Attached is a PDF file for Chapter 3 Exercises and Problems. Please complete Exercise 1, 4, and 9 and presentthese exercises and problems in Excel spreadsheet. Thank you!

SHORT ANSWER QUESTIONS, EXERCISES, AND PROBLEMS A) Comprehensive Review Questions: 1. How do accounts payable and notes payable differ? How are they similar? 2. Define revenues. How are revenues measured? 3. Define expenses. How are expenses measured? 4. What is a balance sheet? On what aspect of a business does the balance sheet provide information? 5. What information does the statement of retained earnings provide? 6. Identify the three types of activities shown in a statement of cash flows. 7. What is a transaction? What use does the accountant make of transactions? Why? 8. What is the accounting equation? Why must it always balance? 9. Give an example from your personal life that illustrates your use of accounting information in reaching a decision. 10. You have been elected to the governing board of your church. At the first meeting you attend, mention is made of building a new church. What accounting information would the board need in deciding whether or not to go ahead? 11. A company purchased equipment for USD 2,000 cash. The vendor stated that the equipment was worth USD 2,400. At what amount should the equipment be recorded? 12. What is meant by money measurement? 13. Of what significance is the exchange-price (or cost) concept? How is the cost to acquire an asset determined? 14. What effect does the going-concern (continuity) concept have on the amounts at which long-term assets are carried on the balance sheet? 15. Of what importance is the periodicity (time periods) concept to the preparation of financial statements? 16. Describe a transaction that would: a) Increase both an asset and capital stock. b) Increase both an asset and a liability. c) Increase one asset and decrease another asset. d) Decrease both a liability and an asset. e) Increase both an asset and retained earnings. f) Decrease both an asset and retained earnings. g) Increase a liability and decrease retained earnings. h) Identify the causes of increases and decreases in stockholders' equity. B) Accounting Exercises: Exercise 1. Applying Basic Accounting Equation Royals Palm, Inc. reports the following assets and liabilities. Compute the totals that would appear in the corporation's basic accounting equation (Assets = Liabilities + Stockholders' Equity (Capital Stock)). Cash Accounts Payable Office Supplies Loan Payable Accounts Receivable Answer: Assets = Liabilities $55,000 25,000 1,500 7,000 10,000 + Stockholders' Equity Exercise 2. Applying Basic Accounting Equation Dan and Den, Inc. reports the following assets and liabilities. Compute the totals that would appear in the corporation's basic accounting equation (Assets = Liabilities + Stockholders' Equity (Capital Stock)). Answer: Assets Cash Accounts Payable Supplies Loan Payable Inventory = Liabilities $37,000 15,000 1,800 9,000 12,000 + Stockholders' Equity Exercise 3. Applying Basic Accounting Equation Mercury, Inc. reports the following assets and liabilities. Compute the totals that would appear in the corporation's basic accounting equation (Assets = Liabilities + Stockholders' Equity (Capital Stock)). Cash Accounts Payable Supplies Loan Payable Inventory Accounts Receivable Equipment $67,000 13,000 2,800 9,000 12,000 15,000 25,000 Exercise 4. On 2014 December 31, Perez Company, the accounting records showed the following information: Assets Liabilities Capital Stock Earned revenues Incurred expenses Dividends declared and paid amounted to $150,000 $50,000 $100,000 $45,000 $33,750 $3,000 1. Prepare the Statement of Stockholders' Equity on 2014 December 31. Statement of Stockholders' Equity Perez Company Month Ended on December 31, 2014 Perez Company, Capital Stock , January 1, 2014 (beginning balance) Net income for the year Less: Dividends Perez Company, Capital Stock, December, 2014 (ending balance) $100,000 Exercise 5. On 2014 December 31, Bryniuk's Company, the accounting records showed the following information: Assets Liabilities Capital Stock Earned revenues Incurred expenses Dividends declared and paid amounted to $750,000 $250,000 $500,000 $175,000 $87,750 $15,000 1. Prepare the Statement of Stockholders' Equity on 2014 December 31. Statement of Stockholders' Equity Bryniuk's Company Month Ended on December 31, 2014 Bryniuk's Company, Capital Stock , January 1, 2014 (beginning balance) $......... Net income for the year Less: Dividends Bryniuk's Company, Capital Stock , December, 2014 (ending balance) Exercise 6. On 2014 December 31, Carlsen Company, the accounting records showed the Stockholders' equity totaled $85,000 at the beginning of the year. During the year, net income was $18,000, dividends of $8,000 were declared and paid. In addition, in 2914, $7,000 of common stock was issued at par value. 1. Carlsen Stockholders' Equity on 2014 December 31. 2. Beginning balance...................... $85,000 3. Changes during the year: - Common stock issued..................... - Net income for the year................18,000 - Less: Dividends..........................(8000) 1. Ending balance.................. $............ Exercise 7. On 2014 December 31, Mitchell Company, the accounting records showed the Stockholders' equity totaled $95,000 at the beginning of the year. During the year, net income was $15,000, dividends of $15,000 were declared and paid. In addition, in 2914, $5,000 of common stock was issued at par value. 1. Compute the company's Stockholders' Equity on 2014 December 31. Exercise 8. On 2014 December 31, RodCast Company, the accounting records showed: Net sales Gross profit Net income Income tax expense Selling, general, and administrative expenses $807,000 $177,000 $35,000 $15,000 $87,000 Compute Company's cost of goods sold, income from operations, income before taxes, and interest expense. Net Sales Cost of Goods Sold Gross Profit Selling, general, and administrative expenses Income From Operations Interest Expense Income Before Taxes Income Taxes Net Income $807,000 $177,000 $87,000 $15,000 $35,000 Exercise 9. On 2014 December 31, Lidowski Company, the accounting records showed: Net sales Gross profit Net income Income tax expense Selling, general, and administrative expenses $105,000 $57,000 $21,000 $9,000 $6,500 Compute Company's cost of goods sold, income from operations, income before taxes, and interest expense. Net Sales Cost of Goods Sold Gross Profit Selling, general, and administrative expenses Income From Operations Interest Expense Income Before Taxes Income Taxes Net Income $105,00 Required: Calculate cost of goods sold, income from operations, income before taxes, and interest expense. Exercise 10. Give examples of transactions that would have the following effects on the items in a firm's financial statements: 1. Increase cash; decrease some other asset. 2. Decrease cash; increase some other asset. 3. Increase an asset; increase a liability. 4. Decrease retained earnings; decrease an asset. 5. Increase an asset other than cash; increase retained earnings. 6. Decrease an asset; decrease a liability. Exercise 11. Which of the following transactions results in a decrease in retained earnings? Why? 1. Employees were paid USD 20,000 for services received during the month. 2. USD 175,000 was paid to acquire land. 3. Paid an USD 18,000 note payable. No interest was involved. 4. Paid a USD 200 account payable. Exercise 12. Assume that the following items were included in the Retained Earnings column in the summary of transactions for Cinck Company for July 2014: Salaries expense Service revenue $120,000 300,000 Gas and oil expense 27,000 Rent expense 48,000 Dividends paid 40,000 Prepare an income statement for July 2010. Comprehensive Problems Example: Larson's Accounting Company has the following assets and liabilities: Cash, $5,000; Accounts Receivable, $2,000; Prepaid Rent, Supplies, $850, $1,500; Equipment, $6,000; Trucks, $15,000; Accounts Payable, $2,500. Business transactions during December are presented as follows: 1. Company received cash from clients for services, $4,500 2. Larson paid to creditors $500, 3. Paid office rent for the month of December, $750, 4. Company billed client for accounting services on account, $5,200 5. Supplies were purchased on account, $650, 6. Company received cash from clients billed previously, $5,200 7. Larson received an invoice for services from Office Extra for December (the invoice will be paid next month), $850, 8. Larson paid monthly salaries, $2,700, 9. Utilities expense were paid, $280, 10. Miscellaneous expense were paid, $350, 11. Dividends were paid, $550. Record all business transactions. Larson Company Income Statement Month Ended December 31, 2014 Fees earned $9,700 Expenses: Rent Expense Service Expense Wages Expense Utilities Expense $750 850 2700 280 Miscellaneous expense 350 Total Expenses $4,930 Net Income ($9,700 - $4,930)= $4,770 Larson Company Statement of Stockholders' Equity Month Ended December 31, 2014 Larson Inc., Capital Stock , December 31, 2014 $27,850 Net income for the month $4,770 Less Dividends - 550 Increase in Stockholders' Equity + 4,220 Larson Inc., Capital Stock , December 31, 2014 $32,070 Larson Company Balance Sheet Month Ended December 31, 2014 Assets Liabilities Cash $10,320 Accounts Receivable Accounts Payable $3,500 2,000 Prepaid Rent 750 Stockholders' Equity Supplies 1,500 Capital Stock 32,070 Total Liabilities and Stockholders' Equity $35,570 Equipment 6,000 Trucks 15,000 Total Assets $35,570 Larson Company Statement of Cash Flow Month Ended December 31, 2014 Cash flows from operating activities Cash received from customers $9,700* Minus cash payments for operating expenses - 3,830** Net cash from operating activities +$5,870 Cash flows from investing activities - Cash flows from financing activities: - Cash received from owner as investment Minus paid dividends -$550 Net cash flows from financing activities $550 Net increase in cash during the year +5,320 Cash as of December 1, 2014 $5,000 Cash as of December 31, 2014 $10,320 $9,700*= $4,500+$5,200 $3,830**= $500+ $2,700+ $280 +$350 Comprehensive Problem 1. Cast 77 Service Company has the following assets and liabilities: Cash, $6,000; Accounts Receivable, $7,000; Prepaid Rent, 1,900; Prepaid Insurance, $1,200 Supplies, $950, $1,500; Equipment, $7,000; Trucks, $10,000; Accounts Payable, $2,700. Business transactions during December are presented as follows: 1. Company received cash from clients for services, $7,500 2. Cast 77 paid to creditors $600, 3. Paid office rent for the month of December, $950, 4. Company billed client for accounting services on account, $8,200 5. Supplies were purchased on account, $450, 6. Company received cash from clients billed previously, $4,200 7. Cast 77 received an invoice for services from Copy Plus for December (the invoice will be paid next month), $550, 8. Cast 77 paid monthly salaries, $4,700, 9. Utilities expense were paid, $380, 10. Miscellaneous expense were paid, $250, 11. Paid for monthly insurance, $200 12. Dividends were paid, $750. Required: Apply basic accounting equation (create a spreadsheet). Prepare income statement at the end of December 31, 2014. Formulate statement of stockholders' equity at the end of December 31, 2014. Prepare balance sheet and statement of cash flows at the end of December 31, 2014