Question 1

The accounts of Garfield Company listed with the increases or decreases that occurred during the past year are as follows.
 $$\begin{array} { | l | r | r | } 
\hline \text { Account } & \text { Increase } & \text { Decrease } \
\hline \text { Cash } & \$ 25,000 & \
\hline \text { Accounts receivable } & & \$ ( 5,000 ) \
\hline \text { Accounts payable } & & ( 11,000 ) \
\hline \text { Notes payable } & 16,000 & \
\hline
\end{array}$$ 
The only items affecting the equity accounts are: net income,an investment of $3,000 by the owner in exchange for stock and dividends of $11,000.Using the balance sheet equation,compute net income for the past year.

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Question 2

You are reviewing the accounting records of Cathy's Antiques,Inc.owned by Cathy Miller.You have uncovered the following situations.Compose a memo to Ms.Miller that cites the appropriate accounting principle and the suggested action for each separate situation.
In August,a check for $500 was written to Wee Day Care Center.This amount represents child care for her son Brandon.
Cathy plans a Going out of Business Sale for May,since she will be closing her business for a month-long vacation in June.She plans to reopen July 1 and will continue operating Cathy's Antiques indefinitely.
Cathy received a shipment of pine furniture from Quebec,Canada.The invoice was stated in Canadian dollars.
Joseph Clark paid $1,500 for a dining table.The amount was recorded as revenue.The table will be delivered to Mr.Clark in six weeks.

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Question 3

A company has assets of $500,000 and equity of $350,000.What is the amount of liabilities?

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Question 4

Prior to purchasing a tract of land,Fast-Forward had the land appraised at $300,000.The management of Fast-Forward purchased the land for $275,000.At what amount should the land be recorded on Fast-Forward's books? What accounting principle supports your answer?

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Question 5

A company performed testing services for a client.The client paid the company $3,000 in cash.Enter the appropriate amounts that reflect this transaction into the company's accounting equation format shown below.
 $$\begin{array} { | c | c | c | } 
\hline \text { Assets } = & \text { Liabilities } + & \text { Equity } \
\hline & & \
\hline
\end{array}$$

Accepted Answer

The answer of A company performed testing services for a...

Question 6

Sara Bloom has prepared the following analysis of September transactions for her business,Blooming Florist.Unfortunately,she has lost some information.Determine the missing amounts (a)through (c)below.
 $\begin{array}{|l|r|r|r|r|r|r}
\hline \text { Date } & \text { Cash } & \begin{array}{c}
\text { Accounts } \
\text { Receivable }
\end{array} & \begin{array}{c}
\text { Accounts } \
\text { Payable }
\end{array} & \begin{array}{c}
\text { Notes } \
\text { Payable }
\end{array} & \begin{array}{c}
\text { Common } \
\text { Stock }
\end{array} & \begin{array}{l}
\text { Retained } \
\text { Earnings }
\end{array} \
\hline \text { Balances } & 30,000 & 30,100 & \text { (a) } & 8,500 & 10,000 & 30,000 \
\hline 9 / 5 & -10,000 & 0 & \text { (b) } & 0 & 0 & \
\hline 9 / 10 & -3,500 & 0 & 0 & 0 & 0 & \text { (c) }\
\hline 
\end{array}$

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Question 7

If Madiera Company paid $42,000 of its accounts payable in cash,what would be the effect of this transaction on assets,liabilities and equity?

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Question 8

At the beginning of the year,a company had $120,000 worth of liabilities.During the year,assets increased by $160,000 and at year-end they equaled $360,000.Liabilities decreased $20,000 during the year.Calculate the beginning and ending values of equity.

Accepted Answer

Ending equity = $260,000
 11ea8a0c_35a5_a4aa_8b44_c9c39f60971d_TB6314_00

Question 9

A company purchased $7,000 of supplies and testing equipment on credit.Enter the appropriate amounts that reflect this transaction into the accounting equation format shown below.
 $$\begin{array} { | c | c | c | } 
\hline \text { Assets } = & \text { Liabilities } + & \text { Equity } \
\hline & & \
\hline
\end{array}$$

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The answer of A company purchased $7,000 of supplies and...

Question 10

If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period,did the assets of the company increase or decrease and by what amount?

Accepted Answer

Assets = Liabilities + Equity + $62,000 = +$92,000 - $30,000

Question 11

On May 1,Chuck Taylor formed Fast-Forward,a shoe consulting business as a corporation.To start the business he invested $750,000 in cash.Enter the appropriate amounts reflecting the transaction into the accounting equation format shown below.
 $$\begin{array} { | c | c | c | } 
\hline \text { Assets } = & \text { Liabilities } + & \text { Equity } \
\hline & & \
\hline
\end{array}$$

Accepted Answer

The answer of On May 1,Chuck Taylor formed Fast-Forward,a shoe...

Question 12

A parcel of land is offered for sale at $600,000 is assessed for tax purposes at $500,000 is recognized by its purchasers as easily being worth $575,000 and is purchased for $570,000.At what amount should the land be recorded in the purchaser's books? What accounting principle supports your answer?

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Question 13

The following information is available for the Skate and Boards Rental.
 $\begin{array}{|l|r|}
\hline \text { Assets at December } 31,2011 & \$ 152,000 \
\hline \text { 2011 Cash inflows from operating activities } & 105,000 \
\hline \text { 2011 Cash outflows from financing activities } & (44,000) \
\hline \text { 2011 Cash outflows from investing activities } & (84,000) \
\hline \text { 2011 Expenses } & (43,000) \
\hline \text { Retained earnings at December 31, 2010 } & 50,000 \
\hline \text { Liabilities at December 31, 2011 } & 28,000 \
\hline \text { Common stock at December 31, 2011 } & 12,000 \
\hline \text { 2011 Revenues } & 135,000 \
\hline \text { 2011 Dividends } & (30,000)\
\hline
\end{array}$ 
Using the above information prepare an Income Statement,Statement of Retained Earnings and Statement of Cash Flows for the Skate and Boards Rental for 2011.Also,prepare its Balance Sheet as of December 31,2011.Assume that the 12/31/10 cash balance is $70,000.

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Question 14

The accountant of Magic Video Games prepared a balance sheet immediately after each transaction was recorded.During September,the first month of operation,the following balance sheets were prepared:

Required: Describe the nature of each of these five transactions for the month of September.
 $$\begin{array} { | l | l | l|} 
\hline \text { Sept. } & 1&\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \
\hline & 5 \
\hline & 9 \
\hline & 11 \
\hline & 15 \
\hline
\end{array}$$

Accepted Answer

The answer of The accountant of Magic Video Games prepared...

Question 15

Data for Madison Realty are as follows:
 $\begin{array}{|l|r|}
\hline \text { Total assets at December } 31,2010 & \$ 100,000 \
\hline \text { Total liabilities at December 31,2010 } & 35,000 \
\hline \text { Total revenues 2011 } & 79,000 \
\hline \text { Total expenses for 2011 } & 47,000 \
\hline \text { Common stock at December 31, 2010 } & 20,000\
\hline
\end{array}$
 
Madison Realty paid dividends of $30,000 during 2011.From the above data,prepare Madison Realty's statement of retained earnings for the year ended December 31,2011.

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The answer of Data for Madison Realty are as follows:
...

Question 16

The records of Skymaster Airplane Rentals show the following information as of December 31,2011
 $\begin{array}{|l|r|l|r|}
\hline \text { Accounts payable } & \$ 36,000 & \text { 2011 Wages expense } & \$ 75,000 \
\hline \text { Insurance expense } & 2,000 & \text { 2011 Advertising expense } & 22,000 \
\hline \text { Accounts receivable } & 24,000 & \text { Cash } & 11,000 \
\hline \text { Retained earnings, } & & \text { Common stock } & 20,000 \
\text { December } 31,2010 & 130,000 & \text { Office furniture } & 15,000 \
\hline\text { Airplanes } & 150,000 & \text { 2011 Maintenance expense } & 39,000 \ 
\hline \text { Notes payable } & 47,000 & \text { 2011 Revenues } & 217,000 \
\hline \text { Hangar } & 60,000 & &\
\hline
\end{array}$
 
Dividends of $52,000 were paid during 2011.
Using the above information,prepare an income statement for 2011.

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Question 17

Identify the risk and the return in each of the following examples.
A.Investing $500 in a CD at 4.5% interest
B.Placing a $100 bet on an NBA game
C.Investing $10,000 in Microsoft stock
D.Borrowing $20,000 in student loans

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Question 18

Presented below is selected financial information for Stanley's Bike Shop.Using the appropriate information,prepare the income statement for 2011.
 $$\begin{array} { | l | r | } 
\hline \text { Total Assets at December 31, 2011 } & \$ 91,000 \
\hline 2011 \text { Expenses } & 38,000 \
\hline \text { Total Equity at December } 31,2010 & 48,000 \
\hline \text { Total Liabilities at December 31,2010 } & 35,000 \
\hline 2011 \text { Revenues } & 46,000 \
\hline
\end{array}$$

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Question 19

From the information given,prepare a November 30 balance sheet.
On November 1 of the current year,Lois Bell began Lois Bell,Interior Design as a corporation with an initial investment of $50,000 cash.On November 30 her records showed the following (alphabetically arranged)selected accounts and amounts:
 $\begin{array}{|l|r|l|r|}
\hline\text { Accounts Payable } & \$ 12,000 & \text { Office furnishings } & \$ 40,000 \
\hline \text { Accounts Receivable } & 23,000 & \text { Dividends } & 6,000 \
\hline \text { Cash } & 17,200 & \text { Rent expense } & 3,600 \
\hline \text { Fees earned } & 30,000 & \text { Salaries expense } & 6,200 \
\hline \text { Notes payable } & 4,250 & \text { Telephone expense } & 250\
\hline
\end{array}$

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Question 20

Della's Donuts has revenues of $83,000 and expenses of $64,000.Calculate its net income.

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Quiz 1: Introducing Accounting in Business