Question 1

Selected transaction data of a business for September are summarized below. Determine the following amounts for September: (a) total revenue, (b) total expenses, (c) net income. $\begin{array}{lr}
\text { Service sales charged to customers on account during September}& \$ 33,000 \ \text { Cash received from cash customers for services performed in September}& 28,000\ \text { Cash received from customers on account during September:}\
\text { Services performed and charged to customers prior to September } & 13,000 \
\text { Services performed and charged to customers during September } & 18,000 \
\text { Expenses incurred prior to September and paid during September } & 6,500 \
\text { Expenses incurred and paid in September } & 36,250\
\text { Expenses incurred in September but not paid in September}&5,000\
\text { Expenses for supplies used and insurance (not included above)}\
\text { applicable to September}&2,000
\end{array}$

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Question 2

A summary of cash flows for Evelyn's Event Planning for the year ended December 31 is shown below. Cash receipts:
$\begin{array}{lr}
\text { Cash received from customers } & \$ 57,360 \
\text { Cash received from bank loan } & 15,000
\end{array}$  ? $\begin{array}{lr}
\text { Cash payments: }\
\text { Cash paid for oper ating expenses } & \$ 12,120 \
\text { Cash paid for equipment } & 18,070 \
\text { Cash paid for party supplies } & 9,480 \
\text { Dividends } & 12,000\
\
\text { The cash balance as of January } 1&\$15,580
\end{array}$ ?
Prepare a statement of cash flows for Evelyn's Event Planning for the year ended December 31.

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Question 3

Using the following accounts and their amounts, prepare in good format a balance sheet for Bright Futures Company for the month ended August 31. $\begin{array}{lr}
\text { Tel ephone expense } & 1,150 \
\text { Cash } & 3,000 \
\text { Accounts payable } & 1,540 \
\text { Dividends } & 800 \
\text { Fees earned } & 15,700 \
\text { Rent expense } & 1,400 \
\text { Supplies } & 140 \
\text { Accounts receivable } & 1,500 \
\text { Computer equipment } & 17,600 \
\text { Common stock } & 10,000 \
\text { Retained earnings (August } 1 \text { ) } & 4,320 \
\text { Wages expense } & 4,800 \
\text { Utilities expense } & 750 \
\text { Office expense } & 420
\end{array}$ ?

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Question 4

The total assets and total liabilities of Paul's Pools and Palaces at the beginning and at the end of the current fiscal year are as follows: $\begin{array}{lrr}
& \underline{\text {Jan. 1}} &\underline{\text {Dec. 31}}\
\text { Total assets } & \$ 280,000 & \$ 475,000 \
\text { Total liabilities } & 205,000 & 130,000
\end{array}$ (a) Determine the amount of net income earned during the year. No additional common stock was issued and no dividends were paid.

(b) Determine the amount of net income during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the sharehol ders were paid $ \$ 53,000 $ in cash dividends during the year (no additional purchase of common stock).

(c) Determine the amount of net income earned during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the sharehol ders paid for $ \$ 35,000 $ of common stock in June of the current fiscal year (no dividends).

(d) Determine the amount of net income earned during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the sharehol ders paid for $ \$ 12,000 $ of common stock in August of the current fiscal year and were paid twel ve monthly cash dividends of $ \$ 1,500 $ each during the year.

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Question 5

The assets and liabilities of Rocky's Day Spa at December 31 and expenses for the year are listed below. The stockholders' equity was $68,000 ($48,000 in Common Stock and $20,000 in Retained Earnings) at January 1. The shareholders invested in an additional $10,000 of common stock during the year. Net income for the year is $45,625. $\begin{array}{|l|c|l|r|}
\hline \text { Accounts payable } & \$ 4,375 &\text { Spa operating expense } & \$ 23,760 \
\hline \text { Accounts receivable } &8,490& \text {  Office expense } & 2,470 \
\hline \text { Cash } & 13,980& \text {Spa supplies } & 9,230 \
\hline \text { Fees earned } &???& \text {  Wages expense } & 26,580 \
\hline \text { Spa furniture \& equipment } & 56,000& \text { Dividends } & 38,170 \
\hline \text { Computers } & 2,130 & \
\hline
\end{array}$ ?
Prepare a balance sheet for Rocky's Day Spa for the year ended December 31.

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Question 6

Using the following accounts and their amounts, prepare in good format a statement of stockholder's equity for Bright Futures Company for the month ended August 31. No common stock was issued during the year. $\begin{array}{lr}
\text { Tel ephone expense } & 1,150 \
\text { Cash } & 3,000 \
\text { Accounts payable } & 1,540 \
\text { Dividends } & 800 \
\text { Fees earned } & 15,700 \
\text { Rent expense } & 1,400 \
\text { Supplies } & 140 \
\text { Accounts receivable } & 1,500 \
\text { Computer equipment } & 17,600 \
\text { Common stock } & 10,000 \
\text { Retained earnings (August } 1 \text { ) } & 4,320 \
\text { Wages expense } & 4,800 \
\text { Utilities expense } & 750 \
\text { Office expense } & 420
\end{array}$ ​
​

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Question 7

Using the following accounts and their amounts, prepare in good format an income statement for Bright Futures Company for the month ended August 31.
 $\begin{array}{lr}
\text { Tel ephone expense } & 1,150 \
\text { Cash } & 3,000 \
\text { Accounts payable } & 1,540 \
\text { Dividends } & 800 \
\text { Fees earned } & 15,700 \
\text { Rent expense } & 1,400 \
\text { Supplies } & 140 \
\text { Accounts receivable } & 1,500 \
\text { Computer equipment } & 17,600 \
\text { Common stock } & 10,000 \
\text { Retained earnings (August } 1) & 4,320 \
\text { Wages expense } & 4,800 \
\text { Utilities expense } & 750 \
\text { Office expense } & 420
\end{array}$ ?

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Question 8

For each of the following, determine the amount of net income or net loss for the year. (a) Revenues for the year totaled $\$ 71,300$ and expenses totaled $\$ 35,500$. The shareholders purchased $\$ 15,000$ of common stock during the year.
(b) Revenues for the year totaled $\$ 220,500$ and expenses total ed $\$ 175,000$. The shareholders were paid $\$ 40,000$ dividends during the year.
(c) Revenues for the year totaled $\$ 149,000$ and expenses total ed $\$ 172,000$. The shareholders purchased $\$ 12,000$ of common stock and were paid $\$ 16,000$ in dividends during the year.
(d) Revenues for the year totaled $\$ 198,150$ and expenses total ed $\$ 174,200$. The shareholders were paid $\$ 35,000$ dividends during the year.

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Question 9

Identify which of the following accounts would appear on a balance sheet. (a) Cash
(b) Fees earned
(c) Common stock
(d) Wages payable
(e) Rent expense
(f) Supplies
(g) Land

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Question 10

Name and describe the four primary financial statements for a corporation.

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Question 11

On March 1, the amount of common stock and retained earnings in Richard's Catering Company was $100,000 and $50,000, respectively. During March, stockholders were paid $31,000 in dividends from the business. The amounts of the various assets, liabilities, revenues, and expenses are as follows: $$\begin{array} { l r } 
\text { Accounts payable } & \$ 10,250 \
\text { Accounts receivable } & 45,950 \
\text { Cash } & 23,840 \
\text { Fees earned } & 64,950 \
\text { Insurance expense } & 1,275 \
\text { Land } & 88,400 \
\text { Miscellaneous expense } & 1,210 \
\text { Rent expense } & 9,000 \
\text { Sal ary expense } & 20,300 \
\text { Supplies } & 900 \
\text { Supplies expense } & 525 \
\text { Utilities expense } & 2,800
\end{array}$$ ?
Present, in good form, (a) an income statement for March, (b) a statement of stockholder's equity for March, and (c) a balance sheet as of March 31.

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Question 12

Indicate whether each of the following activities would be reported on the statement of cash flows as an operating activity, an investing activity, a financing activity, or does not appear on the cash flow statement. (a) Cash paid for building
(b) Cash paid to suppliers
(c) Cash paid for dividends
(d) Cash received from customers
(e) Cash received from the sale of common stock
(f) Cash received from the sale of a building
(g) Borrowed cash from a bank

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Question 13

Explain the interrelationship between the balance sheet and the statement of cash flows.

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Question 14

Match the following items to the financial statement where they can be found. (Hint: Some of the items can be found on more than one financial statement.)
A. Balance sheet
B. Income statement
C. Statement of cash flows
D. Statement of stockholder's equity $$\begin{array} { | l | l | } 
\hline \# & \text { Item } \
\hline 1 . & \text { Dividends } \
\hline 2 . & \text { Revenues } \
\hline 3 . & \text { Supplies } \
\hline 4 . & \text { Land } \
\hline 5 . & \text { Accounts payable } \
\hline 6 . & \text { Accounts receivable } \
\hline 7 . & \text { Operating activities } \
\hline 8 . & \text { Wages expense } \
\hline 9 . & \text { Net income } \
\hline 10 . & \text { Cash } \
\hline
\end{array}$$

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Question 15

What information does the income statement give to business users?

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Question 16

The assets and liabilities of Rocky's Day Spa at December 31 and expenses for the year are listed below. The stockholders' equity was $68,000 ($48,000 in Common Stock and $20,000 in Retained Earnings) at January 1. The shareholders invested in an additional $10,000 of common stock during the year. Net income for the year is $45,625. $\begin{array}{|l|c|l|r|}
\hline \text { Accounts payable } & \$ 4,375 &\text { Spa operating expense } & \$ 23,760 \
\hline \text { Accounts receivable } &8,490& \text {  Office expense } & 2,470 \
\hline \text { Cash } & 13,980& \text {Spa supplies } & 9,230 \
\hline \text { Fees earned } &???& \text {  Wages expense } & 26,580 \
\hline \text { Spa furniture \& equipment } & 56,000& \text { Dividends } & 38,170 \
\hline \text { Computers } & 2,130 & \
\hline
\end{array}$ ?
Prepare an income statement for Rocky's Day Spa for the current year ended December 31.

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Question 17

What are the three sections of the statement of cash flows?

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Question 18

The assets and liabilities of Rocky's Day Spa at December 31 and expenses for the year are listed below. The stockholders' equity was $68,000 ($48,000 in Common Stock and $20,000 in Retained Earnings) at January 1. The shareholders invested in an additional $10,000 of common stock during the year. Net income for the year is $45,625. $\begin{array}{|l|c|l|l|}
\hline \text { Accounts payable } & \$ 4,375& \text { Spa operating expense } & \$ 23,760 \
\hline \text { Accounts receivable } &8,490& \text {  Office expense } & 2,470 \
\hline \text { Cash } &13,980& \text {  Spa supplies } & 9,230 \
\hline \text { Fees earned } & 98,435& \text { Wages expense } & 26,580 \
\hline \text { Spa furniture } \& \text { equipment } & 56,000&\text { Dividends } & 38,170 \
\hline \text { Computers } & 2,130 & \
\hline
\end{array}$  ?
Prepare a statement of stockholder's equity for Rocky's Day Spa for the current year ended December 31.

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Question 19

From the following list of items taken from Lamar's accounting records, identify those that would appear on the income statement. (a) Rent expense
(b) Land
(c) Common stock
(d) Fees earned
(e) Dividends
(f) Wages expense
(g) Investment

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Question 20

A summary of cash flows for Linda's Design Services for the year ended December 31 is shown below. $\begin{array}{l}
\text { Cash receipts: }\
\begin{array}{lr}
\text { Cash received from customers } & \$ 83,990 \
\text { Cash received from sale of stock } & 25,000
\end{array}
\end{array}$ ? $\begin{array}{lr}
\text { Cash payments: }\
\text { Cash paid for expenses } & \$ 27,000 \
\text { Cash paid for land } & 47,000 \
\text { Cash paid for supplies } & 410 \
\text { Dividends } & 5,000\
\
\text { The cash balance as of January 1}&
\$ 40,600
\end{array}$ ?
Prepare a statement of cash flows for Linda's Design Services for the year ended December 31.

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Quiz 1: Accounting and Business

Identify which of the following accounts would appear on a balance sheet. (a) Cash (b) Fees earned (c) Common stock (d) Wages payable (e) Rent expense (f) Supplies (g) Land

Name and describe the four primary financial statements for a corporation.

Explain the interrelationship between the balance sheet and the statement of cash flows.

What information does the income statement give to business users?

What are the three sections of the statement of cash flows?

From the following list of items taken from Lamar's accounting records, identify those that would appear on the income statement. (a) Rent expense (b) Land (c) Common stock (d) Fees earned (e) Dividends (f) Wages expense (g) Investment