1. At the end of the fiscal year of 2019, Howdy Construction Co., Inc. has the following financial profile (all figures are in dollars):

Total Assets: $1,550,000

Total Liabilities: $960,000

Total revenue: $365,200

Total expenses: $287,250

1. What is the total equity of the company?
2. What is the net income after taxes? (Assume a 25% tax rate)
3. Did the equity increase, decrease or remain the same compared to FY 2018? Why?

2. For each of the following independent situations, describe the accounting assumptions, characteristics, or conventions that have been violated.

1. Hilary is the sole proprietor of Hilary Co. During March, the following items were recorded as expenses on the firms books:

Rent on office $500

Supplies for personal use $100

Advertising $250

Employees Wages $700

Pleasure Travel $200

2. Weiss Corporation spent $200 on printing materials and printer cartridges during the current year. These items were listed in the asset section of the balance sheet, labeled office supplies.
3. Over the past few years, the president of Lansing Company has purchased a number of paintings to decorate his office. Recently, one of the artists died, and his paintings have increased in value by over 200 percent. The president has therefore instructed the accounting department to increase the recorded cost of the paintings to reflect this change.
4. Carol Inman, the accountant for Borsting Com, was preparing the firms financial statements. During her analysis, she noticed that the firm had five acres of land in the heart of downtown that it had purchased a couple of years ago for $900,000. Because of a rather severe economic recession that began last year, the market value of real estate has fallen. A similar plot of land recently sold for $500,000, but Carol had decided not to reduce the recorded value of the land.

3. If a typical firm reports $20 million of retained earnings on its balance sheet, can the firm definitely pay a $20 million cash dividend?

4. The following numbers are for Handyman Company for 2019.

Short-term loans payable	10		Long-term debt	207
Interest expense	9		Income tax expense	4
Paid-in Capital	50		Retained earnings (as of 1/1/19)	31
Cash	10		Receivables	27
Dividends	0		Sales	700
Accumulated depreciation	9		Accounts payable	74
Inventory	153		Property, plant & equipment	199
Cost of goods sold	519		Other operating expense	160

1. Create a balance sheet and an income statement for this company
2. Handyman is wondering what its balance sheet and income statement would have looked like if the following numbers were changed as indicated:

	Change
	From	To
Sales	700	825
Cost of goods sold	519	620
Other operating expenses	160	189

3. Create a second income statement and balance sheet with the numbers changed as indicated. After making these changes, your balance sheet may no longer balance. What actions would have been taken in order to eliminate this discrepancy by the Handyman?