1. Ben's Bicycle Shop has current assets in the form of cash at $100,000. Current liabilities include accounts payable ($40,000) and unearned income ($30,000) and owner's equity. On a balance sheet for Ben's Bicycle Shop, what would be the amount of owner's equity? How did you arrive at this amount?
2. Briefly explain how the information in a balance sheet is used.
3. Briefly discuss the different types of budgets that make up the master budget.

Aaron, a businessman, has a method of keeping track of accounts receivable by sorting them into groups of those that are 30, 60, 90, and over 90 days past due. Aaron decides to sell long delinquent accounts to a collection agency. Which of the following actions will the collection agency which buys the delinquent accounts from Aaron do?

Multiple Choice

A. Collect the entire amount owed and return it to Aaron.

B. Sell it back to Aaron after collecting the entire amount owed.

C. Collect the entire amount owed and keep all the money it obtains.

D. Take mild actions and collect a token amount.