ACCOUNTING

ACCOUNTING

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ACCT&201 Week 2 Homework:

 

1. Select the financial statement that matches with the description (Related transactions)

	Related transactions Financial Statements a. Change in owners’ claims to resources b. Profitability of the company c. Change in cash as a result of operating, investing, and financing activities d. Resources equal creditors’ and owners’ claims to those resources

 

2. At the beginning of the year (January 1), Buffalo Drilling has $11,000 of common stock outstanding and retained earnings of $8,200. During the year, Buffalo reports net income of $8,500 and pays dividends of $3,200. In addition, Buffalo issues additional common stock for $8,000.

Required:

Prepare the statement of stockholders’ equity at the end of the year (December 31).

 

	BUFFALO DRILLING Statement of Stockholders’ Equity Common Stock Retained Earnings Total Stockholders’ Equity Beginning balance Ending balance

 

3. Wolfpack Construction has the following account balances at the end of the year.

Accounts	Balances
Equipment	$	26,000
Accounts payable		3,000
Salaries expense		33,000
Common stock		11,000
Land		18,000
Notes payable		20,000
Service revenue		39,000
Cash		6,000
Retained earnings		?

 

Required:

Use only the appropriate accounts to prepare a balance sheet.

	WOLFPACK CONSTRUCTION Balance Sheet Assets Liabilities Total liabilities 0 Stockholders’ Equity Total stockholders’ equity 0 Total assets $0 Total liabilities and stockholders’ equity $0

4. Longhorn Corporation provides low-cost food delivery services to senior citizens. At the end of the year, the company reports the following amounts:

Cash	$	1,200		Service revenue	$	67,700
Equipment		29,000		Cost of goods sold (food expense)		53,400
Accounts payable		4,400		Buildings		40,000
Delivery expense		2,600		Supplies		3,400
Salaries expense		5,500		Salaries payable		800

 

In addition, the company had common stock of $40,000 at the beginning of the year and issued an additional $4,000 during the year. The company also had retained earnings of $18,200 at the beginning of the year.

Show your work

1. 
   Prepare the income statement for Longhorn Corporation.

 

 

 

 

	LONGHORN CORPORATION Income Statement Expenses: Total expenses 0

 

2. Prepare the statement of stockholders’ equity for Longhorn Corporation.

	LONGHORN CORPORATION Statement of Stockholders’ Equity Common Stock Retained Earnings Total Stockholders’ Equity Beginning balance Ending balance

 

5. Below are incomplete financial statements for Bulldog, Inc.

   Required:

Calculate the missing amounts.

	BULLDOG, INC. Income Statement Revenues $39,000 Expenses: Salaries Advertising 6,000 Utilities 4,000 Net income

 

	BULLDOG, INC. Statement of Stockholders’ Equity Common Stock Retained Earnings Total Stockholders’ Equity Beginning balance $10,000 $7,000 $17,000 Issuances 1,100 1,100 Add: Net income Less: Dividends (3,000) (3,000) Ending balance $11,100 $10,000 $21,100

 

 

 

	BULLDOG, INC. Balance Sheet Assets Liabilities Cash $4,000 Accounts payable Write in here Accounts receivable 3,000 Stockholders’ Equity Supplies 9,000 Common stock Write in here Equipment 10,000 Retained earnings Write in here Total assets $26,000 Total liabilities and stockholders’ equity Write answer in here

 

6. Cornhusker Company provides the following information at the end of 2018.

Cash remaining	$	4,800
Rent expense for the year		7,000
Land that has been purchased		21,000
Retained earnings		12,400
Utility expense for the year		4,900
Accounts receivable from customers		7,200
Service revenue earned during the year		37,000
Salary expense for the year		13,300
Accounts payable to suppliers		2,200
Dividends paid to shareholders during the year		3,200
Common stock that has been issued prior to 2018		16,000
Salaries owed at the end of the year		2,400
Insurance expense for the year		3,500

 

No common stock is issued during 2018, and the balance of retained earnings at the beginning of 2018 equals $7,300.

 

Required:

1. Prepare the income statement for Cornhusker Company on December 31, 2018.

 

	CORNHUSKER COMPANY Income Statement For the year ended December 31, 2018 Expenses: Total expenses

 

2. Prepare the statement of stockholders’ equity for Cornhusker Company on December 31, 2018.

	CORNHUSKER COMPANY Statement of Stockholders’ Equity For the year ended December 31, 2018 Common Stock Retained Earnings Total Stockholders’ Equity Beginning balance Ending balance

 

3. Prepare the balance sheet for Cornhusker Company on December 31, 2018.

	CORNHUSKER COMPANY Balance Sheet December 31, 2018 Assets Liabilities Total liabilities Stockholders’ Equity Total stockholders’ equity Total assets Total liabilities and stockholders’ equity

 

7. The four underlying assumptions of generally accepted accounting principles are economic entity, monetary unit, periodicity, and going concern. Consider the four independent situations below.
8. Jumbo’s is a local restaurant. Due to a bad shipment of potatoes, several of the company’s customers become ill, and the company receives considerable bad publicity. Revenues are way down, several of its bills are past due, and the company is making plans to close the restaurant at the end of the month. The company continues to report its assets in the balance sheet at historical (original) cost.
9. Gorloks Tax Services is owned and operated by Sam Martin. The company has the usual business assets: land, building, cash, equipment, and supplies. In addition, Sam decides to buy a boat for him and his family to enjoy on the weekends. Sam includes the boat as an asset on the balance sheet of Gorloks Tax Services.
10. Claim Jumpers International, a U.S.-based company, has operations in the United States and in Europe. For the current year, the company purchased two trucks in the United States for $10,000 and three trucks in Europe for €20,000 (euros). Because of the differences in currencies, the company reported “Five Trucks” with no corresponding amount in the balance sheet.
11. Cobbers Etc. sells specialty music equipment ranging from African bongo drums to grand pianos. Because of the fluctuating nature of the business, management decides to publish financial statements only when a substantial amount of activity has taken place. Its last set of financial statements covered a period of 14 months, and the set of financial statements before that covered a period of 18 months.

Required:

For each situation, select which of the underlying assumptions of GAAP is violated.

	Situation Assumption Violated 1. 2. 3. 4.

 

 

Chap 2.

 

1. Suppose a local company has the following balance sheet accounts. Calculate the missing amounts assuming the business has total assets of $37,500.

 

	Accounts Balances Land $9,000 Equipment Salaries Payable 4,300 Notes Payable Supplies 2,100 Cash 7,200 Stockholders’ Equity 13,500 Accounts Payable 1,700 Prepaid Rent 3,200

 

2. Boilermaker House Painting Company incurs the following transactions for September.

 

Required:

For each transaction, describe the dual effect on the accounting equation. For example, for the first transaction, (1) assets increase and (2) stockholders’ equity increases.
 

Transactions Dual Effect 1. Paint houses in the current month for $15,000 on account. Assets increase and stockholders’ equity increases. 2. Purchase painting equipment for $16,000 cash. 3. Purchase office supplies on account for $2,500. 4. Pay employee salaries of $3,200 for the current month. 5. Purchase advertising to appear in the current month, $1,200. 6. Pay office rent of $4,400 for the current month. 7. Receive $10,000 from customers in (1) above. 8. Receive cash of $5,000 in advance from a customer who plans to have his house painted in the following month.