8. On an unadjusted trial balance, why does the retained earnings balance shown relate to the beginning of the period rather than the end of the period? 9. The name prepaid expense implies that this type of account is an expense account and belongs on an income statement. However, these accounts actually appear on the statement of financial position as assets. Explain (a) why prepaid expense items are assets, and (b) why they require adjustment at the end of each period. 10. Manny Corporation, which has a fiscal year end of June 30th, has a bank loan payable with interest of $129 owing each month, due and payable on the ist of the following month. Adjusting entries are made annually. (a) Does it matter if the company does not record the interest on June 30th, but instead records it when it is paid on the 1st of July? Explain. (b) If a journal entry is not made on June 30th, identify which accounts, if any, will be overstated or understated for the fiscal year. If no accounts will be affected, say so. 11. Use the accounting equation to answer these independent questions: (a) The shareholders' equity of Samsam Corporation is $120,000. Its total liabilities are $55,000. What is the amount of Samsam's total assets? (b) The liabilities of Corgio Corporation are $170,000. Corgia's share capital is $100,000 and its retained earnings are $90,000. What is the amount of Corgio's total assets? (c) The total assets of Pietre Limited are $150,000. Its share capital is $50,000 and its retained earnings are $25,000. What is the amount of its total liabilities? (d) The total assets of Yakov Inc. are $500,000 and its liabilities are equal to half its total assets. What is the amount of Yakov's shareholders' equity? 12. A list of financial statement items for McIvor Corporation includes the following: accounts receivable $14,500; cash $16,400; inventory $9,000; supplies $4,200; prepaid insurance $3,900; accumulated depreciation-buildings $33,000; accumulated depreciation-equipment $25,000; buildings $110,000; equipment $70,000; and land $65,000. Prepare the assets section of the statement of financial position. 13. For each of the situations discussed below, choose a basis of measurement to use and explain why. (a) Shumway Ltd. is a real estate company that purchases and holds land for eventual sale to developers. (b) Tanny Inc. is a manufacturing company that purchased land on which it plans to construct a new plant next year. It expects the value of the land to rise rapidly over the next few years. 14. Andy Ltd. has the following selected transactions: 1. Issued common shares to shareholders in exchange for $5,000. 2. Paid rent in advance for two months, $2,100. 3. Paid administrative assistant $500 salary. 4. Billed clients $1,200 for services provided. 5. Received $900 in partial payment from clients for services provided in item 4 above. 6. Purchased $500 of supplies on account. 7. Paid supplier amount owing on account, $500. 8. Borrowed $1,000 cash from the bank to purchase equipment. Journalize the transactions. 15. Transactions that affect cash do not necessarily affect net income. Identify the impact, if any, of each of the following transactions on cash and net income. The first transaction has been completed for you as an example. Cash Net income - $100 $0 (a) Purchased supplies for cash, $100. (b) Made an adjusting entry to record use of $75 of the supplies in item (a). (c) Performed services on account, $1,000. (d) Received $800 from customers in payment of their account in item (c). (e) Purchased equipment for cash, $5,000. (f) Made an adjusting entry to record depreciation of the equipment in item (e), $1,000. (g) Obtained a $1,000 bank loan. (h) Made an adjusting entry to accrue interest on the loan in item (g), $50. (i) Received $500 cash for services to be performed in the future. (j) Made an adjusting entry relating to the amount received in item (i) to show that $200 of the services had now been performed. (k) Made an adjusting entry to record utilities incurred but not yet paid, $250