Exe 2.

2 Prepare Balance Sheet

Sol: MAJESTIC LIMOUSINE SERVICE
Balance Sheet
As on February 28,2001
Assets Loabilities

Cash 69000 Liabilities:

Account Receivable 78000 Notes Payable 288000
Supplies 14000 Account Payble 26000
Land 70000 Total Liabilites 314000
Building 80000 Owner's Equity:
AutoMobiles 165000 J.Snow ,Capital 162000
Total 476000 Total 476000

Exe2.3 Prepare Balance Sheet

Sol PEREZ COMPANY
Balance Sheet
As on December 31,2001
Assets Loabilities
Liabilities:
Cash 36300 Notes Payable 213600
Account Receivable 56700 Account Payble 43800
Land 90000 Total Liabilites 257400
Building 210000 Owner's Equity:
AutoMobiles 10200 J.Snow ,Capital 145800
Total 403200 Total 403200

Exe 2.5 Compute the missing amount in the following table

Accounting Equation
Assets = Liabilites Owner's Equity
a. 558000 342000 216000
b. 937500 562500 375000
c. 307500 165000 142500

Exe2.6 Accounting Equation

Transcation Assets = Liabilites Owner's Equity
a I I NE
b NE NE NE
c D D NE
d D D NE
e I NE I
f I I NE
g I NE I
h NE NE NE
i NE NE NE

Exe 2.7 Effects of the Business Transcation

a The purcahse of office equipment or any other assersts on credit will cause an
increase the assets and an increase in a liability.
b The payment of an account payable or note payable will cause in decrease in the
cash and decrease the liability
c The collection of an account receviable will cause an increase in assets and decrease in other assets
d The investment of cash in the business by the owner will cause an increase in an assets and also
increase the owner equity.
e The purchase of an automobile or other assets and payment made a part in cash and promissing to
pay the remaining at latter time would cause an increase in one assets , a decrease in another assets
and increse in liability by the amount of the unpaid portion
Exe 2.11 FOSTER COMPANY
Statement of Cash Flow statement of cash flows
for the month ended janurary 31,2001
cash flow from oprating activites:
Cash received from revenues 10000
less: cash paid for expenses 6200
Net cash provided by operation activites

cash flow from investing activities:

Less: cash paid for equipment

cash flow from financing activites:

cash recived from investment by owner 5000
less: cash payment instead by bank loan 2000
Net cash received from financing activites

increase in cash
cash balance, january 1,2001
Cash balance, january 31,2001

Exe 2.12 WALTERS,INC

Income Statement Income Statement
For the Month ended March 31,2001
Revenues
less: Expenses
Net Income

Exe 2.13 FOWLER COMPANY

Income statement Income Statement
For the Month ended August 31,2001
Service revenues
Less: Expenses
Net Income

The following four item represent cash flow but are not revenues or expenses that should be
include in the icome statement:
investment by owner Loan from bank Payment to long term creditors

Exe 2.14 FOWLER COMPANY

Statement of Cash flow Statement of Cash Flows
For the Month ended August 31,2001
Cash flow from operating activities:
Cash received from revenues 10000
Less: Cash paid for expenses 7500
Net Cash provided by operating activities

Cash flow from investment activities:

Less: Cash paid for purcahse of land

Cash flows from financing activities:

Cash recevied from bank loan 15000
Cash recevied from investment by owner 5000
less: Cash paid to long term creditors 8000
Net Cash received from finanacing activities

Less: Decrease in Cash

Cash balance , August 1, 2001
Cash balance , August 31, 2001

Exe 2.15 Finincial statement

John Bank ,Owner's equity:
Balance, January 1,2001
Add: Investment during 2001
Net Income for 2001
Balance December 31,2001
 CHAPTER NO. 3
Exe 3.2 Prepare Journal

Date Particular/Desription Debit Amount $ Credit Amount $

1 Cash 80000
Mark Fraser, Capita 80000
Owner invested cash or addition cash in business
5 Land 102000
Cash 30600
Note payable 71400
Purcahse land for parking
15 Account Payable 976
Cash 976
Payment made to Hampton supply co wihich was due
18 Cash 30000
Notes Payable 30000
Cash received from bank as loan and give notepayable
23 Cash 2900
Account receivable 2900
Cash collection from customer
30 Office Equipment 6200
Cash 1500
Account Payable 4700
Purcahse office equipment partial amount payment
some of them on credit

Exe 3.3 Prepare Journal

Dated Desciption/Particulars Debit Credit

1-Nov Cash 12000
Joe Guiterrez Capital 12000
Cash Inveted by the owner in the business
8-Nov Land 70000
Building 58600
Cash 33600
Notes Payable 95000
Land and building has been purchased and partial
payment has been made Also singed Notes Payable
15-Nov Office Equipment 3200
Accounts Payable 3200
Office Equipment purchased on Credit

21-Nov Accounts Payable 480

Office Equipment 480
Returned some portion of Office Equipment

25-Nov Notes Payable 12000

Cash 12000
Cash paid instead of note payable
30-Nov Vehicles 9400
Joe Guiterrez Captial 9400
Bring assets into business

Exe 3.4 Prepare Trial Balance

FUTIERREZ CONSTRUCTION COMPANY
Trial Balance
November 30, 20xxx

Description Debit Credit

Cash 74400
Land 70000
Building 58600
Office Equipment 2720
Vehicels 9400
Notes Payable 83000
Accounts Payable 2720
Joe Guiterrez Capital 129400
215120 215120
Exe 3.5 Income Statement Accounting Equation
Transaction Revenues - Expenses= N Income Assets Liabilites + Equity
a NE NE NE I I NE
b I NE I I NE I
c NE NE NE D D NE
d NE NE NE NE NE NE
e NE NE NE NE I D
f NE I D I I NE
g NE I D D NE D
h NE I D D NE D

Exe 3.6 Relation Beginning of the Year End of the Year

Owner and Net income Assets 285,000.00 370,000.00
Liablilities 90,000.00 125,000.00
Owner's Equity 195,000.00 245,000.00

The Owner's equity increased by 50,000 during the year. The impact of net Income in contributing to this changed was as follows in the four cases

Description Case A Case B Case C Case D

Owner's Equity at Beg.Year 195,000.00 195,000.00 195,000.00 195,000.00
Add: Addl Investment - 40,000.00 15,000.00
Add: Net Income(Net Loss) 50,000.00 10,000.00 80,000.00 75,000.00
245,000.00 245,000.00 275,000.00 285,000.00
Less Withdrawls - - 30,000.00 40,000.00
Owner's Equity at End Year 245,000.00 245,000.00 245,000.00 245,000.00

Exe 3.9 Prepare Journal

Particular Debit Amount Credit Amount

19-Mar Account Receivable 12000
Legel Fees Earned 12000
Agreement for Pitrick Stewart
15-May Jean Rodnberry , Drawing 6000
Cash 6000
Owner made drawin from business
31-May Process Services Expense 2050
Account Payable 2050
Received bill from lawyers, delivery
services payable june 10
9-Jun Account Payable 2050
Cash 2050
Paid amout owed lawyers, delivery services
31-Dec Depreciation Exp 5100
Acc- Dep 5100
To record annual depreciantion
31-Dec Supplies exp 3750
Supplies 3750
To record supplies expense for the
fourth quarter

Exe 3.10 Adjusting Entry for Depreciation

Calculation

Annual Depreciation Exp 144000 =3600

4

Monthly Depreciation 14400 =300

48

Adjustment Entry for Delivery Truck Debit Credit

Depreciaton Expese 300
Acc. Depreciation Expense 300
To record Depreciation for one month on delivery truck

The depreciation expense would be listed among the expense of the Income Statement, the ACC.
Depreciation would shown on the balance sheet as the deduction from the Asset Delivery truck

b In the balance sheet at December 31,2001, the delivery truck should be reported in the "assets",
Accumulated depreciation as follows:

Delivery Truck 14400

Les. ACC.Depreciation -1200 13200
Exe 3.11 Adjusting Entry for Depreciation Supplies
Monthly Depreciaton Expense 30,000÷60 Months=500

Adjested entries
Debit Credit
a Depreciation Exp : Equipment 500
Acc depreciation Equipment 500
To record depreciation for may 31

b Supplies Expense: May

Supplies per Unadjusted T.B 2250
Less:Supplies Remaining at May31 1900
350

Adjusting entry to record supplies expense for May

Supplies Expense 350
Supplies 350
To record as expense the cost of supplies used in May

c Net Income for May:

Fee Earned 24000
Less: Supplies expense 600
Salaries expense 4000
Rent expense 2400
Utilities expense 1500
Depreciation Expense 500
Supplies expense 350
Net Income for May: 14650

Exe 3.12 CORTES PAINTING CONTRACTORS

Income Statement and Income Statement
Owner Equity Year Ended December 31, 2001

Painting Fee Earned 163300

Less: Expenses:
Paint and supplies expense 27500
Salaries exp 66800
Rent exp 9600
Advertising exp 3200
Depreciation Exp: Painting Equipment 1200
Insurance Exp 12000 120300
Net Income 43000

CORTES PAINTING CONTRACTORS

Statement of Owner's Equity
Year Ended December 31, 2001

a Eduard Cortes, Capital, Dec 31, 01 27200

Net Income 43000
Subtotal 70200
Less:Drawing 18000
Eduard Cortes, Capital, Dec 31, 01 52200

b The useful life of the painting equipment is 06 yrs

Annual Depreciation 7200÷6=1200 (per year)

Cortes has been using the painting equipment for approx. 2=3000/1200 2.5 Years

Exe 3.13 Prepare Closing Entries

Painting Fees Earned 163300
Income summary 163300
To close the revenue account at year end

Income summary 120300

Paint & supplies exp 27500
Salaries Exp 66800
Rent Exp 9600
Advertising Exp 3200
Depreciation Exp Painting Equipment 1200
Insurance Exp 12000
To close the expense account at year end

Income summay 43000

Edurard corts,capital 43000
To transfer the amout to the owner equity of the net income for the year
Edurard corts,capital 18000
Edurard corts,Drawing 18000
To reduce the balance of the owner's capital account for withdrawals
 Chapter 4

Exe 4.2
Income Statement Balance Sheet
Revenue - Expenses Net Income Assets =
a NE I D D
b NE I D NE
c I NE I I
d NE I D NE
e NE I D D
f I NE I NE

Exe 4.3 Journal Entries

a Rent Exp 300000
Prepaid Rent 300000
Record rent exp for Aug in books of accounts
b Unearned Ticket Revenue 320000
Ticket Revenue 320000
To record the portion of renenue

Exe 4.4 Journal Entries

a) 1. Salaries Expense 17800
Salaries Payable 17800
Record the salaries in books
2 Accounts Receibable 18900
Legel Fee Earned 18900
Recoreded the legel fee earned

b) Salary exp for jan $17200

Total 35000 35000-17200 17800
Journal entries
Salaries Payable 17800
Salaries exp 17200
Cash 35000
To record salaries paid to staff
c) Revenue of jan 42000
Journal entries
Cash 60900
Account Receviable 18900
Legel fee earned 42000
Record recipt of legel fees for previous month

Exe 4.5 Journal entries

a Insurance Exp 600
Unexperied Insurance 600
record insurance exp
b Income summary 3000
Insurance Exp 3000
Close insurance Exp for 5 month

Exe 4.7
a Intrest exp 1050
Intrest payable 1050

b Dep exp office Equ 400

Accumulated Dep 400

c Intrest Receivable 750

Intrest revenue 750

d No entry
e Salaries exp 2800
Salaries payable 2800

Exe 4.8
a The total intrest exp over the life of note is 5400 (120000*.9*6/12=5400)

The monthly intrest exp is 900 ( 5400/6=900)

b The liability to the bank at december 31,2000 is 121800 (principal
120000+1800) accued intrest

c 31 ocr,2000 Cash 120000

Note payable 120000

d
Exe 4.9 Journal Entries
a 1-May Cash 300000
Notes Payable 300000
Borrowed money form bank as per 12% intrest
31-May Intrest Exp 3000
Intrest Payable 3000
Record the intrest into books
b 1-May Prepaid Rent 180000
Cash 180000
paid rent for 6 month in advance
31-May Rent exp 30000
Prepaid rent 30000
record the rent paid in advace for May
c 2-May Cash 910000
Unearned Admission Revenue 910000
Sold session ticket for race
31-May Unearned Admission Revenue 260000
 Admission Revenue 260000
record admission revenue into books
d No entry
e 9-May Prpaid Printing 12000
Cash 12000
Printing form for 30 racing
31-May Printing Exp 8000
Prepaid Printing 8000
record the printing exp into books
f 31-May Concession Receviable 16500
Concession Revenue 16500
earned 10% concession on refreshment

Exe 4.12
1 Guest Revenue 460000
less 384000
total revenue 76000
2 Cash 142000
b Guest Revenue
460000
less 175000
total revenue 285000
Cash 142000

Exe 4.13 Journal Entries

a. Commission Receivable 850
Commission earned 850
Com earned and receivable in jan
b Unearned commission 210
commission earned 210
commission earned in jan
c Office suplies exp 360
Office suplies 360
office suplies consumed during jan
d Dep Exp ( Office eqp) 110
Accumalated Dep 110
Dep exp for the jan
e Salaries Exp
Salaries Payable
Salaried earned by empl but not paid

Exe 4.14 FISHER INSURANCE AGENCY

Income Statement
For the Month Ended January 31,2001
Revenue:
Commission earned ……………………………………………………………. 7960
Less Expenses:
Salaries Exp 6550
Rent Exp 1500
Office suplies Exp 360
Dep Exp office equp 110
Total Exp 8520
Net Loss…………………………………………………………. (560)

FISHER INSURANCE AGENCY

Statement of Owner's equity
For the Month Ended January 31,2001

Pat Fisher Capital Dec 31,2000…………….…………………………………………. 12300

Less Net loss………………………………………………………………………………… (560)
Subtotal 11740
Less Withdrawals 1000

Pat Fisher Capital jan 31,2000 10740

FISHER INSURANCE AGENCY

Balance sheet
As on January 31,2001
Assets Liabilities
Cash 4980 Account payable 1660
Commission Receivable 3850 Salaries payable 550
Office suplies 240 Unearned Comm 190
Office equpment 6600
Les: Accu Dep 2530 4070 Owner Equity
Pat Fisher Capital 10740
Total Assets 13140 Total liabilities 13140

Chap -5
Exe 5.2 Income Statement Balance sheet
Net Slale- C.G.S- Other Exp = Net Income Assets = Lib + O.E
a NE NE NE NE I I NE
b I NE NE I I NE I
c NE I NE D D NE D
d NE NE NE NE NE NE NE
e NE I NE D D NE D

Exe 5.3
Subsidry Ledger Effect in Account Balance
a Inv Increase
Ap Increase
b Ap Descrease
c Inv Descrease
d AR Increase
Inv Descrease
e AR Descrease
f AP Descrease
Inv Descrease
g Inv Increase
h Inv Increase
AR Descrease

Exe 5.4 Journal Entries

a 02-Ja Invetory 9200
Accout Payable (smith Co) 9200
Purchase Marchadise on Account
3-Jan Cash 22000
Sales 22000
Sales of Murchadise on cash
Cost of Good Sold 14300
Invetory 14300
To reduce inventory by C.Good sold

b. Opening Balance 84500

Add: cost of marchadise 9200
less: cost of good sold -14300
Balance 79400
Exe 5.6
Journal Entries
b. Cost of good sold 4900
Inventory 4900
Decrease in inventory

Exe 5.7
b Computation the cost of good sold during year 2:
Inventory December 31 year 1 10400
Add: Purchases 105000
Cost of good sold aviable for sale 115400
Less: Inventory December year 2 9600
Cost of good sold 105800

c Journal entries
year 2 31-Dec Cost of good sold 114500
Inventory 10400
Purchases 105000
Close accounts
Inventory 9600
Cost of good sold 9600
Calculate the merchandise in hand

d WARREN'S GIFT SHOP

Partial Income Statement
For the Year Ended December 31, Year 2
Net sale 198500
Less: Cost of goods sold 105800
Gross Profid 92700

Exe 5.8
Net sale Beg Inv Net Purch End Inv CGS GP Exp Net Income
a 300000 95000 130000 44000 181000 119000 90000 29000
b 600000 90000 340000 100000 330000 270000 245000 25000
c 700000 230000 445000 183000 490000 210000 165000 45000
d 900000 290000 500000 60000 640000 260000 300000 (40000)
e 885000 260000 655000 255000 660000 225000 250000 (25000)
 FOSTER COMPANY
statement of cash flows
for the month ended janurary 31,2001

3800

2500

3000

4300
5600
9900

WALTERS,INC
Income Statement
For the Month ended March 31,2001
8500
5000
3500

FOWLER COMPANY
Income Statement
For the Month ended August 31,2001
10000
7500
2500

owner Loan from bank Payment to long term creditors

FOWLER COMPANY
Statement of Cash Flows
For the Month ended August 31,2001

2500

16000

12000

1500
5700
4200

50000
10000
25000
85000
CHAPTER NO. 3
Case E
195,000.00
75,000.00
(25,000.00)
245,000.00
-
245,000.00
Chapter 4

Balance Sheet
Lib+O.E
NE D
I D
NE I
I D
NE D
D I