Chapter 1 Accounting in Action TA : Lamis Jameel Banasser

BE 1-3 : The Accounting Equation (a) ( 800, ,000) – ( 300,000 – 80,000) = $730,000 Owner’s equity = $730,000 (b) ( 300, ,000) + ( 800,000 –300,000 – 70,000) = 830,000 Assets = $830,000 (c) ( 800,000 – 80,000) – ( 800,000 – 300, ,000) = 100,000 Liabilities = $100,000

BE 1-4 : Owner’s equity Liabilities += Assets - Expenses+Revenues - Owner’s Drawings Owner’s Capital - 320, , ,000150, ,000= X(a) 240, ,000= X 240, ,000330,000 = - 35, ,000- 7,00025,000 + X57,000 =(b) 35,000 + X 57,000 = 35,00022, ,000 = X ( 600,000 x 2/3) + 600,000 = (c) X400, ,000 = 200,000400, ,000 =

BE 1-6 : Owner’s Equity LiabilitiesAssets NE++ (A) +NE+ (B) -NE- (C) BE 1-9 : R(a)Received cash for services performed NOE(b)Paid cash to purchase equipment E(c)Paid employee salaries

E 1-6 : 1.Increase in assets and increase in owner’s equity. 2.Decrease in assets and decrease in owner’s equity. 3.Increase in assets and increase in liabilities. 4.Increase in assets and increase in owner’s equity. 5.Decrease in assets and decrease in owner’s equity. 6.Increase in assets and decrease in assets. 7.Increase in liabilities and decrease in owner’s equity. 8.Increase in assets and decrease in assets. 9.Increase in assets and increase in owner’s equity.

BE 1-10 : FRITZ COMPANY Balance Sheet December 31, 2014 _________________________________________________ Assets Cash 49,000 Accounts receivable 72,500 Total assets$121,500 Liabilities and Owner’s Equity Liabilities Accounts payable 90,000 Owner’s Equity Owner’s capital 31,500 Total liabilities and owner’s equity $121,500

E 1-12 : DAVID PANDE CO. Income Statement For the Year Ended December 31, 2014 ____________________________________________________ Revenues Service revenue 63,600 Expenses Salaries and wages expense 29,500 Rent expense 10,400 Utilities expense 3,100 Advertising expense 1,800 Total expenses 44,800 Net income 18,800

E 1-12 : DAVID PANDE CO. Owner’s Equity Statement For the Year Ended December 31, 2014 ______________________________________________________________ Owner’s capital, January 1 48,000 Add: Net income 18,800 66,800 Less: Drawings 6,000 Owner’s capital, December 31 $60,800

PROBLEM 1-3A CRAZY CREATIONS CO. Income Statement For the Month Ended June 30, 2014 ___________________________________________________________________ Revenues Service revenue 6,700 Expenses Rent expense 1,600 Advertising expense 500 Gasoline expense 200 Utilities expense 150 Total expenses 2,450 Net income 4,250 (A)

CRAZY CREATIONS CO. Owner’s Equity Statement For the Month Ended June 30, 2014 ______________________________________________________________ Owner’s capital, June 1 0 Add: : Investments 12,000 Net income 4,250 16,250 16,250 Less: Drawings 1,300 Owner’s capital, June 30 14,950

CRAZY CREATIONS CO. Balance Sheet June 30, 2014 ______________________________________________________________ Assets Cash 10,150 Accounts receivable 3,000 Supplies 2,000 Equipment 10,000 Total assets$25,150 Liabilities and Owner’s Equity Liabilities Notes payable 9,000 Accounts payable 1,200 Total liabilities 10,200 Owner’s Equity Owner’s capital 14,950 Total liabilities and owner’s equity 25,150

(B) CRAZY CREATIONS CO. Income Statement For the Month Ended June 30, 2014 ______________________________________________________________ Revenues Service revenue 7,600 Expenses Rent expense 1,600 Advertising expense 500 Gasoline expense 350 Utilities expense 150 Total expenses 2,600 Net income $5,000

CRAZY CREATIONS CO. Owner’s Equity Statement For the Month Ended June 30, 2014 ______________________________________________________________ Owner’s capital, June 1 0 Add: Investments 12,000 Net income 5,000 17,000 17,000 Less: Drawings 1,300 Owner’s capital, June 30 15,700

E 1-13 : TAYLOR COMPANY Balance Sheet December 31, 2014 __________________________________________________________________ Assets Cash 15,000 Accounts receivable 9,500 Supplies 8,000 Equipment 46,000 Total assets$78,500 Liabilities and Owner’s Equity Liabilities Accounts payable 21,000 Owner’s Equity Owner’s capital (67,500 – 10,000) 57,500 Total liabilities and owner’s equity $78,500