700 Revenue: $6,700 b) AR: $5,200 Revenue: $5,200 c) Cash: -$2,000 Expenses: $2,000 d) Cash: $2,600 Accounts Receivable: -$2,600 e) Cash: -$940 Expenses: $940 END BALANCE: (6,360 + 2,600) = (0) + (0 - 0 + 11,900 - 2,940) END BALANCE: $8,960 = $0 + $8,960

#2 PART B: As of April 30, $944 of interest expense has accrued on a note payable. The full interest payment of $2,833 on the note is due on May 20.

ADJUSTING JOURNAL: April 30 Interest Expense 944 Interest Payable 944 PAYMENT OF INTEREST: May 20 Interest Expense 1,889 Interest Payable 944 Cash 2,883

#2 (a) On April 1, the company hired an attorney for April for a flat fee of $2,500. Payment for April legal services was made by the company on May 12. (b)As of April 30, $944 of interest expense has accrued on a note payable. The full interest payment of $2,833 on the note is due on May 20. (c) Total weekly salaries expense for all employees is $15,000. This amount is paid at the end of the day on Friday of each five-day workweek. April 30 falls on a Tuesday, which means that the employees had worked two days since the last payday. The next payday is May 3. The above three separate situations require adjusting journal entries to prepare financial statements as of April 30. For each situation, present both the April 30 adjusting entry and the subsequent entry during May to record payment of the accrued expenses. PART A:

ADJUSTING JOURNAL: April 30 Legal Services Expense 2,500 Legal Services Payable 2,500 PAYMENT OF LEGAL FEES: May 1 Legal Services Payable 2,500 Cash 2,500

#2 PART C: Total weekly salaries expense for all employees is $15,000. This amount is paid at the end of the day on Friday of each five-day workweek. April 30 falls on a Tuesday, which means that the employees had worked two days since the last payday. The next payday is May 3.

ADJUSTING JOURNAL: April 30 Salaries Expense 6,000(=15,000*2/5) Salaries Payable 6,000 PAYMENT OF SALARIES: May 3 Salaries Expense 9,000 (=15,000*3/5) Salaries Payable 6,000 Cash 15,000

(a) M&R Company provided $3,300 in services to customers in December, which are not yet recorded. Those customers are expected to pay the company in January following the company's year-end. (b) Wage expenses of $2,300 have been incurred but are not paid as of December 31. (c) M&R Company has a $6,300 bank loan and has incurred (but not recorded) 7% interest expense of $441 for the year ended December 31. The company will pay the $441 interest in cash on January 2 following the company's year-end. (d) M&R Company hired a firm that provided lawn services during December for $630. M&R will pay for December lawn services on January 15 following the company's year-end. (e) M&R Company has earned $330 in interest revenue from investments for the year ended December 31. The interest revenue will be received on January 15 following the company's year-end. (f) Salary expenses of $1,030 have been earned by supervisors but not paid as of December 31. For each of the above separate cases, analyze each adjusting entry by showing its effects on the accounting equation—specifically, identify the accounts and amounts (including (+) increase or (−) decrease) for each transaction or event.

ASSETS = LIABILITIES + EQUITY (a) Unrecorded Services Revenue: Accounts Receivable (Asset, Increase (+), $3,300) Service Revenue (Equity, Increase (+), $3,300) (b) Accrued Wage Expenses: Wage Expense (Equity, Decrease (-), $2,300) Wage Payable/Accrued L (Liabilities, Increase (+), $2,300) (c) Unrecorded Interest Expense: Interest Expense (Equity, Decrease (-), $6,300) Interest Payable (Liabilities, Increase (+), $6,300) (d) Accrued Lawn Services Expense: Lawn Services Expense (Equity, Decrease (-), $630) Lawn Service Payable/Accrued L (Liabilitie,Increase(+),$630) (e) Unearned Interest Revenue: Interest Receivable (Asset, Increase (+), $330) Interest Revenue (Equity, Increase (+), $330) (f) Accrued Salary Expenses: Salary Expense (Equity, Decrease (-), $1,030) Salary Payable/Accrued L (Liabilities, Increase (+), $1,030)

#9 Part a) Corentine Company had $154,000 of accounts payable on September 30 and $133,500 on October 31. Total purchases on credit during October were $283,000. Determine how much cash was paid on accounts payable during October.

Accounts Payable Payments on Account $ 303,500 Beginning Balance $ 154,00 Purchases on Account 283,000 Ending Balance $ 133,500

#9 Part b) On September 30, Valerian Company had a $103,500 balance in Accounts Receivable. During October, the company collected $103,890 from its credit customers. The October 31 balance in Accounts Receivable was $91,000. Determine the amount of sales on credit that occurred in October.

Accounts Receivable Beg Balance $ 103,500 Cash Receipts on Account $ 103,890 Sales on Account 91,390 Ending Balance $ 91,000

On May 31 of the current year, the assets and liabilities of Riser, Incorporated are as follows: Cash $19,300; Accounts Receivable, $7,200; Supplies, $600; Equipment, $11,950; Accounts Payable, $9,250. What is the amount of equity as of May 31 of the current year? a) $48,300 b) $13,050 c) $19,300 d) $29,800 e) $39,050

Assets: Cash: $19,300 AR: $7,200 Supplies: $600 Equip: $11,950 Total Assets = 19,300 + 7,200 + 600 + 11,950 = $39,050 Liabilities: Accounts Payable: $9,250 Total Liabilities = $9,250 E = Total Assets - Total Liabilities E = $39,050 - $9,250 = $29,800 ANSWER: $29,800

#5 Part C) On August 1, Lola Company's assets are $48,000 and its liabilities are $28,000. On August 4, Lola issues a sustainability report. On August 5, ownership invests $12,000 cash and $16,000 of equipment in Lola. After the investment, what is the amount of equity for Lola? Assets = Liabilities + Equity August 1 $48,000 = $28,000 + Change August 5

August 1: Equity = 48,000 - 28,000 Equity = $20,000 Change: Cash Invested + Equipment Invested 12,000 + 16,000 = $28,000 (A&E) August 5: Total Assets = 48,000 + 28,000 = $76,000 Total Liabilities = 28,000 + 0 = $28,000 Total Equity = 20,000 + 28,000 = $48,000 ANSWER: Assets = Liabilities + Equity August 1 $48,000 = $28,000 + $20,000 Change $28,000 = $0 + $28,000 August 5 $76,000 = $28,000 + $48,000

A company reports cost of goods manufactured of $960,440 and cost of goods sold of $955,548. Compute the average manufacturing cost per unit assuming 18,470 units were produced. Average Manufacturing Cost Per Unit:

Average Manufacturing Cost Per Unit = cost of goods manufactured / units produced Average Manufacturing Cost Per Unit = 960,440 / 18,470 Average Manufacturing Cost Per Unit = $52 per unit

Prepare the schedule of cost of goods manufactured for Barton Company using the following information for the year ended December 31. Direct materials used $ 200,000 Direct labor 69,500 Factory overhead 31,200 Work in process inventory, beginning 169,600 Work in process inventory, ending 155,500

Barton Company Schedule of Cost of Goods Manufactured For Year Ended December 31 ---------------------------------------------------------------------- Direct Materials Used 200,000 Direct Labor 69,500 Factory Overhead 31,200 Total Manufacturing Costs = $ 300,700 Work in Process Inv. (Beg) 169,600 Total Cost of Work in Process = $ 470,300 Work in Process Inv. (End) < 155,500 > Cost of Goods Manufactured = $ 314,800

PART 3: SALES ACTIVITY Cost of Goods Manufactured ($1,603,000) | Finished Goods Inventory, Cost of Goods Available Finished Good Inventory Beginning (???) > for Sale ($1,745,000) > Ending ($140,900) | Cost of Goods Sold (???)

Beginning Finished Goods Inventory = Cost of Goods Available for Sale - Cost of Goods Manufactured Beginning Finished Goods Inventory = 1,745,000 - 1,603,000 Beginning Finished Goods Inventory = $142,000 Cost of Goods Sold = Cost of Goods Available for Sale = Ending Finished Good Inventory Cost of Goods Sold = 1,745,000 - 140,900 Cost of Goods Sold = $1,604,100

#7 Part b) Is Home Demo's return on assets better than the 7% return of Lows Hardware (a competitor)?

Better (15% is a higher return on asset than 7%)

#9 Part c) During October, Alameda Company had $104,500 of cash receipts and $105,150 of cash disbursements. The October 31 Cash balance was $19,600. Determine how much cash the company had at the close of business on September 30.

Cash Beg Balance $ 20,250 Cash Disbursements $ 105,150 Cash Receipts 104,500 Ending Balance $ 19,600

Determine the ending balance of each of the following T-accounts. Cash Accounts Payable Supplies Accounts Receivable Wages Payable Cash

Cash Accounts Payable Supplies 100 50 2,000 8,000 10,000 3,800 300 60 2,700 1,100 200 ------------ --------------------- --------------------- 310 3,300 7,300 Accounts Receivable Wages Payable Cash 600 150 700 11,000 4,500 150 500 800 6,000 150 100 100 1,300 100 ---------------------- ----------------- -------------------- 50 100 100

#3 Part b) Post entries to T-accounts and the ending balances will be calculated.

Cash: DEBIT- a (11000) d(1298) h(979), CREDIT- b(319) e(6083) g(510) i(100), END BALANCE: $5,465 Debit Accounts Receivable: DEBIT- f(2332), CREDIT- h(979), END BALANCE: $1,353 Debit Supplies: DEBIT- b(319), END BALANCE: $319 Debit Equipment: DEBIT- c(6083), END BALANCE: $6,083 Debit Accounts Payable: DEBIT- e(6083), CREDIT- c(6083), END BALANCE: $0 Credit Common Stock: CEEDIT- a(11000), END BALANCE: $11,000 Credit Dividends: DEBIT- i(900), END BALANCE: $900 Debit Services Revenue: CREDIT- d(1298), f(2332), END BALANCE: $3,630 Credit Rent Expense: DEBIT- g(510), END BALANCE: $510 Debit

Compute cost of goods sold using the following information. Merchandise inventory, beginning $ 13,400 Cost of merchandise purchased 86,400 Merchandise inventory, ending 19,400

Cost of Goods Sold is Computed as: Merchandise inventory, beginning 13,400 Cost of merchandise purchased 86,400 Goods Available for Sale = $ 99,800 Merchandise inventory, ending < 19,400 > Cost of Goods Sold = $ 80,400 COGS = Merchandise inventory, beginning + Cost of merchandise purchased - Merchandise inventory, ending

ENTRIES 1-5: For journal entries 1 through 10, identify the explanation that mostly closely describes it. (a) To record this period's depreciation expense. (b) To record accrued salaries expense. (c) To record this period's use of a prepaid expense. (d) To record accrued interest revenue. (e) To record accrued interest expense. (f) To record the earning of previously unearned income. (g) To record cash receipt of unearned revenue. (h) To record cash payment of an accrued expense. (i) To record cash receipt of an accrued revenue. (j) To record cash payment of a prepaid expense.

ENTRIES 1-5: #1 Interest Receivable 3,300 = D Interest Revenue 3,300 #2 Interest Expense 2,208 = E Interest Payable 2,208 #3 Unearned Revenue 19,250 = F Service Revenue 19,250 #4 Cash 4,200 = G Unearned Revenue 4,200 #5 Accounts Payable 1,700 = H Cash 1,700

ENTRIES 6-10: (a) To record this period's depreciation expense. (b) To record accrued salaries expense. (c) To record this period's use of a prepaid expense. (d) To record accrued interest revenue. (e) To record accrued interest expense. (f) To record the earning of previously unearned income. (g) To record cash receipt of unearned revenue. (h) To record cash payment of an accrued expense. (i) To record cash receipt of an accrued revenue. (j) To record cash payment of a prepaid expense.

ENTRIES 6-10: #6 Cash 12,300 = I Accounts Receivable (from services) 12,300 #7 Prepaid Rent 500 = J Cash 500 #8 Depreciation Expense 38,217 = A Accumulated Depreciation 38,217 #9 Salaries Expense 13,280 = B Salaries Payable 13,280 #10 Insurance Expense 3,180 = C Prepaid Insurance 3,180

#10 Part b) Use this information (same as Part A^) to prepare a BALANCE SHEET for the business as of December 31.

ERNST CONSULTING Balance Sheet December 31 Assets Liabilities Cash $11,360 Accounts payable $8,500 Accounts receivable 14,000 Total liabilities 8,500 Office supplies 3,250 Equity Land 46,000 Common Stock 84,000 Office equipment 18,000 Retained Earnings 110 Total Equity 84,110 Total assets $92,610 Total liabilities&Equity $92,610 *Retained Earnings = NI - Dividends Net Income = Revenues - Expenses Net Income = 14,000 - (3,550 + 7,000 + 760 + 580) Net Income = 14,000 - 11,890 = 2,110 Retained Earnings = 2,110 - 2,000 Retained Earnings = $110

#10 Part a) On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $84,000 in assets in exchange for common stock to launch the business. On December 31, the company's records show the following items and amounts. Cash$ 11,360 Cash dividends $2,000 Accounts receivable $14,000 Consulting revenue $14,000 Office Supplies $3,250 Rent expense $3,550 Land $46,000 Salaries expense $7,000 Office equipment $18,000 Telephone expense $760 Accounts payable $8,500 Miscellaneous expenses $580 Common stock $84,000 Use this information to prepare a December iNCOME STATEMENT for the business.

ERNST CONSULTING Income Statement For Month Ended December 31 Revenues Consulting revenue $14,000 Total revenues $14,000 Expenses Rent expense $3,550 Salaries expense $7,000 Telephone expense $760 Miscellaneous expenses $580 Total expenses $11,890 Net Income $2,110

Shep Company's records show the following information for the current year: Beg. of Year End of Year Total Assets: $54,000 $85,000 Total Liabilities: $24,000 $37,000 Determine net income (loss) for each of the following separate situations. a) Additional common stock of $5,000 was issued, and dividends of $9,000 were paid during the current year. b) Additional common stock of $15,500 was issued, and no dividends were paid during the current year. c) No additional common stock was issued, and dividends of $14,000 were paid during the current year.

Equity = Total Assets - Total Liabilities Beg Equity = 54,000 - 24,000 Beg Equity = $30,000 End Equity = 85,000 - 37,000 End Equity = $48,000 Beg Equity + Common Stock + NI - Dividends = End Equity NI = End Equity - Beg Equity - Common Stock + Dividends a) NI = 48,000 - 30,000 - 5,000 + 9,000 NI = $22,000 b) NI = 48,000 - 30,000 - 15,000 + 0 NI = $2,500 c) NI = 48,000 - 30,000 - 0 + 14,000 NI = $32,000

The following data is provided for Garcon Company and Pepper Company for the year ended December 31. Garcon Company Pepper Company Finished goods inventory, beginning $ 13,000 $ 18,550 Work in process inventory, beginning 15,600 19,650 Raw materials inventory, beginning 8,200 11,250 Rental cost on factory equipment 30,500 25,450 Direct labor 23,000 39,400 Finished goods inventory, ending 21,800 15,400 Work in process inventory, ending 23,800 20,200 Raw materials inventory, ending 7,500 7,400 Factory utilities 11,100 16,000 General and administrative expenses 25,000 45,500 Indirect labor 10,800

Garcon Company Pepper Company X: Direct Labor X = $23,000 X = $39,400 X: Direct Materials Used X = $44,700 X = $57,350 Total Prime Costs ? = $67,700 ? = $96,750 Direct Materials Used = Beginning raw materials inventory + Raw materials purchases - Ending raw materials inventory Garcon: 8,200 + 44,000 - 7,500 = $44,700 Pepper: 11,250 + 53,500 - 7,400 = $57,350 Total Prime Costs = Direct Labor + Direct Materials Used Garcon: 23,000 + 44,700 = $67,700 Pepper: 39,400 + 57,350 = $96,750

PART 2) Compute the total conversion costs for both Garcon Company and Pepper Company. Garcon Company Pepper Company XXX ### ### XXX ### ### Total Conversion Costs ? ?

Garcon Company Pepper Company X: Direct Labor X = $23,000 X = $39,400 X: Factory Overhead X = $57,700 X = $55,790 Total Conversion Costs ? = $80,700 ? = $95,190 Factory Overhead = Rental cost on factory equipment + Repairs(Factory equipment) + Factory utilities + Indirect labor Garcon: 30,500 + 5,300 + 11,100 + 10,800 = $57,700 Pepper: 25,450 + 3,200 + 16,000 + 11,140 = $55,790 Total Conversion Costs = Direct Labor + Factory Overhead Garcon: 23,000 + 57,700 = $80,700 Pepper: 39,400 + 55,790 = $95,190

Carmen Camry operates a consulting firm called Help Today, which began operations on December 1. On December 31, the company's records show the following selected accounts and amounts for the month of December. Cash $ 25,220 Dividends $ 5,850 Accounts receivable 22,250 Consulting revenue 26,890 Office supplies 5,100 Rent expense 9,410 Office equipment. 19,870 Salaries expense 5,470 Land 43,900 Telephone expense 710 Accounts payable 10,790 Miscellaneous expenses 400 Common stock 100,500 Use the above information to prepare a December 31 balance sheet for Help Today. Hint: The ending Retained Earnings account balance as of December 31 is $5,050.

HELP TODAY Balance Sheet As of December 31 Assets: Liabilities Cash $ 25,220 Accounts Payable $ 10,790 Accounts Receivable 22,250 Total Liabilities 10,790 Office Supplies 5,100 Equity Office Equipment 19,870 Common Stock 100,500 Land 43,900 Retained Earnings 5,050 Total Equity 105,550 Total Assets $ 116,340 TotalEquity&Liabilities$116,340 Retained Earnings: NI - Dividends RE = 10,900 - 5,850 RE = 5,050

Carmen Camry operates a consulting firm called Help Today, which began operations on December 1. On December 31, the company's records show the following selected accounts and amounts for the month of December. Cash $ 25,220 Dividends $ 5,850 Accounts receivable 22,250 Consulting revenue 26,890 Office supplies 5,100 Rent expense 9,410 Office equipment. 19,870 Salaries expense 5,470 Land 43,900 Telephone expense 710 Accounts payable 10,790 Miscellaneous expenses 400 Common stock 100,500 Use the above information to prepare a December income statement for the business.

HELP TODAY Income Statement For Month Ended December 31 Revenues: Consulting revenue $ 26,890 Total Revenue $ 26,890 Expenses: Rent expense $ 9,410 Salaries expense 5,470 Telephone expense 710 Miscellaneous expense 400 Total Expenses $ 15,990 Net Income $ 10,900

Carmen Camry operates a consulting firm called Help Today, which began operations on December 1. On December 31, the company's records show the following selected accounts and amounts for the month of December. Cash $ 25,220 Dividends $ 5,850 Accounts receivable 22,250 Consulting revenue 26,890 Office supplies 5,100 Rent expense 9,410 Office equipment. 19,870 Salaries expense 5,470 Land 43,900 Telephone expense 710 Accounts payable 10,790 Miscellaneous expenses 400 Common stock 100,500 Use the above information to prepare a December statement of retained earnings for Help Today. The Retained Earnings account balance at December 1 was $0. Hint: Net income for December is $10,900.

HELP TODAY Statement of Retained Earnings For Month Ended December 31 Retained earnings, December 1 $ 0 Add: Net Income 10,900 10,900 Less: Dividends 5,850 Retained earnings, December 31 $ 5,050

#5 Part A) On January 1, Lumia Company's liabilities are $78,000 and its equity is $58,000. On January 3, Lumia purchases and installs solar panel assets costing $28,000. For the panels, Lumia pays $13,000 cash and promises to pay the remaining $15,000 in six months. What is the total of Lumia's assets after the solar panel purchase? Assets = Liabilities + Equity Jan 1 = $78,000 + $58,000 Change Jan 3

Jan 1: Assets = 78,000 + 58,000 Assets = $136,000 A Change: Asset Purchase - Cash Paid 28,000 - 13,000 = $15,000 L Change: Accounts Payable = $15,000 Jan 3: Total Assets = 136,000 + 15,000 = $151,000 Total Liabilities = 78,000 + 15,000 = $93,000 Total Equity = 58,000 + 0 = $58,000 ANSWER: Assets = Liabilities + Equity Jan 1 $136,000 = $78,000 + $58,000 Change $15,000 = $15,000 + $0 Jan 3 $151,000 = $93,000 + $58,000

#5 Part B) On March 1, ABX Company's assets are $118,000 and its liabilities are $48,000. On March 5, ABX is fined $24,000 for failing emission standards. ABX immediately pays the fine in cash. After the fine is paid, what is the amount of equity for ABX? Assets = Liabilities + Equity March 1 $118,000 = $48,000 + Change March 5

March 1: Equity = 118,000 - 48,000 Equity = $70,000 Change: Fine Cash(A) = -$24,000 (given) Fine Expense(Equity) = -$24,000 (given) March 5: Total Assets = 118,000 - 24,000 = $94,000 Total Liabilities = 48,000 + 0 = $48,000 Total Equity = 70,000 - 24,000 = $46,000 ANSWER: Assets = Liabilities + Equity March 1 $118,000 = $48,000 + $70,000 Change ($24,000) = $0 + ($24,000) March 5 $94,000 = $48,000 + $46,000

#7 Home Demo reported the following results: Sales $95 billion Net Income $12 billion Avg Total Assets $80 billion Part a) Compute Home Demo's return on assets.

Numerator: Denominator: (Net Income) / (Avg Total Assets) = Return on Assets $12 billion / $80 billion = 15%

The following chart shows how costs flow through a business as a product is manufactured. All boxes in the chart show cost amounts. Compute the cost amounts in the empty boxes. PART 1: MATERIALS ACTIVITY Raw Materials Purchases ($570,000) | Raw Materials Inventory Raw Materials Available Raw Materials Inventory Beginning ($155,000) > For Use In Production > Ending ($194,000) (???) | Product. Act. (pt.2)Direct Materials Used in Production (???)

Raw Materials Available For Use In Production = Beginning Raw Materials Inventory + Raw Materials Purchases Raw Materials Available In Production = 155,000 + 570,000 Raw Materials Available For Use In Production = $725,000 Direct Materials Used in Production = Raw Materials Available for use in Production + Ending Raw Materials Inventory Direct Materials Used in Production = 725,000 - 194,000 Direct Materials Used in Production = $531,000

Garcia company reports beginning raw materials inventory of $860 and ending raw materials inventory of $722. If the company purchased $3,437 of raw materials during the month, what is the amount of materials used during the month? Note: Assume all raw materials were used as direct materials. Raw Materials Used:

Raw Materials Used = beginning raw materials inventory + purchases of raw materials - ending raw materials inventory Raw Materials Used = 860 + 3,437 - 722 Raw Materials Used during the month = $3,575

For each of the following separate situations, determine the amount of expense each company should recognize in December (using accrual basis accounting). (a) Chipotle has monthly wages expense of $6,200 that has been incurred but not paid as of December 31. (b) United Airlines purchases a 24-month insurance policy for $93,000 on December 1 for immediate coverage. (c) On December 15, Pfizer prepays $50,000 for hotel rooms for its January sales meeting.

SITUATION EXPENSED RECOGNIZED IN DECEMBER (a) Wages Expense Incurred but not paid $6,200 (b) Purchases a 24-month insurance policy $3,875 (c) Prepays for hotel rooms for its annual sales meeting $ 0 Reasoning: b: Insurance expense for 24 months is $93,000, Insurance expense for 1 month = 93,000 * (1/24) = $3,875 c: Since $50,000 rent is for January, It will not be shown as an expense for December. = $0

Determine the missing amount for each separate situation involving manufacturing cost flows. (1) (2) (3) Direct materials used ? $ 150,480 $ 33,890 Direct Labor used 75,000 ? 45,720 Factory overhead 122,000 32,840 60,275 ------------------------------------------------------- Total manufacturing costs 243,500 238,700 ? Work in process inv. BEG ? 56,920 8,245 ------------------------------------------------------ Total cost of work in process 289,325 ? ? Work in process inv. END ? 22,545 11,250 ------------------------------------------------------ Cost of goods manufactured $265,420

Situation (1): Direct Materials Used = Total manufacturing costs - Factory overhead - Direct labor used Direct Materials Used = 243,500 - 122,000 - 75,000 Direct Materials Used = $46,500 Work in Process Inv. BEG = Total cost of work in process - Total manufacturing costs Work in Process Inv. BEG = 289,420 - 243,500 Work in Process Inv. BEG = $45,825 Work in Process Inv. END = Total cost of work in process - Cost of goods Manufactured Work in Process Inv. END = 289,325 - 265,420 Work in Process Inv. END = $23,905

PART 2: Situation (2)

Situation (2): Direct Labor Used = Total manufacturing costs - Factory overhead - Direct materials used Direct Labor Used = 238,700 - 32,000 - 105,480 Direct Labor Used = $55,380 Total cost of work in process = Total manufacturing costs + Work in process inv. BEG Total cost of work in process = 238,700 + 56,920 Total cost of work in process = $295,620 Cost of Goods Manufactured = Total manufacturing costs - Work in process inv. END Cost of Goods Manufactured = 238,700 - 22,545 Cost of Goods Manufactured = $273,075

PART 3: Situation (3)

Situation (3): Total Manufacturing Costs = Direct Materials Used + Direct labor used + Factory overhead Total Manufacturing Costs = 33,890 + 45,720 + 60,275 Total Manufacturing Costs = $139,885 Total cost of work in process = Total manufacturing costs + Work in process inv. BEG Total cost of work in process = 139,885 + 8,245 Total cost of work in process = $148,130 Cost of Goods Manufactured = Total manufacturing costs - Work in process inv. END Cost of Goods Manufactured = 139,885 - 11,250 Cost of Goods Manufactured = $136,880

Use the following data to compute total factory overhead costs for the month: Sales commissions $ 12,000 Direct labor 40,800 Indirect materials 16,400 Factory utilities 10,200 Indirect labor 14,700 Direct materials 41,700 Corporate office salaries 43,700 Depreciation—factory equipment 8,700 Multiple Choice: a) $144,500 b) $132,500 c) $50,000 d) $90,800 e) $55,700

Total Factory Overhead Cost = indirect material + factory utilities + indirect labor + depreciation-factory equipment Total Factory Overhead Cost = 16,400 + 10,200 + 14,700 + 8,700 Total Factory Overhead Cost = $50,000 (c)

PART 2: PRODUCTION ACTIVITY Direct Materials Used in Production (X=$919,000) | Direct Labor used in | Factory Overhead used in Production ($388,000) ---| | |--- Production ($788,000) Total Work in Process (???) Work in process Inventory, ^ | ^ Work in Process Inventory, Beginning ($94,000) -------| | |------- Ending (???) | Sales Act. (pt.3)Cost of Goods Manufactured ($1,603,000)

Total Work in Process = Direct Material used in Production + Direct Labor used in Production + Factory Overhead used in Production + Beginning Work in Process Inventory​ Total Work in Process = 531,000 + 388,000 + 788,000 + 94,000 Total Work in Process = $1,801,000 Ending Work in Process Inventory = Total Work in Process + Cost of Goods Manufactured Ending Work in Process Inventory = 1,801,000 - 1,603,000 Ending Work in Process Inventory = $198,000

Indicate whether a debit or credit decreases the normal balance of each of the following accounts. a) Trucks b) Equipment c) Accounts Payable d) Cash e) Buildings f) Office Equipment

a) Credit b) Credit c) Debit d) Credit e) Credit f) Credit

A chart of accounts is a list of all ledger accounts and an identification number for each. Identify the following accounts as either an Asset, Liability, Equity, Revenue, or Expense account. a) Wage Expense b) Postage Expense c) Delivery Expense d) Equipment e) Utilities Expense f) Furniture g) Insurance Expense h) Insurance Payable i) Interest Expense

a) Expense b) Expense c) Expense d) Asset e) Expense f) Asset g) Expense h) Liability i) Expense

Expenses Total Assets Net Income Total Liabilities DreamWorks $ 34,000 $ 70,000 $ 31,000 $ 56,000 Pixar 85,000 156,000 45,000 148,200 Universal 18,000 80,000 6,200 24,840 a. Compute the debt ratio for each of the three companies. b. Which company has the most risk from financial leverage?

a. Debt Ratio = Total Liabilities/ Total Assets DreamWorks: 56,000 / 70,000 DreamWorks: 0.8 Pixar: 148,000 / 156,000 Pixar: 0.95 Universal: 24,840 / 80,000 Universal: 0.31 b. Pixar has the most risk from financial leverage