Complete the assignment using Excel. Ensure your work is organized, properly labeled, and highlight your final answer. Written responses must adhere to APA format.

Q 1-3 The president of your firm, Lesky and Lesky, has little background in accounting. Today, he walked into your office and said, A year ago we bought a piece of land for $100,000. This year, inflation has driven prices up by 6%, and an appraiser just told us we could easily resell the land for $115,000. Yet our balance sheet still shows it at $100,000. It should be valued at $115,000. That's what it's worth. Or, at a minimum, at $106,000. Respond to this statement with specific reference to the accounting principles applicable in this situation.

Q 1-4 Identify the accounting principle(s) applicable to each of the following situations:

a.Tim Roberts owns a bar and a rental apartment and operates a consulting service. He has separate financial statements for each.

b.An advance collection for magazine subscriptions is reported as a liability titled Unearned Subscriptions.

c.Purchases for office or store equipment for less than $25 are entered in Miscellaneous Expense.

d.A company uses the lower of cost or market for valuation of its inventory.

e.Partially completed television sets are carried at the sum of the cost incurred to date.

f.Land purchased 15 years ago for $40,500 is now worth $346,000. It is still carried on the books at $40,500.

g.Zero Corporation is being sued for $1 million for breach of contract. Its lawyers believe that the damages will be minimal. Zero reports the possible loss in a note.

P 1-5 The following data relate to Jones Company for the year ended December 31, 2011:

Sales on credit	$80,000
Cost of inventory sold on credit	65,000
Collections from customers	60,000
Purchase of inventory on credit	50,000
Payment for purchases	55,000
Cash collections for common stock	30,000
Dividends paid	10,000
Payment to salesclerk	10,000

Required

a. Determine income on an accrual basis.

b. Determine income on a cash basis.

Q 2-9 What are the three principal financial statements of a corporation? Briefly describe the purpose of each statement.

P 2-3 Gaffney Company had these adjusting entry situations at the end of December.

1. On July 1, Gaffney Company paid $1,200 for a one-year insurance policy. The policy was for the period July 1 through June 30. The transaction was recorded as prepaid insurance and a reduction in cash.

2. On September 10, Gaffney Company purchased $500 of supplies for cash. The purchase was recorded as supplies. On December 31, it was determined that various supplies had been consumed in operations and that supplies costing $200 remained on hand.

3. Gaffney Company received $1,000 on December 1 for services to be performed in the following year. This was recorded on December 1 as an increase in cash and as revenue. As of December 31, this needs to be recognized as Unearned Revenue, a liability account.

4. As of December 31, interest charges of $200 have been incurred because of borrowed funds. Payment will not be made until February. A liability for the interest needs to be recognized, as does the interest expense.

5. As of December 31, a $500 liability for salaries needs to be recognized.

6. As of December 31, Gaffney Company had provided services in the amount of $400 for Jones Company. An asset, Accounts Receivable, needs to be recognized along with the revenue.

P 2-4 DeCort Company had these adjusting entry situations at the end of December:

1. On May 1, DeCort Company paid $960 for a two-year insurance policy. The policy was for the period May 1 through April 30 (2 years). This is the first year of the policy. The transaction was recorded as insurance expense.

2. On December 1, DeCort Company purchased $400 of supplies for cash. The purchase was recorded as an asset, supplies. On December 31, it was determined that various supplies had been consumed in operations and that supplies costing $300 remained on hand.

3. DeCort Company holds a note receivable for $4,000. This note is interest-bearing. The interest will be received when the note matures. The note is a one-year note receivable made on June 30, bearing 5% simple interest.

4. DeCort Company owes salaries in the amount of $800 at the end of December.

5. As of December 31, DeCort Company had received $600 for services to be performed. These services had not been performed as of December 31. A liability, Unearned Revenue, needs to be recognized, and revenue needs to be reduced.

6. On December 20, DeCort Company received a $400 bill for advertising in December. The liability account, Accounts Payable, needs to be recognized along with the related expense.