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Answer the following questions. (Hint: Use the accounting equation.)


a. Office Store has assets equal to $238,000 and liabilities equal to $212,000 at year-end. What is the total
equity for Office Store at year-end?
Assets
$

238,000

Liabilities
$

212,000

Equity
$

26,000

b. At the beginning of the year, Addison Companys assets are $274,000 and its equity is $205,500. During
the year, assets increase $80,000 and liabilities increase $53,000. What is the equity at the end of the
year?
Assets
Beginning

Change
Ending

274,000

80,000

354,000

Liabilities
$

68,500

53,000

121,500

Equity
$

205,500
27,000

232,500

c. At the beginning of the year, Quaker Companys liabilities equal $75,000. During the year, assets
increase by $60,000, and at year-end assets equal $190,000. Liabilities decrease $12,000 during the
year. What are the beginning and ending amounts of equity?
Assets
Beginning

Change
Ending

130,000

60,000

190,000

References
Worksheet

Learning Objective:
01-A1 Define and
interpret the
accounting equation
and each of its
components.

Liabilities
$
$

75,000

(12,000)

63,000

Equity
$

55,000
72,000

127,000

Exercise 1-8
Using the
accounting
equation LO A1,
P1

Learning Objective:
01-P1 Analyze
business transactions
using the accounting
equation.

Answer the following questions. (Hint: Use the accounting equation.)


a. Office Store has assets equal to $238,000 and liabilities equal to $212,000 at year-end. What is the total
equity for Office Store at year-end?
Assets
$

238,000

Liabilities
$

212,000

Equity
$

26,000

b. At the beginning of the year, Addison Companys assets are $274,000 and its equity is $205,500. During
the year, assets increase $80,000 and liabilities increase $53,000. What is the equity at the end of the
year?
Assets
Beginning

Change
Ending

274,000

80,000

354,000

Liabilities
$

68,500

53,000

121,500

Equity
$

205,500
27,000

232,500

c. At the beginning of the year, Quaker Companys liabilities equal $75,000. During the year, assets
increase by $60,000, and at year-end assets equal $190,000. Liabilities decrease $12,000 during the
year. What are the beginning and ending amounts of equity?
Assets
Beginning

Change
Ending

130,000

60,000

190,000

Liabilities
$

75,000

(12,000)

63,000

No further explanation details are available for this problem.

Equity
$

55,000
72,000

127,000

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On October 1, Keisha King organized Real Answers, a new consulting firm; On October 3, the owner
contributed $65,915 cash. On October 31, the company's records show the following items and amounts.

Cash
Accounts receivable
Office supplies
Land
Office equipment
Accounts payable
Common stock

$ 13,000
13,000
27,625
46,000
18,000
48,750
65,915

Cash dividends
Consulting fees earned
Rent expense
Salaries expense
Telephone expense
Miscellaneous expenses

2,000
15,000
2,700
6,000
760
580

Using the above information prepare an October income statement for the business.
REAL ANSWERS
Income Statement
For Month Ended October 31
Revenues
Consulting fees earned

15,000

Total revenues

15,000

Expenses
Rent expense

2,700

Salaries expense

6,000

Telephone expense

760

Miscellaneous expenses

580

Total expenses

10,040
$

Net income

4,960

rev: 01_13_2015_QC_CS-3718, 01_19_2015_QC_CS-3718

References
Expanded table

Exercise 1-14
Preparing an income
statement LO P2

Learning Objective: 01-P2 Identify and


prepare basic financial statements and
explain how they interrelate.

On October 1, Keisha King organized Real Answers, a new consulting firm; On October 3, the owner
contributed $65,915 cash. On October 31, the company's records show the following items and amounts.

Cash
Accounts receivable
Office supplies
Land
Office equipment
Accounts payable
Common stock

$ 13,000
13,000
27,625
46,000
18,000
48,750
65,915

Cash dividends
Consulting fees earned
Rent expense
Salaries expense
Telephone expense
Miscellaneous expenses

Using the above information prepare an October income statement for the business.
REAL ANSWERS
Income Statement
For Month Ended October 31
Revenues
Consulting fees earned

15,000

Total revenues

15,000

Expenses
Salaries expense

6,000

Rent expense

2,700

Telephone expense

760

Miscellaneous expenses

580

Total expenses
Net income

10,040
$

4,960

rev: 01_13_2015_QC_CS-3718, 01_19_2015_QC_CS-3718

No further explanation details are available for this problem.

2,000
15,000
2,700
6,000
760
580

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On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner
contributed $59,280 cash. On October 31, the companys records show the following items and amounts.

Cash
Accounts receivable
Office supplies
Land
Office equipment
Accounts payable
Common stock

$ 10,400
16,000
22,100
36,000
18,000
39,000
59,280

Cash dividends
Consulting fees earned
Rent expense
Salaries expense
Telephone expense
Miscellaneous expenses

2,000
18,000
3,240
7,200
760
580

Using the above information prepare an October statement of retained earnings for Real Answers

REAL ANSWERS
Statement of Retained Earnings
For Month Ended October 31
Retained earnings, October 1

Add: Net income

0
6,220
6,220

Less: Dividends

2,000

Retained earnings, October 31

4,220

References
Expanded table

Exercise 1-15
Preparing a
statement of retained
earnings LO P2

Learning Objective: 01-P2 Identify and


prepare basic financial statements and
explain how they interrelate.

On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner
contributed $59,280 cash. On October 31, the companys records show the following items and amounts.

Cash
Accounts receivable
Office supplies
Land
Office equipment
Accounts payable
Common stock

$ 10,400
16,000
22,100
36,000
18,000
39,000
59,280

Cash dividends
Consulting fees earned
Rent expense
Salaries expense
Telephone expense
Miscellaneous expenses

2,000
18,000
3,240
7,200
760
580

Using the above information prepare an October statement of retained earnings for Real Answers

REAL ANSWERS
Statement of Retained Earnings
For Month Ended October 31
Retained earnings, October 1

Add: Net income

6,220
6,220

Less: Dividends

2,000

Retained earnings, October 31

4,220

REAL ANSWERS
Income Statement
For Month Ended October 31
Revenues:
Consulting fees earned
Expenses:
Salaries expense
Rent expense
Miscellaneous expenses
Telephone expense

$ 18,000
$ 7,200
3,240
580
760

Total expenses
Net income

11,780
$

6,220

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On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner
contributed $77,473 cash. On October 31, the companys records show the following items and amounts.

Cash
Accounts receivable
Office supplies
Land
Office equipment
Accounts payable
Common stock

$ 2,250
19,000
4,781
36,000
28,000
8,438
77,473

Cash dividends
Consulting fees earned
Rent expense
Salaries expense
Telephone expense
Miscellaneous expenses

3,360
21,000
3,780
8,400
660
680

Using the above information prepare an October 31 balance sheet for Real Answers.
REAL ANSWERS
Balance Sheet
As of October 31
Assets
Cash

Liabilities
$

Office equipment

2,250

Accounts payable

8,438

28,000

Office supplies

4,781

Land

36,000

Accounts receivable

19,000

Total liabilities

8,438
Equity

Common stock

77,473

Retained earnings
Total assets

90,031

Total liabilities and equity

4,120
$

90,031

rev: 07_19_2014_QC_51515

References
Expanded table

Exercise 1-16
Preparing a balance
sheet LO P2

Learning Objective: 01-P2 Identify and


prepare basic financial statements and
explain how they interrelate.

On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner
contributed $77,473 cash. On October 31, the companys records show the following items and amounts.

Cash
Accounts receivable
Office supplies
Land
Office equipment
Accounts payable
Common stock

$ 2,250
19,000
4,781
36,000
28,000
8,438
77,473

Cash dividends
Consulting fees earned
Rent expense
Salaries expense
Telephone expense
Miscellaneous expenses

3,360
21,000
3,780
8,400
660
680

Using the above information prepare an October 31 balance sheet for Real Answers.
REAL ANSWERS
Balance Sheet
As of October 31
Assets
Cash

Liabilities
$

Accounts receivable

2,250

Accounts payable

19,000

Office supplies

4,781

Office equipment

28,000

Land

36,000

Total liabilities

8,438
Equity

Common stock

77,473

Retained earnings
$

Total assets

90,031

Total liabilities and equity

rev: 07_19_2014_QC_51515

REAL ANSWERS
Income Statement
For Month Ended October 31
Revenues:
Consulting fees earned
Expenses:
Salaries expense
Rent expense
Miscellaneous expenses
Telephone expense

$ 21,000
$ 8,400
3,780
680
660

Total expenses
Net income

8,438

13,520
$

7,480

4,120
$

90,031

REAL ANSWERS
Statement of Retained Earnings
For Month Ended October 31
Retained earnings, October 1
$
0
Add: Net income
7,480
7,480
3,360

Less: Dividends
Retained earnings, October 31

4,120

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Swiss Group reports net income of $38,000 for 2013. At the beginning of 2013, Swiss Group had $150,000
in assets. By the end of 2013, assets had grown to $200,000.
What is Swiss Group's 2013 return on assets?
Return on assets
Choose Numerator:
Net income
$

38,000

Choose Denominator:

Average total assets

175,000

Return on assets

Return on assets

21.7%

References
Worksheet

Exercise 1-18 Analysis


of return on assets LO
A2

Learning Objective: 01-A2 Compute and


interpret return on assets.

Swiss Group reports net income of $38,000 for 2013. At the beginning of 2013, Swiss Group had $150,000
in assets. By the end of 2013, assets had grown to $200,000.
What is Swiss Group's 2013 return on assets?
Return on assets
Choose Numerator:
Net income
$

38,000

Choose Denominator:

Average total assets

175,000

Return on assets

Return on assets

21.7%

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Determine the missing amount from each of the separate situations given below.
Assets

Liabilities

Equity

(a)

94,000

53,000

41,000

(b)

120,000

40,000

80,000

(c)

115,000

53,000

62,000

References
Worksheet

Exercise 1-9 Using


the accounting
equation LO A1

Learning Objective: 01-A1 Define and


interpret the accounting equation and each
of its components.

Determine the missing amount from each of the separate situations given below.
Assets

Liabilities

Equity

(a)

94,000

53,000

41,000

(b)

120,000

40,000

80,000

(c)

115,000

53,000

62,000

No further explanation details are available for this problem.

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Required:
2. Enter the amount of each transaction on individual items of the accounting equation. (Enter the
transactions in the given order. Enter reductions to account balances with a minus sign.)

Assets
Date
May

Cash
1

Accounts
Receivable

41,500

(2,200)

Office
Equipment

Liabilities

Accounts
Payable

=
1,880

1,880

Equity
Common
Stock
$

41,500

Dividends

Revenues

(720)

5,900

5,900

2,700

(2,700)

12

2,700

15

(740)

20

2,700

2,200

720

3,900

25

3,900

(3,900)

26

(1,880)

(1,880)

85

22

Expenses

3,900

740

85

28

(740)

740

30

(400)

400

30

(260)

260

31

(1,700)

27

45,360

1,880

85

41,500

1,700
$

1,700

12,500

5,145

References
Worksheet

Learning Objective: 01-C4 Explain


generally accepted accounting principles
and define and apply several accounting
principles.

Problem 1-7A Part 2

Learning Objective: 01-P1 Analyze


business transactions using the
accounting equation.

Learning Objective: 01-P2 Identify and prepare basic financial statements and
explain how they interrelate.

Required:
2. Enter the amount of each transaction on individual items of the accounting equation. (Enter the
transactions in the given order. Enter reductions to account balances with a minus sign.)

Assets
Date
May

Cash
1

Accounts
Receivable

41,500

(2,200)

Office
Equipment

Liabilities

Accounts
Payable

=
1,880

1,880

Equity
Common
Stock
$

41,500

Dividends

Revenues

(720)

5,900

5,900

2,700

(2,700)

12

15

(740)

20

2,700

22

2,700

2,200

3,900

25

3,900

(3,900)

26

(1,880)

(1,880)

85

27

Expenses

3,900

720

740

85

28

(740)

740

30

(400)

400

30

(260)

260

31

(1,700)

1,700

45,360

1,700

1,880

85

41,500

12,500

5,145