Financial Accounting_Assignment#1

Submitted to: Dr. Sherif Ismail

Maher Zakaria Al-Kotory 12/2/17 Reg. No. 17124339

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Assignment # 1 _ Financial Accounting

Case study 1

Show the effects on the accounting equation??

Solution:

Basic CASE STUDY 1 ELPER CONSULTING SERVICES

Analysis Transaction 1. Issued 5000 shares of capital stock for $50,000

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
Equation ------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

Analysis 1 $50,000 +$50,000 Issued stocks

$50,000 = $50,000

Financial Accounting_Assignment#1 Maher Zakaria Al-Kotory Reg. No. 17124339

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 1 ELPER CONSULTING SERVICES

Analysis Transaction 2. Paid $400 office rent.

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends
Equation
Analysis
1 $50,000 +$50,000 Issued stocks

2 -$400 -$400 Rent

$49,600 = $49,600

Basic CASE STUDY 1 ELPER CONSULTING SERVICES

Analysis Transaction 3. Purchased supplies $200 on account

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 $50,000 +$50,000 Issued stocks

Equation 2 -$400 -$400 Rent
Analysis Purchas
ed
3 +$200 +$200
supplie
s

$49,600 = $49,600

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 1 ELPER CONSULTING SERVICES

Analysis Transaction 4. Purchased Equipment $15,000 Cash

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 $50,000 +$50,000 Issued stocks

Equation
Analysis 2 -$400 -$400 Rent

3 +$200 +$200 Purchased supplies

4 -15,000 +$15,000 Purchased Equipment

$49,800 = $49,800

Basic CASE STUDY 1 ELPER CONSULTING SERVICES

Analysis Transaction 5. Services Revenue $2,000 for credit

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 $50,000 +$50,000 Issued stocks

Equation 2 -$400 -$400 Rent

Analysis 3 +$200 +$200 Purchased supplies

4 -15,000 +$15,000 Purchased Equipment

5 $2,000 $2,000 Service Revenue

$51,800 = $51,800

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Assignment # 1 _ Financial Accounting

CASE STUDY 1 ELPER CONSULTING SERVICES

Basic
Transaction 6. $100 Utilities Expense for credit
Analysis The liability Accounts Payable increases $100, and the stockholders’ equity decreases $100 due to Utilities Expenses.

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 $50,000 +$50,000 Issued stocks

2 -$400 -$400 Rent

Equation
Analysis 3 +$200 +$200 Purchased supplies

4 -15,000 +$15,000 Purchased Equipment

5 $2,000 $2,000 Service Revenue

6 +$100 -$100

$51,800 = $51,800

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Assignment # 1 _ Financial Accounting

Case study 2: show the effects on the accounting equation?

Solution:

Basic CASE STUDY 2 THOMPSON ENGINEERING Inc.

Analysis Transaction 1. Issued 5,000 shares of capital stock for $20 per share

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
Equation ------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

Analysis 1 100,000 +$100,000 Issued stocks

$100,000 = $100,000

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 2 THOMPSON ENGINEERING Inc.

Analysis Transaction 2. Purchased Equipment for Cash $15,000 and on Credit $30,000

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

Equation 1 100,000 +$100,000 Issued stocks

Analysis 2 -15,000 +$15,000

+$30,000 +$30,000 Purchased Equipment

$130,000 = $130,000

Basic CASE STUDY 2 THOMPSON ENGINEERING Inc.

Analysis Transaction 3. Purchased Equipment for Cash $15,000 and on Credit $30,000

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 100,000 +$100,000 Issued stocks

Equation
2 -15,000 +$15,000
Analysis
+$30,000 +$30,000 Purchased Equipment

3 +$11,000 -11,000

$130,000 = $130,000

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 2 THOMPSON ENGINEERING Inc.

Analysis Transaction 4. Purchased supplies on account of $300

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 100,000 +$100,000 Issued stocks

Equation 2 -15,000 +$15,000

Analysis +$30,000 +$30,000 Purchased Equipment

3 +$11,000 -11,000

4 +$300 +$300 Purchased supplies

$130,300 = $130,300

Basic CASE STUDY 2 THOMPSON ENGINEERING Inc.

Analysis Transaction 5. Collected Revenue as Accounts Receivable of $12,000

Assets = Liabilities + Stockholders’ Equity

Accounts
Cash +
Receivable
+ Supplies + Equipment = Accounts
Payable
Common
Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 100,000 +$100,000 Issued stocks

2 -15,000 +$15,000
Equation
+$30,000 +$30,000 Purchased Equipment
Analysis
3 +$11,000 -11,000

4 +$300 +$300 Purchased supplies

5 +$12,000 +12,000 Revenue

$142,300 = $142,300

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 2 THOMPSON ENGINEERING Inc.

Analysis Transaction 6. Purchased supplies on account of $300

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 100,000 +$100,000 Issued stocks

2 -15,000 +$15,000

Equation +$30,000 +$30,000 Purchased Equipment

Analysis 3 +$11,000 -11,000

4 +$300 +$300 Purchased supplies

5 +$12,000 +12,000 Revenue

6 -$6,000 Dividends -$6,000

$136,300 = $136,300

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Assignment # 1 _ Financial Accounting

Case study 3

Solution:

I: INCREASE D: DECREASE NE: NO EFFECT

Basic CASE STUDY 3 Dr. Schekter, DVM, Veterinary Clinic
Analysis Transaction 1. Issued 5,000 shares of capital stock for $400,000.

Assets = Liabilities + Stockholders’ Equity

Accounts Accounts Common
Cash +
Receivable
+ Supplies + Equipment = Payable Stock
+ Retained Earnings
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends
Equation
1 400,000 +$400,000 Issued stocks
Analysis
I NE NE NE NE I NE NE NE

$400,000 = $400,000

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 3 Dr. Schekter, DVM, Veterinary Clinic

Analysis Transaction 2. Purchased land and building Cash Payment of $100,000 and a Note Payable of $150,000

Assets = Liabilities + Stockholders’ Equity

Equipment
Accounts Accounts Common
Cash +
Receivable
+ Supplies + Land = Payable Stock
+ Retained Earnings
Building
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 400,000 +$400,000 Issued stocks

Equation
Analysis 2 -100,000 +$100,000

+$150,000 +$150,000

D NE NE I I NE NE NE NE

$550,000 = $550,000

Basic CASE STUDY 3 Dr. Schekter, DVM, Veterinary Clinic

Analysis Transaction 3. Purchased Medical Instruments Cash Payment of $130,000.

Assets = Liabilities + Stockholders’ Equity

Equipment
Accounts Accounts Common
Cash +
Receivable
+ Supplies + Land = Payable Stock
+ Retained Earnings
Building
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 400,000 +$400,000 Issued stocks

Equation 2 -100,000 +$100,000

Analysis
+$150,000 +$150,000

3 -130,000 +$130,000

D NE NE I NE NE NE NE NE

$550,000 = $550,000

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 3 Dr. Schekter, DVM, Veterinary Clinic

Analysis Transaction 4. Purchased Office Fixtures Cash Payment of $20,000 and Accounts Payable of $30,000

Assets = Liabilities + Stockholders’ Equity

Equipment
Accounts Accounts Common
Cash +
Receivable
+ Supplies + Land = Payable Stock
+ Retained Earnings
Building
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 400,000 +$400,000 Issued stocks

2 -100,000 +$100,000
Equation +$150,000 +$150,000
Analysis
3 -130,000 +$130,000

4 -$20,000 +$20,000

+$30,000 +$30,000

D NE NE I I NE NE NE NE

$580,000 = $580,000

Basic CASE STUDY 3 Dr. Schekter, DVM, Veterinary Clinic

Analysis Transaction 5. Purchased Supplies of $5,000

Assets = Liabilities + Stockholders’ Equity

Equipment
Accounts Accounts Common
Cash +
Receivable
+ Supplies + Land = Payable Stock
+ Retained Earnings
Building
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 400,000 +$400,000 Issued stocks

2 -100,000 +$100,000

+$150,000 +$150,000
Equation
Analysis 3 -130,000 +$130,000

4 -$20,000 +$20,000

+$30,000 +$30,000

5 -$5,000 +$5,000 Purchased Supplies

D NE I NE NE NE NE NE NE

$580,000 = $580,000

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 3 Dr. Schekter, DVM, Veterinary Clinic

Analysis Transaction 6. Services Revenue $1,900 Cash Payment and $300 on Account

Assets = Liabilities + Stockholders’ Equity

Equipment
Accounts Accounts Common
Cash +
Receivable
+ Supplies + Land = Payable Stock
+ Retained Earnings
Building
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 400,000 +$400,000 Issued stocks

2 -100,000 +$100,000

+$150,000 +$150,000
Equation 3 -130,000 +$130,000
Analysis
4 -$20,000 +$20,000

+$30,000 +$30,000

5 -$5,000 +$5,000 Purchased supplies

6 +$1,900 +$300 +$2,200 Services Revenue

I I NE NE NE NE I NE NE

$582,200 = $582,200

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 3 Dr. Schekter, DVM, Veterinary Clinic

Analysis Transaction 7. Radio Advertisements expenses of $400

Assets = Liabilities + Stockholders’ Equity

Equipment
Accounts Accounts Common
Cash +
Receivable
+ Supplies + Land = Payable Stock
+ Retained Earnings
Building
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 400,000 +$400,000 Issued stocks

2 -100,000 +$100,000

+$150,000 +$150,000

3 -130,000 +$130,000
Equation
Analysis 4 -$20,000 +$20,000

+$30,000 +$30,000

5 -$5,000 +$5,000 Purchased supplies

6 +$1,900 +$300 +$2,200 Services Revenue

7 +$400 -$400
NE NE NE NE I NE NE D NE

$582,200 = $582,200

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 3 Dr. Schekter, DVM, Veterinary Clinic

Analysis Transaction 8. Receiving $100 Cash on the $300 Account Receivable recorded May 24.

Assets = Liabilities + Stockholders’ Equity

Equipment
Accounts Accounts Common
Cash +
Receivable
+ Supplies + Land = Payable Stock
+ Retained Earnings
Building
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 400,000 +$400,000 Issued stocks

2 -100,000 +$100,000

+$150,000 +$150,000

3 -130,000 +$130,000
Equation 4 -$20,000 +$20,000
Analysis
+$30,000 +$30,000

5 -$5,000 +$5,000 Purchased supplies

6 +$1,900 +$300 +$2,200 Services Revenue

7 +$400 -$400
8 +$100 -$100

I D NE NE NE NE NE NE NE

$582,200 = $582,200

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Assignment # 1 _ Financial Accounting

Basic CASE STUDY 3 Dr. Schekter, DVM, Veterinary Clinic

Analysis Transaction 9. Cash Payment of $2,800, Salary Expenses

Assets = Liabilities + Stockholders’ Equity

Equipment
Accounts Accounts Common
Cash +
Receivable
+ Supplies + Land = Payable Stock
+ Retained Earnings
Building
------ ------------ ---------- ------------ ------------ ----------- Revenue Expenses Dividends

1 400,000 +$400,000 Issued stocks

2 -100,000 +$100,000

+$150,000 +$150,000

3 -130,000 +$130,000

4 -$20,000 +$20,000
Equation
Analysis +$30,000 +$30,000

5 -$5,000 +$5,000 Purchased supplies

6 +$1,900 +$300 +$2,200 Services Revenue

7 +$400 -$400
8 +$100 -$100

9 -$2,800 -2,800

D NE NE NE NE NE NE I NE

$579,400 = $579,400

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Assignment # 1 _ Financial Accounting

Case study: 4

Choose the correct answer

1. The three types of business entities are:
a. proprietorships, small businesses, and partnerships.

b. proprietorships, partnerships, and corporations.

c. proprietorships, partnerships, and large businesses.

d. financial, manufacturing, and service companies.

2. Net income will result during a time period when:

a. assets exceed liabilities.

b. assets exceed revenues.

c. expenses exceed revenues.

d. revenues exceed expenses.

3. As of December 31, 2012, Stoneland Company has assets of $3,500 and owner’s equity of $2,000. What are the liabilities for
Stoneland Company as of December 31, 2012?
a. $1,500. b. $1,000. c. $2,500. d. $2,000.

4. On the last day of the period, Jim Otto Company buys a $900 machine on credit. This transaction will affect the:
a. income statement only.

b. balance sheet only.

c. income statement and owner’s equity statement only.

d. income statement, owner’s equity statement, and balance sheet.

5. The financial statement that reports assets, liabilities, and owner’s equity is:
a. income statement.

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Assignment # 1 _ Financial Accounting

b. owner’s equity statement.

c. balance sheet.

d. statement of cash flows.

Brief Exercises
BE1-1 Presented below is the basic accounting equation. Determine the missing amounts.
Assets =Liabilities + Owner’s Equity

(a) $90,000 $50,000 $40,000

(b) $110,000 $40,000 $70,000

(c) $94,000 $41,000 $53,000

BE1-2 Given the accounting equation, answer each of the following questions.
(a) The liabilities of Buerhle Company are $120,000 and the owner’s equity is $232,000. What is the amount of Buerhle
Company’s total assets?
$352,000
(b) The total assets of Buerhle Company are $190,000 and its owner’s equity is $91,000. What is the amount of its total
liabilities?
$99,000
(c) The total assets of Buerhle Company are $800,000 and its liabilities are equal to one half of its total assets. What is the
amount of Buerhle Company’s owner’s equity?
$400,000
BE1-5 Indicate whether each of the following items is an asset (A), liability (L), or part of owner’s equity (OE).
____(A)___(a) Accounts receivable ____(A)___(d) Supplies

____(L)___ (b) Salaries and wages payable ____(OE)___ (e) Owner’s capital

____(A)___ (c) Equipment ____(L)___ (f) Notes payable

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Assignment # 1 _ Financial Accounting

Do it! 1-4 Presented below is selected information related to Lance Company at December 31, 2012. Lance reports financial
information monthly.

Accounts Payable $ 3,000

Salaries and Wages Expense $16,500

Cash 4,500

Notes Payable 25,000

Advertising Expense 6,000

Rent Expense 10,500

Service Revenue 51,500

Accounts Receivable 13,500

Equipment 29,000

Owner’s Drawings 7,500

(a) Determine the total assets of Lance Company at December 31, 2012.

(b) Determine the net income that Lance Company reported for December 2012.

Solution:

(a) The total assets are $47,000, comprised of Cash $4,500, Accounts Receivable $13,500, and
Equipment $29,000.
(b) Net income is $18,500, computed as follows.
Revenues
Service revenue $51,500
Expenses
Rent expense $10,500
Salaries & Wages expense $16,500
Advertising expense $6,000
Total expenses $33,000

Net Income $18,500

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Assignment # 1 _ Financial Accounting

E1-5 Garcia Cleaners has the following balance sheet items.

● Accounts payable (L)

● Accounts receivable (A)

● Cash (A)

● Notes payable (L)

● Equipment (A)

● Salaries and wages payable (OE)

● Supplies (A)

● Owner’s capital (OE)

Instructions

Classify each item as an asset (A), liability (L), or owner’s equity(OE).

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