Problems:SetA 43 J+ Paid £2,900 cash for accounts payable due 2, Collected £1,300 of accounts receivable 3 Purchased addiional equipment for £3,100, paying €800 in cash and the balance on account. * Gecomnized revenue of £7,300, of which £2,500 is collected in cash and the balance is due in October. Declared and paid a £400 cash dividend. (@) Prepare a tabular analysis of the September felons ots Deeinning with August 31. (@) Ending cash £15,900 (©) Brepare an income statement for Septenben Sepa beeMTIRES statement for (b) Net income £4,330 , Total assets £29,800 PUBA On May 1, 2017, Park Flying School Led, a ‘company that provides fying lessons, Prepare income statement, and Habit 29 investment of 443,000 cash in the hecioee” Following are the assets ‘retained earnings and liabilities of the company on May'31, 2017, ‘and the revenues and expenses for the satemony, oa atemeng ‘month of May (all amounts in thousands), Of financial position. (Loa) Cash W 4500 Notes Payable 28,000 Accounts Receivable "7.429 Rent Expense 1,000 Equipment 64,000 Maintenance and Service Revenue 6,800 Repairs Expense 400 Advertising Expense 500 Gasoline Expense 2,500 Accounts Payable 1,400 Utilities Expense 400 Ho additional investments were made in May, but the ‘Company paid dividends of 480,000 during the month, (2) Net income w2,000 : Total assets 175,920 (©) Prepate an income statement anda etaincy Sonne (uatement for May assuming the (b) Ne mens 1,400 > PLA Mat Stiner started « delivery service, Stiner Heliveries Lid, on Jane 1, 2017, The ae rncacions following transactions occurred during the oon Jane, and prepare nancial statements. June 1 Shareholders invested £10,000 cash in the business in exchange for ordinary (06,7,8) shares, 2 Purchased a used van for deliveries for £14,000, ‘Matt paid £2,000 cash and planed a note payable for the remaining balance 3 Paid £500 for office rent for the month 5 Performed services worth £4,800 on account Declared and paid £300 in cash dividenhe 12. Purchased supplies for £150 on accoune 1p Recelved a cash payznent of £1.250 for services performed on June 5, 34, Parchased gasoline for £100 on aceaune, 39 Received a cash payment of £1,500 for services performed. 32 Made a cash payment of £500 on the now, payable, 26 Paid £250 for utilities, 30 Raid forthe gasoline purchased on account on June 17, 30 Paid £1,000 for employee salaries44 Accounting in Action Instructions : (a) Show the effects of the previous transactions on the accounting equation using the following format. Assets - __usbies + Equity ae ‘Accounis _ Notes “Accounts, Shave Retained Earnings Pat Sash + ecehable + Supplies + Bauipment = pasitie + Payable Captal + Ret tap a 7 Include margin explanations for any changes in the Retained Earnings account in your analysis, wot lncarne dan (&) Prepare an income statement for the month of June (©) Prepare a statement of financial position at June 30, 2017 Determine financial P1-5A Financial statement information about four different companies is as follows. statement amounts and re retained earnings pink i‘ Crosby Stills Nash, Young Company Company Company Company January 1, 2017 Eee ee ‘Assets HK$ 900,000 HKS!,100,000 7) HK$1,500,000 Liabilities 650,000 @ HK$ 750,000 © Equity @ 500,000 430,000 1,000,000 December 31, 2017 Assets tb) 1,370,000 2,000,000 OO) Liabilities 550,000 750,000, & 800,000 Equity 490,000 © 1,300,000 1,400,000 Equity changes in year Additional investment © 150,000 100,000 150,000 Dividends 100,00 oO: 140,000 100,000 Total revenues 3,500,000 4,200,000 @) 5,000,000 Total expenses 3,300,000 3,850,000 3,420,000 0 Instructions (a) Determine the missing amounts. (Hint: For example, to solve for (a), Assets ~ Liabili- ties = Equity = HK$250,000.) (b) Prepare the retained earings statement for Stills Company. Assume beginning retained earnings was HK§200,000. (©) -——- Write a memorandum explaining the sequence for preparing financial state- ments and the interrelationship of the retained earnings statement to the income statement and statement of financial position, Hi PROBLEMS: SET B Arabjee transactions and P41-4B On April 1, Holly Dahl established Holiday Travel Agency Ltd, The following trans- ‘compute 2 income. actions were completed during the month. 5 |. Sharcholders invested €12,000 cash in the business in exchange for ordinary shares. Paid €400 cash for April office rent. Purchased office equipment for €5,500 cash. Incurred €300 of advertising costs in a local newspaper, on account. Paid €600 cash for office supplies. Performed services worth €8,500: €2,000 cash is received from customers, and the = balance of €6,500 is billed to customers on account. 7. Declared and paid a €200 cash dividend. 8, Paid the local newspaper amount due in transaction (4), 9. Paid employees’ salaries €2,200. 10. Received €5,700 in cash from customers billed previously in transaction (6).Exercises 2. Dekalb Company AG includes in its accounting records only transaction data that can be expressed in terms of money. 3. Omar Shariff, president of Omar's Oasis SISC, records his personal living costs as expenses of the Oasis, Instructions For cach of the three situations, state if the accounting method used is correct or incor rect. If correct, identify which standard or assumption supports the method used. If incon. rect, identify which standard or assumption has been violated, E1-5 Robinson Cleaners AG has the following statement of financial position items. Classify accounts as asses, liabilities, and equity, Accounts payable Accounts receivable (o6) Cash Notes payable Equipment Salaries and wages payable Supplies Share capital—ordinary Instructions Classify each item as an asset, liability, or equity E1-6 Selected transactions for Spring Cruises ASA are listed below. Analyze the effect of Sold ordinary shares for cash to start busi ‘ansactlons, Paid monthly rent, (07) 1 2. 3. Purchased equipment on account, 4. Billed customers for services performed, 5. Paid dividends, 6. Received cash from customers billed in (4). 7, Incurred advertising expense on account. 8, Purchased additional equipment for cash, 9. Received cash from customers when service was performed. Instructions List the numbers of the above transactions and describe the effect of each transaction on assets, liabilities, and equity. For example, the first answer is (1) Increase in assets and increase in equity. HAZ Collins Computer Timeshare Company SA entered into the following transactions Analyze she fect of during May 2017. 1. Purchased computer terminals for R§20,000 from Digital Equipment on account, pitiahembonee Paid R$3,000 cash for May rent on storage space. on Received R§14,000 cash from customers for contracts billed in April Performed computer services for Schmidt Construction Company for R$2,400 cash, Paid Central States Power Co, R$11,000 cash for energy usage in May, Shareholders invested an additional R§32,000 in the business, Paid Digital Equipment for the terminals purchased in (1) above. Incurred advertising expensé for May of R$1,100 on account. Instructions Indicate with the appropriate letter whether each of the transactions above results in: (a) An increase in assets and a decrease in assets (b) An increase in assets and an increase in equity, (©) An increase in assets and an increase in liabilities (a) A decrease in assets and a decrease in equity. (©) A decrease in assets and a decrease in liabilities, (© Anincrease in liabilities and a decrease in equity. (®) An increase in equity and a decrease in liabilities. £28 An analysis of the transactions made by J. L. Kang & Co. Ltd, public accounting Analyeeransations and firm, for the month of August is shown on the next page. Each increase and decrease in commune meas equity is explained. ~ (07,8)SEER EEE EEE EEE EEE EE EEE EEE CeCe eee eee 40 4 Accounting in Action cl eH eet Liabilities + __ uit Cash + ACCUM Ssorlies + Equipment - A°COUNIS , Share, Retained Earnings Receivable Payable * Capital * “Rex = Exp = “DRC 1 $615,000 £15,000 sted Shares 2 =2,000 +65,000 +£3.00 3 750 +750 4. +4,600 424,500 +£9,100 Service Revenue 5. 1,500 =1,500 6 ~2/000 £2,000 1 M650 #650 Rent Expense 8 4450-450, 9. -3,900 -3.500 Sal Wages Expense 10. +500 500 Usilities Expense Instructions (@) wes Describe each transaction that occurred for the month, (©) Determine how much equity increased for the mont, ©) Compute the amount of net income for the month, Prepare financial ston E19 An analysis of transaction for. L. Kang & Co, Lid, was presente in B1-8, Assume 08) “ that August is the companys first month of business, Instructions Prepare an income statement and a retained earnings statement for August and a state ‘ment of financial position at August 31, 2017. Determine net income E1-10 Kimmy A.$. had the following assets and liabilities on the dates indicated, ton December 31 Total Assets Total Liabilities 2016 400,000 266,000 2017 +480,000 £300,000 2018 590,00 400,000 Kimmy began business on January 1, 2016, wth an investment of 100,000 from share- holders Instructions Froman analysis ofthe change in equity during th year, compute the net income (or ess) for: (a) 2016, assuming Kimmy paid 15,000 in dividends for the year, (®) 2017, assuming shareholders made an additional investment of €50,000 and Kimmy paid no dividends in 2017, (©) 2018, assuming shareholders made an additional investment of 615,000 and Kimmy paid dividends of 30,000 in 2018, Avalos financial E1-11 wo items are omitted from each ofthe following summaries of statement of finane Statements items, cial position and income statemant data for two companies forthe year 2017, Steven Craig i (wos) Ltd. and Georgia Enterprises Ltd { Steven _Georgla ; Graig Enterprises : Beginning of year: | ‘Total assets £97,000 £129,000 i Total liabilities 63,000 © | Total equity @ 75,000 | End of year: ‘otal assets 160,000 180,000 ‘otal liabilities 100,000 50,000 Total equity 60,000 130,000, ‘Changes during year in equity ‘Additional investment @ 25,000 Dividends 44,000 @ . Total revenues 215,000 100,000 Total expenses 155,000 35,000PROBLEM 1-44 ooe'ses ooe'ses OOS - OENTS - DOGS + OWOTS + OTS + OETTD = OUTS + OES 6) oT - 0oe - ose - one's + O01: + Ost + OUsLL = G00 «+ Ost wr ooe- - 0s8- ~ o0c'9 + o0o' + osc + o0sHH = OOO + Os + 0 oe oor - 008 = o0e'9 + ooo + ose + OnSTHE = 000'R on + o-— ove = 008 = one's + Ov'L + sz + O00 = 000 ost @ wer + oor - 009- - 008 + 00' + 082 © + 00 = OOOH + Ost © oo ore O0e- - 006 - 08 © + 00'L «+ OSE «+ O00'ZE © = 000'R on + oe - 00s - ove + nv' «+ «Ost + 00% = 000K on + arse osrs+ or = 00s = o08'» + 00°01 + 0007 = 000'%F + (0) Goes ooc- 008» © + 00001 + 000% = 00041 + @ pars + 0s- 000'01 + 000% = 000 © oor s- oo0'or + 00% = 00’ DOOTS+ OTHE DOOOTS+ oo0'0rs + aune ‘SpUAPIAIG ~ Sesuadra ~“SenUaADY 4 Teydeo + aiqehed + e\qekeg = woudinby + sayddng + aiqenjeooy + yseD suie3 POUT seus, nba Syunoosy _S230N Sone . ‘savaATa0 NANUS: syunosoy Bessy aed @)(b) STINER DELIVERIES Income Statement For the Month Ended June 30, 2017 Revenues Service revenue ($4,800 + $1,500) w.esssersesseeee $6,300 Expenses Salaries and wages expense .. $1,000 Rent expense... 500 Utilities expense .. 250 Gasoline expense 100 Total expenses 1,850 Net income. $4,450 (c) STINER DELIVERIES Statement of Financial Position June 30, 2017 Assets Equipment $14,000 Supplies... 150 Accounts receivable 3,550 Cash 8,100 Total assets. $25,800 Equity and Liabilities Equity Share capital—ordinary ... $10,000 Retained earnings ($4,450 — $300). 4,150 Total equity... $14,150 Liabilities Total equity and liabilities.. EXERCISE 1-6 4. Increase in assets and increase in equity. 2. Decrease in assets and decrease in equity. 3. Increase in assets and increase in liabilities. 4. Increase in assets and increase in equity. 5. Decrease in assets and decrease in equity. 6. Increase in assets and decrease in assets. 7. Increase in liabilities and decrease in equity. 8. Increase in assets and decrease in assets. 9. Increase in assets and increase in equity.EXERCISE 1-9 J.L. KANG & CO. Income Statement For the Month Ended August 31, 2017 Revenues Service revenue... Expenses Salaries and wages expense $3,900 Rent expense... 650 Utilities expens: __500 Total expenses. Net income ... J. L. KANG & CO. Retained Earnings Statement For the Month Ended August 31, 2017 Retained earnings, August 1 Add: Net income... Less: Dividends... Retained earnings, August 31 J.L. KANG & CO. Statement of Financial Position August 31, 2017 Assets Equipment.. Supplies.. Accounts receivable Cash... Total assets Equity and Liabilities Equity Share capital—ordinary $15,000 Retained earnings... 7 2,050 Liabilities Accounts payable Total equity and liabilities $9,100 $ 5,000 750 4,050 9,250 $17,050 2,000 $19,050