Assignment 1 Attempt all Questions
1. The balance sheet items for Franklin Bakery (Arranged in Alphabetical order) were as follows at August 1, 2015. (you are to compute the missing figure for Retained Earnings.)
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Accounts payable
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$16,200.00
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Equipment and Fixtures
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$44,500.00
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Accounts Receivables
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$11,260.00
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Land
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$67,000.00
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Building
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$84,000.00
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Notes Payable
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$74,900.00
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Capital Stock
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$80,000.00
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Salaries Payable
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$8,900.00
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Cash
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$6,940.00
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Supplies
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$7,000.00
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During the next two days, the following transactions occurred:
Aug. 2 Additional capital stock was sold for $25,000. The accounts payable were paid in full. (No payment was made on notes payable or salaries payable)
Aug. 3 Equipment was purchased at a cost of $7,200 to be paid within 10 days. Supplies were purchased for $1,250 cash from a restaurant supply center that was going out of business. These supplies would have cost $1,890 if purchased through normal channels.
Instructions:
a. Prepare a balance sheet at August 1, 2015
b. Prepare a balance sheet at August 3, 2015, and a Statement of cash Flows for August 1 - 3. Classify the payment of account payable and the purchase of supplies as operating activities.
c. Assume the notes payable do not come due for several years, is Franklin Bakery in a stronger financial position on August 1 or on August 3? Explain briefly.
2. The following list of Balance sheet items are in random order for Alexander Farms, Inc., at September 30, 2015:
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Land
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$490,000.00
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Fences and Gates
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$33,570.00
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Barns and Sheds
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$78,300.00
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Irrigation System
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$20,125.00
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Notes Payable
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$330,000.00
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Cash
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$16,710.00
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Accounts Receivables
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$22,365.00
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Lives stock
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$120,780.00
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Citrus Trees
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$76,650.00
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Farm Machinery
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$42,970.00
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Account payable
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$77,095.00
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Retained Earnings
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?
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Property taxes Payable
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$9,135.00
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Wages payable
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$5,820.00
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Capital Stock
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$290,000.00
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Instructions
a. Prepare a balance sheet by using these items and computing the amount for retained earnings.
b. Assume that on September 30, immediately after this balance sheet was prepared, a tornado completely destroyed one of the barns. This barn had a cost of $14,000 and was not insured against this type of disaster. Explain what changes would be required in your September 30 balance sheet to reflect the loss of this barn.
Assignment 2
PROBLEM 1.
Analyzing and Journalizing Transactions
Weida Surveying, Inc., provides land surveying services. During September, its transactions included the following:
Sept.
1 Paid rent for the month of September, $4,400.
Sept. 3
Billed Fine Line Homes $5,620 for surveying services. The entire amount is due on or before September 28. (Weida uses an account entitled Surveying Revenue when billing clients.)
Sept. 9
Provided surveying services to Sunset Ridge Developments for $2,830. The entire amount was collected on this date.
Sept. 14
Placed a newspaper advertisement in the Daily Item to be published in the September 20 issue. The cost of the advertisement was $165. Payment is due in 30 days.
Sept. 25
Received a check for $5,620 from Fine Line Homes for the amount billed on September 3.
Sept. 26
Provided surveying services to Thompson Excavating Company for $1,890. Weida collected $400 cash, with the balance due in 30 days.
Sept. 29
Sent a check to the Daily Item in full payment of the liability incurred on September 14.
Sept. 30
Declared and paid a $7,600 cash dividend to the company's stockholders.
Instructions
a. Analyze the effects that each of these transactions will have on the following six components of the company's financial statements for the month of September. Organize your answer in tabular form, using the column headings shown. Use I for increase, D for decrease, and NE for no effect. The September 1 transaction is provided for you:
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Income Statement
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Balance sheet
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Transaction
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Revenue +
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Expense =
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Net Income
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Assets +
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Liabilities +
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Owners' Equity
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Sept 1
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NE
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I
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D
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D
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NE
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D
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b. Prepare a journal entry (including explanation) for each of the above transactions.
c. Three of September's transactions involve cash payments, yet only one of these transactions is recorded as an expense. Describe three situations in which a cash payment would not involve recognition of an expense.
2. The Accounting Cycle: Journalizing, Posting, and Preparing a Trial Balance
Dr. Schekter, DVM, opened a veterinary clinic on May 1, 2015. The business transactions for May are shown below:
May
1 Dr. Schekter invested $400,000 cash in the business in exchange for 5,000 shares
of capital stock.
May 4
Land and a building were purchased for $250,000. Of this amount, $70,000 applied to the land, and $180,000 to the building. A cash payment of $100,000 was made at the time of the purchase, and a note payable was issued for the remaining balance.
May 9
Medical instruments were purchased for $130,000 cash.
May 16
Office fixtures and equipment were purchased for $50,000. Dr. Schekter paid
$20,000 at the time of purchase and agreed to pay the entire remaining balance in 15 days.
May 21
Office supplies expected to last several months were purchased for $5,000 cash.
May 24
Dr. Schekter billed clients $2,200 for services rendered. Of this amount, $1,900 was received in cash, and $300 was billed on account (due in 30 days).
May
A $400 invoice was received for several radio advertisements aired in May. The
27 entire amount is due on June 5.
May 28
Received a $100 payment on the $300 account receivable recorded May 24.
May 31
Paid employees $2,800 for salaries earned in May.
A partial list of account titles used by Dr. Schekter includes:
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Cash
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Notes Payable
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Accounts Receivable
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Accounts Payable
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Office Supplies
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Capital Stock
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Medical Instruments
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Veterinary Service Revenue
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Office Fixtures and Equipment
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Advertising Expense
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Land
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Salary Expense
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Building
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Instructions
a. Analyze the effects that each of these transactions will have on the following six components of the company's financial statements for the month of May. Organize your answer in tabular form, using the column headings shown below. Use I for increase, D for decrease, and NE for no effect. The May 1 transaction is provided for you:
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Income Statement
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Balance sheet
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Transaction
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Revenue +
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Expense =
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Net Income
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Assets =
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Liabilities +
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Owners' Equity
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May 1
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NE
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NE
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NE
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I
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NE
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I
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b. Prepare journal entries (including explanations) for each transaction.
c. Post each transaction to the appropriate ledger accounts
d. Prepare a trial balance dated May 31, 2015.
e. Using figures from the trial balance prepared in part d, compute total assets, total liabilities, and owners' equity. Did May appear to be a profitable month?