Financial and Managerial Accounting PDF [PDF]

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Chapter 1 Introduction to Accounting and Business



Example Exercises



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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.