1. Click on links Exercise 1-8 page 34Using the Accounting EquationExercise 1-8Exercise 1-8 Algo Exercise 1-9 page 34Using the Accounting EquationExercise 1-9Exercise 1-9 Algo Exercise 1-14 page 36Prepare an Income StatementExercise 1-14Exercise 1-14 Algo Exercise 1-15 page 36Prepare a Statement of Owner’s EquityExercise 1-15 Algo Exercise 1-16 page 36Prepare a Balance SheetExercise 1-16 Algo Exercise 1-18 page 36Return on AssetsExercise 1-18Exercise 1-18 Algo Chapter 1 – Accounting in Business Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Exercise 1-8 page 34 1 - 2

3. Answer the following questions. (Hint: Use the accounting equation.) a. Office Store has assets equal to $123,000 and liabilities equal to $47,000 at year-end. What is the total equity for Office Store at year-end? b. At the beginning of the year, Addison Company’s assets are $300,000 and its equity is $100,000. During the year, assets increase $80,000 and liabilities increase $50,000. What is the equity at the end of the year? c. At the beginning of the year, Quaker Company’s liabilities equal $70,000. During the year, assets increase by $60,000, and at year-end assets equal $190,000. Liabilities decrease $5,000 during the year. What are the beginning and ending amounts of equity? Exercise 1-8 page 34 1 - 3

4. a. Office Store has assets equal to $123,000 and liabilities equal to $47,000 at year-end. What is the total equity for Office Store at year-end? b. At the beginning of the year, Addison Company’s assets are $300,000 and its equity is $100,000. During the year, assets increase $80,000 and liabilities increase $50,000. What is the equity at the end of the year? Assets=Liabilities+Equity $123,000=$47,000+$ 76,000 Assets=Liabilities+Equity $300,000=$200,000+$100,000 80,000=50,000+30,000 $380,000=$250,000+$130,000Ending Beginning Change Exercise 1-8 page 34 1 - 4

5. c. At the beginning of the year, Quaker Company’s liabilities equal $70,000. During the year, assets increase by $60,000, and at year-end assets equal $190,000. Liabilities decrease $5,000 during the year. What are the beginning and ending amounts of equity? Assets=Liabilities+Equity $130,000=$70,000+$60,000 Change60,000=(5,000)+65,000 $190,000=$65,000+$125,000Ending Beginning Exercise 1-8 page 34 1 - 5

6. Answer the following questions. (Hint: Use the accounting equation.) a. Office Store has assets equal to $160,000 and liabilities equal to $40,000 at year-end. What is the total equity for Office Store at year-end? b. At the beginning of the year, Addison Company’s assets are $600,000 and its equity is $150,000. During the year, assets increase $90,000 and liabilities increase $40,000. What is the equity at the end of the year? c. At the beginning of the year, Quaker Company’s liabilities equal $100,000. During the year, assets increase by $40,000, and at year-end assets equal $230,000. Liabilities decrease $25,000 during the year. What are the beginning and ending amounts of equity? Algorithm Exercise 1-8 page 34 1 - 6

7. a. Office Store has assets equal to $160,000 and liabilities equal to $40,000 at year-end. What is the total equity for Office Store at year-end? b. At the beginning of the year, Addison Company’s assets are $600,000 and its equity is $150,000. During the year, assets increase $90,000 and liabilities increase $40,000. What is the equity at the end of the year? Assets=Liabilities+Equity $160,000=$40,000+$120,000 Assets=Liabilities+Equity $600,000=$450,000+$150,000 90,000=40,000+50,000 $690,000=$490,000+$200,000Ending Beginning Change Algorithm Exercise 1-8 page 34 1 - 7

8. c. At the beginning of the year, Quaker Company’s liabilities equal $100,000. During the year, assets increase by $40,000, and at year-end assets equal $230,000. Liabilities decrease $25,000 during the year. What are the beginning and ending amounts of equity? Assets=Liabilities+Equity $190,000=$100,000+$90,000 Change40,000=(25,000)+65,000 $230,000=$75,000+$155,000Ending Beginning Algorithm Exercise 1-8 page 34 1 - 8

9. Exercise 1-9 page 34 1 - 9

10. Determine the missing amount from each of the separate situations given below. Assets=Liabilities+Equity a.$65,000=$20,000+$45,000 b.100,000=34,000+66,000 c.154,000=114,000+40,000 Exercise 1-9 page 34 1 - 10

11. Determine the missing amount from each of the separate situations given below. Assets=Liabilities+Equity a.$192,000=$145,000+$47,000 b.120,000=58,000+62,000 c.226,000=151,000+75,000 Algorithm Exercise 1-9 page 34 1 - 11

12. Exercise 1-14 page 36 1 - 12

13. Cash$11,360Owner withdrawals$2,000 Accounts receivable14,000Consulting fees earned14,000 Office supplies3,250Rent expense3,550 Land46,000Salaries expense7,000 Office equipment18,000Telephone expense760 Accounts payable8,500Miscellaneous expenses580 Owner investments84,000 On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $84,000 cash. On October 31, the company's records show the following items and amounts. Use this information to prepare an October income statement for the business. 14,000$ 3,550$ 7,000 760 580 11,890 2,110$ Consulting fees earned Rent expense Salaries expense Telephone expense Miscellaneous expenses Total expenses Net income (loss) Expenses: Real Answers Income Statement For Month Ended October 31 Revenues: To Statement of Owner’s Equity Exercise 1-14 page 36 1 - 13

14. Cash$11,250Owner withdrawals$2,000 Accounts receivable23,000Consulting fees earned25,000 Office supplies1,200Rent expense4,500 Land30,000Salaries expense10,000 Office equipment18,000Telephone expense850 Accounts payable5,000Miscellaneous expenses700 Owner investments71,500 On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $71,500 cash. On October 31, the company's records show the following items and amounts. Use this information to prepare an October income statement for the business. 25,000$ 4,500$ 10,000 850 700 16,050 8,950$ Consulting fees earned Rent expense Salaries expense Telephone expense Miscellaneous expenses Total expenses Net income (loss) Expenses: Real Answers Income Statement For Month Ended October 31 Revenues: To Statement of Owner’s Equity Algorithm Exercise 1-14 page 36 1 - 14

15. Exercise 1-15 page 36 1 - 15

16. Cash$11,360Owner withdrawals$2,000 Accounts receivable14,000Consulting fees earned14,000 Office supplies3,250Rent expense3,550 Land46,000Salaries expense7,000 Office equipment18,000Telephone expense760 Accounts payable8,500Miscellaneous expenses580 Owner investments84,000 On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $84,000 cash. On October 31, the company's records show the following items and amounts. Use this information to prepare an October statement of owner’s equity for Real Answers. $- Add: 84,000 Less: Withdrawals by owner Net loss K. King, Capital, October 31 Statement of Owner's Equity For Month Ended October 31 Investment by owner Net income Real Answers K. King, Capital, October 1 From Income Statement Exercise 1-15 page 36 1 - 16

17. Cash$11,360Owner withdrawals$2,000 Accounts receivable14,000Consulting fees earned14,000 Office supplies3,250Rent expense3,550 Land46,000Salaries expense7,000 Office equipment18,000Telephone expense760 Accounts payable8,500Miscellaneous expenses580 Owner investments84,000 On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $84,000 cash. On October 31, the company's records show the following items and amounts. Use this information to prepare an October statement of owner’s equity for Real Answers. 14,000$ 3,550$ 7,000 760 580 11,890 2,110$ Consulting fees earned Rent expense Salaries expense Telephone expense Miscellaneous expenses Total expenses Net income (loss) Expenses: Real Answers Income Statement For Month Ended October 31 Revenues: Exercise 1-15 page 36 1 - 17

18. Cash$11,360Owner withdrawals$2,000 Accounts receivable14,000Consulting fees earned14,000 Office supplies3,250Rent expense3,550 Land46,000Salaries expense7,000 Office equipment18,000Telephone expense760 Accounts payable8,500Miscellaneous expenses580 Owner investments84,000 On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $84,000 cash. On October 31, the company's records show the following items and amounts. Use this information to prepare an October statement of owner’s equity for Real Answers. To Balance Sheet -$ Add: 84,000 2,110 86,110 Less: 2,000 84,110$ Withdrawals by owner Net loss K. King, Capital, October 31 Statement of Owner's Equity For Month Ended October 31 Investment by owner Net income Real Answers K. King, Capital, October 1 From Income Statement Exercise 1-15 page 36 1 - 18

19. Cash$11,250Owner withdrawals$2,000 Accounts receivable23,000Consulting fees earned25,000 Office supplies1,200Rent expense4,500 Land30,000Salaries expense10,000 Office equipment18,000Telephone expense850 Accounts payable5,000Miscellaneous expenses700 Owner investments71,500 On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $71,500 cash. On October 31, the company's records show the following items and amounts. Use this information to prepare an October statement of owner’s equity for Real Answers. $- Add: 71,500 Less: Withdrawals by owner Net loss K. King, Capital, October 31 Statement of Owner's Equity For Month Ended October 31 Investment by owner Net income Real Answers K. King, Capital, October 1 From Income Statement Algorithm Exercise 1-15 page 36 1 - 19

20. Cash$11,250Owner withdrawals$2,000 Accounts receivable23,000Consulting fees earned25,000 Office supplies1,200Rent expense4,500 Land30,000Salaries expense10,000 Office equipment18,000Telephone expense850 Accounts payable5,000Miscellaneous expenses700 Owner investments71,500 On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $71,500 cash. On October 31, the company's records show the following items and amounts. Use this information to prepare an October statement of owner’s equity for Real Answers. 25,000$ 4,500$ 10,000 850 700 16,050 8,950$ Consulting fees earned Rent expense Salaries expense Telephone expense Miscellaneous expenses Total expenses Net income (loss) Expenses: Real Answers Income Statement For Month Ended October 31 Revenues: Algorithm Exercise 1-15 page 36 1 - 20

21. Cash$11,250Owner withdrawals$2,000 Accounts receivable23,000Consulting fees earned25,000 Office supplies1,200Rent expense4,500 Land30,000Salaries expense10,000 Office equipment18,000Telephone expense850 Accounts payable5,000Miscellaneous expenses700 Owner investments71,500 On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $71,500 cash. On October 31, the company's records show the following items and amounts. Use this information to prepare an October statement of owner’s equity for Real Answers. To Balance Sheet -$ Add: 71,500 8,950 80,450 Less: 2,000 78,450$ Withdrawals by owner Net loss K. King, Capital, October 31 Statement of Owner's Equity For Month Ended October 31 Investment by owner Net income Real Answers K. King, Capital, October 1 From Income Statement Algorithm Exercise 1-15 page 36 1 - 21

22. Exercise 1-16 page 36 1 - 22

23. Cash$11,360Owner withdrawals$2,000 Accounts receivable14,000Consulting fees earned14,000 Office supplies3,250Rent expense3,550 Land46,000Salaries expense7,000 Office equipment18,000Telephone expense760 Accounts payable8,500Miscellaneous expenses580 Owner investments84,000 On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $84,000 cash. On October 31, the company's records show the following items and amounts. Use this information to prepare an October balance sheet for Real Answers. Exercise 1-16 page 36 1 - 23

24. $11,360$8,500 14,000 3,250 46,000 18,00084,110 $92,610 Total AssetsTotal Liabilities and Equity LandOwner's Equity Office equipmentK. King, Capital Cash Accounts payable Accounts receivable Office supplies Real Answers Balance Sheet October 31 AssetsLiabilities From Statement of Equity Cash$11,360Owner withdrawals$2,000 Accounts receivable14,000Consulting fees earned14,000 Office supplies3,250Rent expense3,550 Land46,000Salaries expense7,000 Office equipment18,000Telephone expense760 Accounts payable8,500Miscellaneous expenses580 Owner investments84,000 Exercise 1-16 page 36 1 - 24

25. Cash$11,360Owner withdrawals$2,000 Accounts receivable14,000Consulting fees earned14,000 Office supplies3,250Rent expense3,550 Land46,000Salaries expense7,000 Office equipment18,000Telephone expense760 Accounts payable8,500Miscellaneous expenses580 Owner investments84,000 $- Add: 84,000 Statement of Owner's Equity For Month Ended October 31 Investment by owner Net income Real Answers K. King, Capital, October 1 From Income Statement Exercise 1-16 page 36 1 - 25

26. 14,000$ 3,550$ 7,000 760 580 11,890 2,110$ Consulting fees earned Rent expense Salaries expense Telephone expense Miscellaneous expenses Total expenses Net income (loss) Expenses: Real Answers Income Statement For Month Ended October 31 Revenues: Cash$11,360Owner withdrawals$2,000 Accounts receivable14,000Consulting fees earned14,000 Office supplies3,250Rent expense3,550 Land46,000Salaries expense7,000 Office equipment18,000Telephone expense760 Accounts payable8,500Miscellaneous expenses580 Owner investments84,000 Exercise 1-16 page 36 1 - 26

27. To Balance Sheet -$ Add: 84,000 2,110 86,110 Less: 2,000 84,110$ Withdrawals by owner K. King, Capital, October 31 Statement of Owner's Equity For Month Ended October 31 Investment by owner Net income Real Answers K. King, Capital, October 1 From Income Statement Cash$11,360Owner withdrawals$2,000 Accounts receivable14,000Consulting fees earned14,000 Office supplies3,250Rent expense3,550 Land46,000Salaries expense7,000 Office equipment18,000Telephone expense760 Accounts payable8,500Miscellaneous expenses580 Owner investments84,000 Exercise 1-16 page 36 1 - 27

28. $11,360$8,500 14,000 3,250 46,000 18,00084,110 $92,610 Total AssetsTotal Liabilities and Equity LandOwner's Equity Office equipmentK. King, Capital Cash Accounts payable Accounts receivable Office supplies Real Answers Balance Sheet October 31 AssetsLiabilities Cash$11,360Owner withdrawals$2,000 Accounts receivable14,000Consulting fees earned14,000 Office supplies3,250Rent expense3,550 Land46,000Salaries expense7,000 Office equipment18,000Telephone expense760 Accounts payable8,500Miscellaneous expenses580 Owner investments84,000 Exercise 1-16 page 36 1 - 28

29. Cash$11,250Owner withdrawals$2,000 Accounts receivable23,000Consulting fees earned25,000 Office supplies1,200Rent expense4,500 Land30,000Salaries expense10,000 Office equipment18,000Telephone expense850 Accounts payable5,000Miscellaneous expenses700 Owner investments71,500 On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $71,500 cash. On October 31, the company's records show the following items and amounts. Use this information to prepare an October balance sheet for Real Answers. Algorithm Exercise 1-16 page 36 1 - 29

30. $11,250$5,000 23,000 1,200 30,000 18,00078,450 $83,450 Total AssetsTotal Liabilities and Equity LandOwner's Equity Office equipmentK. King, Capital Cash Accounts payable Accounts receivable Office supplies Real Answers Balance Sheet October 31 AssetsLiabilities From Statement of Equity Cash$11,250Owner withdrawals$2,000 Accounts receivable23,000Consulting fees earned25,000 Office supplies1,200Rent expense4,500 Land30,000Salaries expense10,000 Office equipment18,000Telephone expense850 Accounts payable5,000Miscellaneous expenses700 Owner investments71,500 Algorithm Exercise 1-16 page 36 1 - 30

31. Cash$11,250Owner withdrawals$2,000 Accounts receivable23,000Consulting fees earned25,000 Office supplies1,200Rent expense4,500 Land30,000Salaries expense10,000 Office equipment18,000Telephone expense850 Accounts payable5,000Miscellaneous expenses700 Owner investments71,500 $- Add: 71,500 Statement of Owner's Equity For Month Ended October 31 Investment by owner Net income Real Answers K. King, Capital, October 1 From Income Statement Algorithm Exercise 1-16 page 36 1 - 31

32. 25,000$ 4,500$ 10,000 850 700 16,050 8,950$ Consulting fees earned Rent expense Salaries expense Telephone expense Miscellaneous expenses Total expenses Net income (loss) Expenses: Real Answers Income Statement For Month Ended October 31 Revenues: Cash$11,250Owner withdrawals$2,000 Accounts receivable23,000Consulting fees earned25,000 Office supplies1,200Rent expense4,500 Land30,000Salaries expense10,000 Office equipment18,000Telephone expense850 Accounts payable5,000Miscellaneous expenses700 Owner investments71,500 Algorithm Exercise 1-16 page 36 1 - 32

33. To Balance Sheet -$ Add: 71,500 8,950 80,450 Less: 2,000 78,450$ Withdrawals by owner K. King, Capital, October 31 Statement of Owner's Equity For Month Ended October 31 Investment by owner Net income Real Answers K. King, Capital, October 1 From Income Statement Cash$11,250Owner withdrawals$2,000 Accounts receivable23,000Consulting fees earned25,000 Office supplies1,200Rent expense4,500 Land30,000Salaries expense10,000 Office equipment18,000Telephone expense850 Accounts payable5,000Miscellaneous expenses700 Owner investments71,500 Algorithm Exercise 1-16 page 36 1 - 33

34. $11,250$5,000 23,000 1,200 30,000 18,00078,450 $83,450 Total AssetsTotal Liabilities and Equity LandOwner's Equity Office equipmentK. King, Capital Cash Accounts payable Accounts receivable Office supplies Real Answers Balance Sheet October 31 AssetsLiabilities Cash$11,250Owner withdrawals$2,000 Accounts receivable23,000Consulting fees earned25,000 Office supplies1,200Rent expense4,500 Land30,000Salaries expense10,000 Office equipment18,000Telephone expense850 Accounts payable5,000Miscellaneous expenses700 Owner investments71,500 Algorithm Exercise 1-16 page 36 1 - 34

35. Exercise 1-18 page 36 1 - 35

36. Swiss Group reports net income of $70,000 for 2013. At the beginning of 2013, Swiss Group had $300,000 in assets. By the end of 2013, assets had grown to $400,000. What is Swiss Group’s 2013 return on assets? ÷ = ÷= =+ 2 Return on Assets 16.0% Average Total Assets $250,000$200,000$300,000 Net Income $40,000 Average Total Assets $250,000 Return on assets is useful in evaluating management, analyzing and forecasting profits, and planning activities. Return on assets (ROA), also called return on investment (ROI ). Exercise 1-18 page 36 1 - 36

37. Swiss Group reports net income of $70,000 for 2013. At the beginning of 2013, Swiss Group had $300,000 in assets. By the end of 2013, assets had grown to $400,000. What is Swiss Group’s 2013 return on assets? ÷ = ÷= =+ 2 Return on Assets 20.0% Average Total Assets $350,000$300,000$400,000 Net Income $70,000 Average Total Assets $350,000 Return on assets is useful in evaluating management, analyzing and forecasting profits, and planning activities. Return on assets (ROA), also called return on investment (ROI ). Algorithm Exercise 1-18 page 36 1 - 37