penStax Principles of Accounting, Volume $1$: Financial Accounting

Chapter $2$: Introduction to Financial Statements

Page $1$ of $4$

Full Name: $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Exercise Set A

EA$1.$ LO $2\mathrm{.}1$ For each independent situation below, calculate the missing values.

Solution

Revenues $$ Expenses $+$ Gains $$ Losses $=$ Net Income$/($Loss$)$

$$1,250$ $$1,100$ $$125$ $$75?$

$?$ $$100,755$ $$0$ $$1,550($$$485)$

$$75,560$ $$68,600?$ $$1,675$ $$6,485$

$$26,390?$ $$320$ $$600($$$990)$

$$872,300$ $$856,995$ $$11,000?$ $$26,305$

EA$2.$ LO $2\mathrm{.}1$ For each independent situation below, calculate the missing values for owner$$s equity

Solution

Beginning Balance $+$ Investments $$ Distributions $=$ Ending Balance

$$0$ $$22,750$ $$12,000?$

$$17,630?$ $$7,500$ $$66,330$

$?$ $$75,300$ $$163,200$ $$138,900$

$$0$ $$175,300?$ $$159,530$

$$85,800$ $$62,750$ $$43,900?$

EA$3.$ LO $2\mathrm{.}1$ For each independent situation below, calculate the missing values.

Solution

Assets $$ Liabilities $=$ Owner$$s Equity

$$32,000$ $$17,000?$

$$168,700?$ $$146,300$

$$17,500$ $$16,830?$

$?$ $$232,000$ $$330,700$

$$382,170?$ $$125,270$

EA$4.$ LO $2\mathrm{.}1$ For each independent situation below, place an $($X$)$ by the transactions that would be

included in the statement of cash flows.

Solution

Transaction Included

Sold items on account

Wrote check to pay utilities

Received cash investment by owner

Recorded wages owed to employees

Received bill for advertising

OpenStax Principles of Accounting, Volume $1$: Financial Accounting

Chapter $2$: Introduction to Financial Statements

Page $2$ of $4$

EA$5.$ LO $2\mathrm{.}2$ For each of the following items, identify whether the item is considered current or

noncurrent, and explain why.

Solution

Item Current or Noncurrent?

Cash

Inventory

Machines

Trademarks

Accounts Payable

Wages Payable

Owner, Capital

Accounts Receivable

EA$6.$ LO $2\mathrm{.}2$ For the items listed below, indicate how the item affects equity $($increase$,$ decrease,

or no impact.

Solution

Item Increase? Decrease? or No Impact?

Expenses

Assets

Gains

Liabilities

Dividends

EA$7.$ LO $2\mathrm{.}2$ Forest Company had the following transactions during the month of December.

What is the December $31$ cash balance?

Cash sales $$3,250$

Payment for inventory $1,760$

Investments by owners $3,000$

Supplies used $175$

Cash withdrawals $260$

Inventory received $2,500$

Wages paid $2,390$

Cash balance Dec. $14,250$

Solution

The December $31$ cash balance is:

OpenStax Principles of Accounting, Volume $1$: Financial Accounting

Chapter $2$: Introduction to Financial Statements

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EA$8.$ LO $2\mathrm{.}2$ Here are facts for the Hudson Roofing Company for December.

Hudson Alexander, Capital Dec. $1$ $$175,300$

Dec. revenue $56,400$

Dec. expenses $59,800$

Assuming no investments or withdrawals, what is the ending balance in the owners$$ capital

account?

Solution

The December $31$ capital account balance is:

EA$9.$ LO $2\mathrm{.}3$ Prepare an income statement using the following information for DL Enterprises

for the month of July $2018.$

Sales revenue $$62,500$

Rental revenue $15,300$

Product expense $52,200$

Wages expense $18,900$

Owner investment $12,000$

Equipment purchases $56,000$

Utilities expense $1,800$

Taxes expense $400$

Solution

DL Enterprises

Income Statement

For the Month Ended July $31,2018$

Sales Revenue

Rental Revenue

Total Revenue

Expenses

Product Expense

Wages Expense

Utilities Expense

Taxes Expense

Total Expenses

Net Income

EA$10.$ LO $2\mathrm{.}3$ Prepare a statement of owner$$s equity using the information provided for Pirate

Landing for the month of October $2017.$

Cash $$14,500$

Pirate Pete, Capital Oct. $156,000$

Net loss Oct. $20177,800$

Owner investments $1,500$

Wages payable $3,250$

Supplies expense $750$

Owner withdrawals $100$

OpenStax Principles of Accounting, Volume $1$: Financial Accounting

Chapter $2$: Introduction to Financial Statements

Page $4$ of $4$

Solution

Pirate Landing

Statement of Owner$$s Equity

For the Month Ended Oct. $31,2017$

Pirate Pete, Capital Oct. $1$

Increases:

Owner Investments

Total Increases

Decreases:

Net Loss October $2017$

Owner Withdrawals

Total Decreases

Pirate Pete, Capital October $31$

EA$11.$ LO $2\mathrm{.}3$ Prepare a balance sheet using the following information for the Ginger Company

as of March $31,2019.$

Accounts payable $$1,730$

Cash $11,050$

Ginger Ale, Capital Mar. $117,300$

Inventory $8,230$

Wages payable $2,150$

Sales $13,600$

Product expenses $8,200$

Ginger Ale, Capital Mar. $3122,700$

Equipment $7,300$

Solution

Ginger Company

Balance Sheet

Mar. $31,2019$

Assets: Liabilities:

Cash Accounts Payable

Inventory Wages Payable

Equipment Total Liabilities

Owner$$s Equity:

Ginger Ale, Capital March $31$

Total Assets Total Liabilities and Owner$$s Equity