Question 1:
Identify the financial statement (Balance Sheet, Income Statement, Statement of Retained Earnings,
Statement of Cash Flow) in which decision makers can find the following information. Hint: In some
cases, more than one statement will report the needed data.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Common shares
Income tax payable
Dividends
Income tax expense
Ending balance of retained earnings
Revenue
Cash spent to acquire equipment
Selling, general and administrative expenses
Adjustments to reconcile net income to net cash provided by operations
Ending cash balance
Current liabilities
Net income
Question 2:
Requirement 1: Fill in the missing amounts which correspond with a letter, for each company.
Alpha
Beta
Delta
Assets
$78
$30
F
Liabilities
47
19
$2
Common shares
6
1
2
Retained earnings
A
10
3
B
$48
$9
$48
30
G
Common shares
6
1
2
Retained earnings
27
D
4
Dividends
3
2
0
Beginning
Ending
Assets
Liabilities
Income Statement
Revenues
$216
E
$20
Expenses
211
$144
19
C
9
1
Net Income
Missing Amount
Solution
A
B
C
D
E
F
G
Requirement 2: At the end of the year, which company has the highest net income? Which company
has the highest percentage of net income to revenue?
Hint: A statement of retained earnings will help you with your calculations.
Question 3:
Prepare journal entries for the following transactions which occurred at Stark Corporation:
The owner, Tony Stark, invested cash of $12,000 and office equipment valued at $7,500 into
the business, receiving common shares in exchange.
Purchased supplies for cash, $1,000.
Paid $750 for one month’s rent on the store.
Billed a client, Ultron, $1,500 for services rendered.
Tony Stark received a dividend of $300.
Question 4:
Dr. Li’s Family Dental has the following trial balance:
Dr. Li’s Family Dental
Trial Balance
December 31, 2016
Debit
Credit
Cash
$6,000
Accounts receivable
13,000
Supplies
4,000
Equipment
22,000
Land
50,000
Accounts payable
$19,000
Note payable
20,000
Share capital
10,000
Retained earnings
8,000
Service revenue
70,000
Salary expense
21,000
Rent expense
10,000
Interest expense
TOTAL
1,000
$127,000
$127,000
Compute the following amounts for Dr. Li’s dental practice:
a. Total assets
b. Total liabilities
c. Net income or loss during December
d. Total shareholders’ equity
Question 5:
During October 2016, Paws Veterinary Clinic completed the following transactions:
Oct.
1
Paws received $30,000 cash and issued common shares to shareholders
4
Purchased supplies, $1,000, and equipment, $2,600 on account
5
Performed checkup services, and received cash, $1,500
7
Paid cash to acquire land for an office site, $22,000
11
Performed a surgery on a sick cat, and billed the customer $500
16
Paid for the equipment, purchased Oct 4 on account
17
Paid the telephone bill, $95
18
Received partial payment from client on account, $250
22
Paid the water and electricity bills, $400
29
Received $2,000 cash for conducting a workshop on “Healthy Cat Living”
31
Paid employee salary, $1,300
31
Declared and paid dividends of $1,500
Requirements:
1. Record each transaction in the journal. Key each transaction by date. Explanations are not
required.
2. Prepare the trial balance of Paws, at October 31, 2016.
Evaluation
Financial Accounting focuses heavily on finding solutions to numerical problems. With that in mind,
most units will include a number of problems. For each problem, you will need to provide more than
a simple numerical response. Your solutions should thoroughly address the issue and present the
findings in a meaningful format similar to those developed within the chapters and as part of the
review exercises solutions. Part value may be assigned for incorrect responses providing evidence
of understanding of the principles exist.
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