23 0 271 KB
Chapter 1 Introduction to Accounting and Business
Example Exercises
29
3. Billed customers for delivery services on account, $22,400. 4. Received cash from customers on account, $11,300. 5. Paid dividends, $6,000. Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Stockholders’ Equity Capital Stock, Dividends, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) is shown below. (1) Asset (Cash) increases by $25,000; Stockholders’ Equity (Capital Stock) increases by $25,000.
EE 1-3 p. 14
OBJ. 4 PE 1-3B Transactions Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery Service during May: 1. Received cash in exchange for capital stock, $18,000. 2. Paid advertising expense, $4,850. 3. Purchased supplies on account, $2,100. 4. Billed customers for delivery services on account, $14,700. 5. Received cash from customers on account, $8,200. Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Stockholders’ Equity Capital Stock, Dividends, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) is shown below. (1) Asset (Cash) increases by $18,000; Stockholders’ Equity (Capital Stock) increases by $18,000.
EE 1-4 p. 15
OBJ. 5 PE 1-4A Income statement The revenues and expenses of Sunset Travel Service for the year ended April 30, 2014, are listed below.
Fees earned Office expense Miscellaneous expense Wages expense
$1,673,000 488,000 34,000 660,000
Prepare an income statement for the current year ended April 30, 2014.
EE 1-4 p. 15
OBJ. 5 PE 1-4B Income statement The revenues and expenses of Sentinel Travel Service for the year ended August 31, 2014, are listed below.
Fees earned Office expense Miscellaneous expense Wages expense
$750,000 295,000 12,000 450,000
Prepare an income statement for the current year ended August 31, 2014.
EE 1-5 p. 16
PE 1-5A Retained earnings statement OBJ. 5 Using the income statement for Sunset Travel Service shown in Practice Exercise 1-4A, prepare a retained earnings statement for the current year ended April 30, 2014. Craig Daws, the owner, invested an additional $75,000 in the business in exchange for capital stock and cash dividends of $55,000 were paid during the year. Retained earnings as of May 1, 2013, was $250,000.