Brief Exercises BE1-1 (LO 3) Presented below is the basie accounting equation (in thousands). Determine the missing amounts. Assets = Liabilities + Equity a. ¥88,000 _ ¥50,000 2 b.? ¥45,000 ¥70,000 e. ¥94,000 2 ¥60,000 [BE1.2 (L03) Given th accounting equation, answer each ofthe following questions be xcntig eatin | The liabiltis of Shumway Ld are £120,000 andthe equity is £292,000. Whats the amount of Sbumway Lids otal assets? ‘bi. The total assets of Shumway Lt. ae £190,000 andits equity is £0,000, What isthe amount ofits otal bites? ‘BE. (LD 3) At the begining ofthe yea, Gilles Puanbers had toa assets of C800, 000 and total ish of (300,000, Answer the fellowing questions bn ecg action | foal sets increased €350,000 during the year and total abilities decreased 060,000, whats the amount of equity atthe endo the yer? Daring the year, total abilities increased €100,000 and equity decreased €70,000, Wha isthe amount of total assets at the end of the year? « Iftotal assets decreased €80,000 and equity inreased€120,000 during the year, what isthe amount of total labiites atthe end af the year? BE1.4 (LO 3) Use the expanded accounting equation to answer each of the following questions. ‘a. The liabilities of Kumar Company are £90,000. Share capital—ordinary is ¥150,000; dividends 240,000; revenues, £450,000; and expenses, £340,000. What is the amount of Kumar's total assets? 1b. The total assets of Kalim Company are £57,000. Share capital—ordinary is €35,000; dividends 27,000; revenues, *52,000; and expenses, *35,000. What is the amount of the company’s total, liabilities? ce. The total assets of Siram Co. are £660,000 and its liabilities are equal to two-thirds of its total assets. What is the amount of Siram Co.'s equity? ‘nk. (0) Ines whther ah the fing en amas) aby (Lor Fat oe enti amet ibe ae egy ‘sues and ages aie |BH.6 (0 ) Clase ofthe owing tems as iden) revnae (Re espens Classy tems aft ut, DividendBE1.7 (LO 4) Presented below are three business transactions. On a sheet of paper, ist the letters (a), (b), and (c) with columns for assets, liabilities, and equity. For each column, indicate whether the transactions increased (+), decreased (~), or had no effect (NE) on assets, liabilities, and equity. a, Purchased supplies on account. bb, Received cash for performing a service. ¢, Paid expenses in cash. BE1.8 (LO 4) Follow the same format as in BEL. Determine the effect on assets, liabilities, and equity of the following three transactions. a. Shareholders invested cash in the business. ‘b. Payment of dividends. cc. Received cash from a customer who had previously been billed for services performed. 'BE1.9 (LO. Presented blow are thre transactions. Mark cach transaction as affecting sharchoder investment (0 dividends (D),revenve (R), expense (Bo not llc ety (SE. a ‘a. Receved cash for serves performed. Pa eas to purchase equipment. Paid employee salaries 'BEs.10 (LO 5) In alphabetical ord below ae statement of nancial psitian items for Grande Lat December 3, 2020, Propares statment of Financia positon, following the format of Mustratin 110, se. ‘Accounts payable £50,000 ‘Accounts reeehable 62500 (cash 49,000 ‘Share capital—ordinry| 21500 'BEL.1 (LO 5) Indicate whether the folowing items would appear on the income statement (15), statement of nani poston (SFP), or tained earings ttement (Rts). [mio perf tr ‘a. Note payable Db. Advertising expense «Share capital—ondinary, a.cash Sere erent,Exercises Ex (LO ) Genes Company performs the following accounting task during the yea, Classify the thre atvtes of accounting. Analyzing and interpreting information Ctasitfng eonomie events Explaining uss, meaning, and limitations of data Keeping a systematic chronological dary of evens. ‘Measuring events in dollars and cents. Preparing accounting reports Reporting information in standard format. ‘Selecting economic activities relevant to the company. ‘Summarizing economic events Accounting isan information system that identifies, records, and communicates the economic evens of an organization to fntersted wes.” Instructions Ccteporize the accountng tasks performed by Genesis as relating to ether the dentifeation (1), recording (R), or communication () aspects of ccountog. E12 (101) “entfy users of ecounting Information. 8. The following ae users of Gnanclal statements Customers, ‘Tax authoriis Labor wnions Marketing manager. Production supervisor Financial regulators, ‘tore mansger. Supplies Vice president of finance Instructions ‘det the users as being either external users or internal users. The fllowing questions could be asked by a internal usr oran external user Can we afford to give our employes a pay raise? id the company earn. satisfactory income’? ‘Do we need te borrow inthe near future? How dos the company’s profitability compare tothe sompanis? What doe it cost ws to manufature each unit produced? ‘Which product should we emphasize? Will the company be able to pay its short-term debts? Inetructions "enti each of the questions as being more likely asked by an internal user or an external user.11.3 (L0 2) Angela Manternaeh, president of Manternach Designs, has instructed Cala Ruden, the head of the accountng department for Manternach Designs to report the company’ andin the company's accounting reports a its far value of €170,000 instead ofits east of€100,000. Manternah sys, "Showing the and at (C170,000 will make ur company look Hike a better investment when we uy toatract new tvestors next month” [tant ior Instructions Explain the ethical situation laveving Cara Raden, identifying the stakeholders and theakernatves E1.4 (LO) The following situations involve accounting principles and assumptions ety opt | 1. Jala A/S owns buildings tht are worth substantially more than they orginally cost. In an effort to provide more relevant information, Julia reports the buildings t fair valu ints accounting reports. 2. Deal Creations includes in its accountng records only transition data that ean be expressed in terms of money. ‘3 Omar Sharif, owner of Omar's Ons, records his personal living costs as expense ofthe business. Instructions For each ofthe thre situations, determine ithe accounting method used i correct or incoret. If correct, deni which pineple or assumption supports the ‘method used incre, ident which prnepleo assumption hasbeen violated E1.5 (LO 3) Diehl Cleaners has the following statement of financial position items. Accounts payable Accounts receivable Cash Notes payable Equipment Salaries and wages payable Supplies Share eapital—ordinary Instructions. ‘Classify each item as an asset, lability, or equity. 11.6 (LO 4) Selected transactions fr Spring Cruises are liste below. Analyze the eet of transactions. 14 Received cash investment from srcholders to start business in exchange for ordinary shares ‘2. Paid monthly rent 23. Purchased equipment on account. 4. Billed customers for services performed 65. Paid dividends. 6. Received cas from customers billed in). 7. Incurred advertising expense on account, £8, Purchased aditional equipment for cash ‘9 Received cash fom customers when sevice was performed, Instructions List the mambersof the above transactions and describe the effect ofeach transaction on asst, abilities, and equity. For example the fist answer i (4) Ineresse in sets and increase in equity.121.7 (L0 4) Collins Computer Timeshare entered into th following transactions during May 2020 Analyze the effet of transactions on assets, abies, and equity, Purchased compaters for RS20,000 from Digital Equipment on account. 2. Paid Rf4,000 cash for May ret on storage spac. ‘3. Received RS17,000 cash rom customers for contracts billed in pei, 4. Performed computer services for Viking Construction for R64,000 cash. 65. Paid TH State Power Rf1,000 cash for energy usage in May 6. Sharcbolders investd an aditional B629,000in the businossin exchango for ordinary shares. 7. Paid Digital Equipment forthe computers purchased in (1) above. 8, Incurred advertising expense for May of RS1,200 on acount. Instructions Indicate with the appropriate letter whether cach ofthe transactions above results in: 1 An nrease in assets and a decrease in assets ’. An increase in assets and an increase in equity. €.An increase in assets an an inerease in Habits, 4. A decrease in asets an decrease in iy A decrease in assets and a decrease in ables £42 increase abilities and a decrease in equity Am increas in equity anda decreas in iabilites. na.0 9 OD a ysis ofthe transtetions made by Kang & Coa public accountng firm, forthe month of August i shown below po nae rst nd compet etre. sets thous aus Taal tas Cash» Acoso» Supls + Fame = Aouns Pole > Sarat» “Bey = Bap sao se Shares stzom || se +70 sts ) Serice Revenue ae 200 tts Rea Hxpeme 40 twas Expense = Ue Expense Instructions a, Describe each transaction that occurred for the month. b, Determine how much equity increased for the month. c. Compute the amount of net income for the month. E1.9 (LO 5) An analysis of transactions for Kang & Co. was presented in EL8. Instructions Prepare an income statement and a retained earnings statement for August and a statement of financial position at August 31, 2020. Assume that August is the company’s first month of business.1.10 (LO 5) Kinney A. had thefllowing ase and ible on the dates indicated. Determine nt income (rls). ecember 31 Total Assets Total Liailities 209 400000 £250,000 2020 t460,000 __t300,000 2021 590,000 400,000 ‘Kinney began business on January, 2019, with an investment of 100,000. Instructions From an analysis ofthe change in equity during the year, comput the net income (r loss) for ‘2.2019, assuming Kinneys pid $12,000 in dividends forthe yar. 2020, assuming shareholders made an aditiona investment of 24,000 and Kinney paid no dividends in 2020 <. 2021, assuming shareholders made an additional investment of 12,000 and Kinney paid dividends of 25,000 n 2021, Ext (LO 5) Two tems ar omitted from each ofthe following summaries of statement of financial position and income statement data fortwo propritorshipe forthe ‘year 2020, Greene's Goods and Solar Enterprises. Analy fnancal statements items. Greenc’s Solar Goods” Enterprises Beginning of yar: Total assets 110,000 €129,000 Total lables 85,000 (©) Total equity @ 80,000 Bnd of year Total assets 360,000 180,000 Total ibites 120,000 50,000 Total equity 40,000 130,000 ‘Changes during eatin equity Additional investment © 25000 Dividends 37000 @) Total evenves 1220000 100,000 Total expenses 175,000 60,000 Instructions Determine the missing amounts [E12 (LO 9) The ellowing information relates to Karen Weigel Co. forthe year 2020. ‘Prepare income statement, comprehensive income statement, and retained earnings statement Retained earnings January 1,2020 $42,000 Dividends pad daring 2020 6000 Serie revenue 63,600 Salaries and wages expense ‘Advertising expense Rent expense ilies expense (Other comprehensive income Instructions ‘After analyzing the data, prepare) an income statement and (b) a comprehensive income statement forthe year 2020.E113 (LO 5) Lynn reise is the bookkeeper for Sanculi SpA. Lynn has been trying to get the statement of financial position of Sanculi to balance correctly. Saneuli's statement of financial position is shown as follows. Sanculi SpA Statement of Financial Position December 31, 2020 ‘Assets Liabilities Equipment _|€48,000 Share capital—ordinary Supplies 8,000 Retained earnings Cash 14,000 Accounts payable Dividends | _ 5,000 Accounts receivable €50,000 17,500 16,000, (8,500) Total assets €75,000 Total equity and liabilities €75,000 Instructions Prepare a correct statement of financial position. 1g (LO 5) Bear Park Ld a camping ground in the Lake Distr, has compiled the following nancial information as of December 31, 2020. Compute net income and prepare astaement of iancil poston. Revenues during 2020~camping fees £140,000 Revenues during 2020—geneal store 47,000 Accounts payable Ccashonhand (rigina coat of equipment 105.500 Fairvalue of equipment 340,000 [Notes payable £60,000 ‘Expenses during 2020 150.000 ‘supplies on hand 2500 ‘Share eaptal-ordinary 120,000 Retained earnings 2 Instructions ‘a. Determine Bear Pa’ et income for 2020, ’. Prepare statement of nancial position for Hear Park Lt. a of December 3, 2020. 1.35 (LO 5) Presented below is financial information related to the 2020 operations of Delgado Cruises SA. [prowess oe Maintenance and repairs expense RS 97,000 ilies expense 10,000 Salaries and wagesexpense 144,000, Advertising expense 3.500 “Ticket revenue 242,000 (Other comprehensiveincome 4.200 Instructions Prepare the 2020 income statement and comprehensive Income statement for Delgado Cruises SA.E1.16 (LO 5) Presented below is information related to Ling an Co. Retained earnings, January 1, 2020 £23,000 Share capital—ordinary 10,000 Legal service revenue—2020 340,000 Total expenses—2020 211,000, Assets, January 1, 2020 195,000 Liabilities, January 1, 2020 62,000 Assets, December 31, 2020 168,000 Liabilities, December 31,2020 80,000 Dividends—2020 64,000 Instructions Prepare the 2020 retained earnings statement for Ling an Co. 1.17 (40.5) This information fo Java Growers forthe year ended December 31, 2020 (amounts in thousand), Prepare cashflow statement. sh received from revenues rom customers Rp600,000 Cash received for issuance ofordnary shares 280,000 Cash pi for new equipment 95,000 (Cash dividends paid 20,000 Cash paid for expenses 490,000 (cash balance 1/1/20, 28,000 Instructions Propare the 2020 statement of cash ows for Java Growers 14.18 (LO 5) The statement of eah fows classifies each transaction as an operating activity, an investing activity, ora financing activity. Operating activites are the ‘ypes of activities the company performs to generate profits. Investing actives include the purchase of long-lived assets such as equipmeat orth purchase of lnvestment securities. Financing activities are borrowing money, investments by shareholders, and dividends paid. “ent cash flow activities. Presented below are the following transactions, 14 Shareholders invested €20,000 cash n exchange for ordinary shares. 2. Issued note payable fr 2,000 cash 5. Purchased office equipment for €11,000 cath. 14. Received €15,000 cash for servies performed, 65. Paid €1,000 cash for rent 6. Paid C500 dividend. 7. Paid €5:700 cash fr salaries. Inetructions| Classify each ofthese transactions as operating, investing, or financing activites.