Questions -
Q1. Basic computations. The following selected balances were extracted from the accounting records of Rossi Enterprises on December 31, 20X3:
|
Accounts Payable
|
$3,200
|
Interest Expense
|
$2,500
|
|
Accounts Receivable
|
14,800
|
Land
|
18,000
|
|
Auto Expense
|
1,900
|
Loan Payable
|
40,000
|
|
Building
|
30,000
|
Tax Expense
|
3,300
|
|
Cash
|
7,400
|
Utilities Expense
|
4,100
|
|
Fee Revenue
|
56,900
|
Wage Expense
|
37,500
|
a. Determine Rossi's total assets as of December 31.
b. Determine the company's total liabilities as of December 31.
c. Compute 20X3 net income or loss.
Q2. Accounting equation; analysis of owner's equity. Sportscar Repair revealed the following financial data on January 1 and December 31 of thecurrent year.
|
Assets
|
Liabilities
|
|
January 1
|
$45,000
|
$20,000
|
|
December 31
|
49,000
|
31,000
|
a. Compute the change in owner's equity during the year by using the accounting equation.
b. Assume that there were no owner investments or withdrawals during the year. What is the probable cause of the change in owner's equityfrom part (a)?
c. Assume that there were no owner investments during the year. If the owner withdrew $17,000, determine and compute the company's netincome or net loss. Be sure to label your answer.
d. If owner investments and withdrawals amounted to $13,000 and $2,000, respectively, determine whether the company operated profitablyduring the year. Show appropriate calculations.
Q3. Financial statement relationships. The following information appeared on the financial statements of the Altoona Repair Company:
|
Income statement
|
|
Total expenses
|
$ 64,900
|
|
Net income
|
7,200
|
|
Statement of owner's equity
|
|
Beginning owner's equity balance
|
$ 113,200
|
|
Owner withdrawals
|
61,300
|
|
Ending owner's equity balance
|
70,800
|
|
Balance sheet
|
|
Total liabilities
|
$ 97,000
|
By picturing the content of and the interrelationships among the financial statements, determine the following:
a. Total revenues for the year
b. Total owner investments
c. Total assets
Q4. Statement preparation. The following information is taken from the accounting records of Grimball Cardiology at the close of business on December 31, 20X1.
|
Accounts Payable
|
$14,700
|
Surgery Revenue
|
$175,000
|
|
Surgical Expenses
|
80,000
|
Cash
|
60,000
|
|
Surgical Equipment
|
37,000
|
Office Equipment
|
118,000
|
|
Salaries Expense
|
30,000
|
Rent Expense
|
15,000
|
|
Accounts Receivable
|
135,000
|
Loan Payable
|
10,300
|
|
Utilities Expense
|
5,000
|
|
|
All equipment was acquired just prior to year-end. Conversations with the practice's bookkeeper revealed the following data:
|
Rose Grimball, capital (January 1, 20X1)
|
$300,000
|
|
19X1 owner investments
|
2,000
|
|
19X1 owner withdrawals
|
22,000
|
Instructions -
a. Prepare the income statement for Grimball Cardiology in good form.
b. Prepare a statement of owner's equity in good form.
c. Prepare Grimball's balance sheet in good form.
Q5. Financial statement preparation. On October 1, 20X6, Susan Thompson opened Thompson Decorating Services, a sole proprietorship. Susanbegan operations with $50,000 cash, 60% of which was acquired via an owner investment. The remaining amount was obtained from a bank loan. A review of the accounting records for October revealed the following:
- Asset purchases: Van, $16,000; office equipment, $4,000; and decorator (household) furnishings, $17,000. These amounts were paid incash except for $2,100 that is still owed for the furnishings acquisition.
- Services performed: Total billings on account, $18,300. Clients have remitted a total of $14,200 in settlement of their balances due.
- Expenses incurred: Salaries, $8,700; advertising, $2,500; taxes, $150; postage, $1,800; utilities, $100; interest, $450; and miscellaneous,$200. These amounts had been paid by month-end with the exception of $700 of the advertising expenditures.
Further information revealed that Thompson withdrew $5,500 of cash from the business on October 31.
Instructions
Prepare an income statement for the month ending October 31, 20X6.
Prepare a statement of owner's equity for the month ending October 31, 20X6.
Prepare a balance sheet as of October 31, 20X6.
Q6. Analysis of prepaid account balance. The following information relates to Action Sign Company for 20X2:
|
Insurance expense
|
$4,350
|
|
Prepaid insurance, December 31, 20X2
|
1,900
|
|
Cash outlays for insurance during 20X2
|
6,200
|
Compute the balance in the Prepaid Insurance account on January 1, 20X2.
Q7. Accounting for prepaid expenses and unearned revenues. Hawaii-Blue began business on January 1 of the current year and offers deep-seafishing trips to tourists. Tourists pay $125 in advance for an all-day outing off the coast of Maui. The company collected monies during Januaryfor 210 outings, with 30 of the tourists not planning to take their trips until early February.
Hawaii-Blue rents its fishing boat from Pacific Yacht Supply. An agreement was signed at the beginning of the year, and $72,000 was paid for therights to use the boat for 2 full years.
Required - Prepare journal entries to record (1) the collection of monies from tourists and (2) the revenue generated during January.
a. Calculate Hawaii-Blue's total obligation to tourists at the end of January. On what financial statement and in which section would this amountappear?
b. Prepare journal entries to record (1) the payment to Pacific Yacht Supply and (2) the subsequent adjustment on January 31.
c. On what financial statement would Hawaii-Blue's January boat rental cost appear?