accounting principles 10th edition weygandt & kimmel chapter 1 - solutions for chapter 1 -...

Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23 Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23

Assets = Liabilities + Owner's Equity

Assets = Liabilities + Owner's EquityAccounts Accounts Owner's

Cash Receivable Supplies Equipment Payable Capital1) $ 15,000 $ 15,000 2) (7,000) 7,000 3) 1,600 1,600 4) 1,200

5) 250 6) 1,500 2,000 7) (1,700)

5, 8) (250) (250)6, 9) 600 (600)

10) (1,300)

$ 8,050 $ 1,400 $ 1,600 $ 7,000 $ 1,600 $ 15,000 $ 18,050

summation of assets summation of liabilities owner's cap/draw & owner's equity $ 13,700

$ 18,050 $ 18,050 summation of owner's equity

$ 18,050 $ 16,450

Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23 Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23

Income Statement Balance Sheetmonth ending September 30, 2012 month ending September 30, 2012

Revenues Assets Service Revenues $ 4,700 Cash

Accounts Receivable

B13

Dicostanzo, Enzo: Service Revenue

Expenses Supplies Salaries & Wages Expense (900) Equipment Rent Expense (600) Total Assets Advertising Expense (250) Utilities Expense (200) Liabilities & Owner's Equity Total Expenses (1,950) Liabilities

Accounts PayableNet Income $ 2,750 Owner's Equity

Owner's CapitalTotal Liabilities & Owner's Equity

Owner's Equity Statementmonth ending September 30, 2012

Statement of CashFlowsOwner's Capital, September 1 0 month ending September 30, 2012Add: Investments $ 15,000 Add: Net Income $ 2,750 Cash Flows from Operating Activities

17,750 cash receipts from revenues

Less: Drawings $ (1,300) cash payments for expensesOwner's Capital, September 30 16,450 Net Cash Provided by Operating Activities

Cash Flow from Investing Activities Purchase of Equipment

Cash Flow from Financing Activities Investment by Owners Drawings by Owners

net change in cash

cash at beginning of periodcash at end of period

Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23

Owner's Equity-Owner's

Drawings Revenues -ExpensesInitial InvestmentEquipment on cashSupplies on Credit

1,200 Service Revenue

(250) Advertising Expense 3,500 Service Revenue

(900) Salaries & Wage Expense (600) Rent Expense (200) Utilities Expense

(1,300)

$ (1,300) $ 4,700 $ (1,950) $ 18,050

owner's cap/draw net income $ 2,750

summation of owner's equity $ 16,450


Balance Sheetmonth ending September 30, 2012

$ 8,050 Accounts Receivable 1,400

1,600 7,000

Total Assets $ 18,050

Liabilities & Owner's Equity

Accounts Payable $ 1,600 Owner's Equity Owner's Capital 16,450 Total Liabilities & Owner's Equity $ 18,050

Statement of CashFlowsmonth ending September 30, 2012

Cash Flows from Operating Activities cash receipts from revenues $ 3,300

cash payments for expenses (1,950)Net Cash Provided by Operating Activities $ 1,350

Cash Flow from Investing Activities Purchase of Equipment $ (7,000) paid cash so put it here

Cash Flow from Financing Activities Investment by Owners 15,000 Drawings by Owners (1,300)

$ 13,700

net change in cash $ 8,050

cash at beginning of period $ - cash at end of period $ 8,050


Transactions

3) purchase of supplies on $1,600 credit, assets and liabilities increase

4) services provided for $1,200 cash, revenue increases owner's equity

decreased owner's equity (expense)

6) services provided for $1,500 cash and $2,000 creditequal increase in assets and owners equity

7) payment of $1,700 expenses equal decrease in assets and expensesequal decrease in assets and owner's equity

8) payment of accounts payable (from #5) payment of $250 bill in cashequal decrease in cash and accounts payable

9) receipt of cash on account (from #6) received $600 in cashcomposition of assets changed

10) withdrawl of $1,300 in cash by ownerequal decrease in assets and owner's equity

1) initial investment by owner, $15,000 cash, equal increase in assets and owner's equity

2) purchase of equipment for $7,000 cash, equal increases and decrease

5) purchased advertising on $250 credit, increased liabilities and

paid cash so put it here

Chapter 1, Transaction Analysis & Financial Statements, pages 21


Assets = Liabilities + Owner's EquityAccounts Accounts Owner's

Cash Receivable Supplies Equipment Payable Capital

1) $ 25,000 $ 25,000 2) 7,000 7,000 3) 8,000 4) (850)5) (1,000)

$ 31,150 $ - $ - $ 7,000 $ 7,000 $ 25,000

summation of assets summation of liabilities owner's cap/draw & owner's equity $ 24,000


$ 38,150 $ 31,150

Chapter 1, Transaction Analysis & Financial Statements, pages 21 Chapter 1, Transaction Analysis & Financial Statements, pages 21

Income Statement Balance Sheetmonth ending August 31, 2012 month ending August 31, 2012


Accounts Receivable

B13


Expenses Supplies Salaries & Wages Expense - Equipment Rent Expense (850) Total Assets Advertising Expense - Utilities Expense - Liabilities & Owner's EquityTotal Expenses (850) Liabilities



Owner's Equity Statementmonth ending August 31, 2012

Statement of CashFlowsOwner's Capital, September 1 0 month ending August 31, 2012Add: Investments 25,000 Add: Net Income 7,150 Cash Flows from Operating Activities

32,150 cash receipts from revenuesLess: Drawings (1,000) cash payments for expensesOwner's Capital, September 30 $ 31,150 Net Cash Provided by Operating Activities



net change in cash


Owner's Equity-Owner'sDrawings Revenues -Expenses

cashequpment on credit

8,000 service provided (850) rent expense

(1,000) cash withdrawal

$ (1,000) $ 8,000 $ (850)




Balance Sheetmonth ending August 31, 2012

$ 31,150 Accounts Receivable -

- 7,000



Accounts Payable $ 7,000 Owner's Equity Owner's Capital 31,150 Total Liabilities & Owner's Equity $ 38,150

Statement of CashFlowsmonth ending August 31, 2012

Cash Flows from Operating Activities cash receipts from revenues $ 8,000 cash payments for expenses (850)Net Cash Provided by Operating Activities $ 7,150

Cash Flow from Investing Activities Purchase of Equipment $ -


$ 24,000



Chapter 1, - pages 21

Transactions

1) Initial Investment by Owner, $25,000 Cash Equal Increase in Assets and Owner's Equity

2) Purchase of Equipment for $7,000 CreditEqual Increase in Total Assets and Total Liabilities

3) Services provided for $8,000 CashTotal Assets, Cash increasedRevenue Increases Owner's Equity

4) Payment of $850 Rent Expenses, CashEqual Decrease in Assets and ExpensesEqual Decrease in Assets and Owner's Equity

5) WithDrawl of $1,000 in cash by OwnerEqual Decrease in Assets and Owner's Equity

Equipment paid on credit so it is zero

we start with zero


Income Statement Flannagan Companymonth ending December 31, 2012

Revenues Service Revenues $ 36,000

Expenses

Rent Expense (11,000) Salaries & Wages Expense (7,000) Utilities Expense (4,000)Total Expenses (22,000)

Net Income $ 14,000

Balance Sheet Flannagan Companymonth ending December 31, 2012

Assets Cash $ 8,000 Accounts Receivable 9,000 Supplies - Equipment 10,000 Total Assets $ 27,000

- Liabilities & Owner's EquityLiabilities Accounts Payable $ 2,000 Note Payble 16,500

Owner's Equity $ 18,500 Owner's Capital 8,500Total Liabilities & Owner's Equity $ 27,000

Presented below is selected information related to Flanagan Company at December31, 2012. Flanagan reports fi nancial information monthly.Equipment $10,000 Utilities Expense $ 4,000Cash 8,000 Accounts Receivable 9,000Service Revenue 36,000 Salaries and Wages Expense 7,000

Rent Expense 11,000 Notes Payable 16,500Accounts Payable 2,000 Owner’s Drawings 5,000(a) Determine the total assets of Flanagan Company at December 31, 2012.(b) Determine the net income that Flanagan Company reported for December 2012(c) Determine the owner’s equity of Flanagan Company at December 31, 2012

Chapter 1, Transaction Analysis & Financial Statements, pages 26-27


Assets = Liabilities +Accounts Notes Accounts

Cash Receivable Supplies Equipment Payable Payable

1) $ 11,000 2) (800)3) 3,000 3,000 4) 1,500 5) 700 700 6) 2,000 7) (500)

(300) (100)

8 (1,000)

$ 10,500 $ 2,000 $ - $ 3,000 $ 700 $ 3,000 Total Assets $ 15,500 Total liabili $ 3,700

summation of assets summation of liabilities & owner's equity

$ 15,500 $ 15,500

$ 15,500


Income Statementmonth ending July 31, 2012


ExpensesRent Expense (800) Salaries & Wages Expense (500)Utilities Expense (300)Supplies Expense (100)Total Expenses (1,700)

B13


Net Income $ 1,800

Owner's Equity StatementOwner's Capital July 1st, 2012

Owner's Capital, September 1 $0 Add: Investments 11,000 Add: Net Income 1,800

12,800 Less: Drawings (1,000)Owner's Capital, July 31 $ 11,800


Owner's EquityOwner's -Owner'sCapital Drawings Revenues -Expenses

$ 11,000 (800) Rent Expense

Equipment on credit 1,500 Service Revenue

borrowed cash 2,000 Service Revenue

(500) expense (300) expense (100) expense

(1,000)

$ 11,000 $ (1,000) $ 3,500 $ (1,700) $ 11,800

owner's cap/draw net income $ 10,000 $ 1,800

summation of owner's equity $ 11,800 $ 11,800


Balance Sheetmonth ending July 31, 2012

Assets Cash $ 10,500 Accounts Receivable 2,000 Supplies - Equipment 3,000 Total Assets $ 15,500

Liabilities & Owner's EquityLiabilitiesNotes Payable $ 700

Accounts Payable $ 3,000 Total Liabilities 3,700 Owner's EquityOwner's Capital 11,800 Total Liabilities & Owner's Equity $ 15,500

Statement of CashFlowsmonth ending July 31, 2012

Cash Flows from Operating Activities cash receipts from revenues $ 1,500 cash payments for expenses (1,700)Net Cash Provided by Operating Activities $ (200)

Cash Flow from Investing Activities Purchase of Equipment $ -

Cash Flow from Financing Activities Investment by Owners 11,000 Proceeds from debt $ 700 Drawings by Owners (1,000)

$ 10,700



Chapter 1, - pages 26 - 27


2) Payment of $800 Rent Expense (July 2012)Equal Decrease in Assets and ExpensesEqual Decrease in Assets and Owner's Equity

3) Purchase of Equipment on $3,000 CreditAssets and Liabilities Increase

4) Legal Services provided for $1,500 CashRevenue Increases Owner's Equity

5) Borrowed $700 Cash from Bank on Note Payable6) Legal Services provided for $2,000 CreditAccounts Receivable IncreasesRevenue Increases Owner's Equity

7) Payment of $900 Expense (July 2012)Equal Decrease in Assets and ExpensesEqual Decrease in Assets and Owner's Equity

8) WithDrawl of $1,000 in cash by OwnerEqual Decrease in Assets and Owner's Equity

Transactions (July 2012)



Assets = Liabilities +Accounts Accounts

Cash Receivable Supplies Equipment Payable

1) $ 15,000 2) (2,000) 5,000 $3,000 3) (750) 750 4) 4,600 3,900 5) (1,500) (1,500)

6) (2,000)

7) (650)8 450 (450)9 (4,800)

10 500 $ 8,350 $ 3,450 $ 750 $ 5,000 $ 2,000

summation of assets summation of liabilities & owner's equity

$ 17,550 $ 17,550

$ 17,550


Income Statementmonth ending August 31, 2012


Expensesrent Expense (650)salary Expense (4,800)utilities Expense (500)

Total Expenses (5,950)

Net Income $ 2,550

B13


Owner's Equity Statementmonth ending August 31, 2012

Owner's Capital, September 1 0Add: Investments 15,000 Add: Net Income 2,550

17,550 Less: Drawings (2,000)Owner's Capital, September 30 $ 15,550


Owner's EquityOwner's -Owner's

Capital Drawings Revenues -Expenses

$ 15,000

supplies 8,500 Service Revenue

(2,000) Ownerss drawing

(650) rent Expenseaccounts receivable

(4,800) salaries expense (500) Utilities expense

$ 15,000 $ (2,000) $ 8,500 $ (5,950) $ 15,550




Balance Sheetmonth ending August 31, 2012

Assets Cash $ 8,350 Accounts Receivable 3,450 Supplies 750 Equipment 5,000 Total Assets $ 17,550

Liabilities & Owner's EquityLiabilities Accounts Payable $ 2,000 Owner's Equity Owner's Capital 15,550 Total Liabilities & Owner's Equity $ 17,550

Statement of CashFlowsmonth ending August 31, 2012

Cash Flows from Operating Activities cash receipts from revenues $ 5,050 cash payments for expenses (7,700)Net Cash Provided by Operating Activities $ (2,650)

Cash Flow from Investing Activities Purchase of Equipment $ (2,000)


$ 13,000





2) Purchase of Equipment on $5,000 ($2,000 Cash, $3,000 Credit)Assets and Liabilities Increase

3) Purchase of supplies on $750 CashAssets increased and decreased

4) Revenues of $8,500 earned $4,600 Cash ans $3,900 Credit

Revenue Increases Owner's EquityCash and Accounts Receivable Increases

5) Paid $1,500 Cash on Accounts PayableEqual Decrease in Assets and Owner's Equity

7) Payment of $650 Rent Expense (August 2012)Equal Decrease in Assets and ExpensesEqual Decrease in Assets and Owner's Equity

8) Received / Collected $450 Cash on AccountAssets increased and decreased

9) Payment of $4,800 Expenses (August 2012)Equal Decrease in Assets and ExpensesEqual Decrease in Assets and Owner's Equity

10) Incurred $500 of Utilities Expenses on AccountLiabilities Increased, Equity / Expenses Decreased

Transactions (August 2012)

Problem Set P1 - A1 Chapter 1, Transaction Analysis & Financial Statements, page 39 Chapter 1, Transaction Analysis & Financial Statements, page 39


a) Assets = Liabilities + Owner's EquityAccounts Accounts Owner's


1) $ 10,000 $ 10,000 2) (5,000) 5,000 3) (400)4) (500) 500

5) 250 6) 6,100 7) (1,000)8) (2,000)

9) (170)10) 750

10,11) 120 (120)

$ 7,150 $ 630 $ 500 $ 5,000 $ 250 $ 10,000

summation of assets = summation of liabilities owner's cap/draw & owner's equity $ 9,000


$ 13,280 $ 13,030 b) Net Income is $4,030

Chapter 1, Transaction Analysis & Financial Statements, page 39 Chapter 1, Transaction Analysis & Financial Statements, page 39

Income Statement Balance Sheetmonth ending May 31, 2012 month ending May 31, 2012


Accounts ReceivableExpenses Supplies Salaries & Wages Expense (2,000) Equipment Rent Expense (400) Total Assets

Advertising Expense (250) Utilities Expense (170) Liabilities & Owner's EquityTotal Expenses (2,820) Liabilities



Owner's Equity Statementmonth ending May 31, 2012

Statement of CashFlowsOwner's Capital, May 1 0 month ending May 31, 2012Add: Investments $ 10,000 Add: Net Income $ 4,030 Cash Flows from Operating Activities

$ 14,030 cash receipts from revenuesLess: Drawings $ (1,000) cash payments for expensesOwner's Capital, May 31 $ 13,030 Net Cash Provided by Operating Activities



net change in cash


Chapter 1, Transaction Analysis & Financial Statements, page 39


Drawings Revenues -Expenses

Initial Investment Equipment cash

(400) Rent Expense cashSupplies cash

(250) Advertising Expense on account 6,100 Service Revenue cash

(1,000) Owners Drawing (2,000) Salaries & Wage Expense cash

(170) Utilities Expense cash 750 Service Revenue

received cash $120 from $750

$ (1,000) $ 6,850 $ (2,820)




Balance Sheetmonth ending May 31, 2012

$ 7,150 Accounts Receivable 630

500 5,000



Accounts Payable $ 250 Owner's Equity Owner's Capital 13,030 Total Liabilities & Owner's Equity $ 13,280

Statement of CashFlowsmonth ending May 31, 2012

Cash Flows from Operating Activities cash receipts from revenues $ 6,220 cash payments for expenses (3,070)Net Cash Provided by Operating Activities $ 3,150



$ 9,000


cash at beginning of period 0cash at end of period $ 7,150

Problems: Set A – assignments

Transactions

A summary of May transactions is presented below.

1. Invested $10,000 cash to start the repair shop.

2. Purchased equipment for $5,000 cash.

3. Paid $400 cash for May office rent.

4. Paid $500 cash for supplies.

6. Received $6,100 in cash from customers for repair service.

7. Withdrew $1,000 cash for personal use.

8. Paid part-time employee salaries $2,000.

9. Paid utility bills $170.

10. Provided repair service on account to customers $750.

11. Collected cash of $120 for services billed in transaction (10).

Instructions(a) Prepare a tabular analysis of the transactions, using the following column headings: Cash, Accounts Receivable,Supplies, Equipment, Accounts Payable, Owner’s Capital, Owner’s Drawings, Revenues, and Expenses(b) From an analysis of the owner’s equity columns, compute the net income or net loss for May.Ans - Net income = $4030

P1-1A Threet’s Repair Shop was started on May 1 by Erica Threet.

5. Incurred $250 of advertising costs in the Beacon News on account.

Problem Set P1 - 1BChapter 1, Transaction Analysis & Financial Statements, page 41 Chapter 1, Transaction Analysis & Financial Statements, page 41


a) Assets = Liabilities + Owner's EquityAccounts Accounts Owner's


1) $ 15,000 $ 15,000 2) (600)3) (3,000) 3,000 4) 700

5) (800) 800 6) 3,000 7,000 7) (500)

4, 8) (500) (500)

9) (2,500)6, 10) 4,000 (4,000)

$ 14,100 $ 3,000 $ 800 $ 3,000 $ 200 $ 15,000

summation of assets = summation of liabilities owner's cap/draw & owner's equity $ 14,500


$ 20,900 $ 20,700

Chapter 1, Transaction Analysis & Financial Statements, page 41 Chapter 1, Transaction Analysis & Financial Statements, page 41

Income Statement Balance Sheetmonth ending April 30, 2012 month ending April 30, 2012


Accounts ReceivableExpenses Supplies Salaries & Wages Expense (2,500) Equipment Rent Expense (600) Total Assets Advertising Expense (700)


Total Expenses (3,800) Liabilities Accounts Payable

Net Income $ 6,200 Owner's Equity Owner's CapitalTotal Liabilities & Owner's Equity

Owner's Equity Statementmonth ending April 30, 2012

Statement of CashFlowsOwner's Capital, April 1 0 month ending April 30, 2012Add: Investments $ 15,000 Add: Net Income $ 6,200 Cash Flows from Operating Activities

$ 21,200 cash receipts from revenuesLess: Drawings $ (500) cash payments for expensesOwner's Capital, April 1 $ 20,700 Net Cash Provided by Operating Activities



net change in cash




Drawings Revenues -Expenses

Initial Investment (600) Rent Expense cash

Equipment (700) Advertising Expense on account

Supplies 10,000 Service Revenue cash+Credit

(500) Owners DrawingAdvertising expense

(2,500) Salaries & Wage Expense cash Service Revenue

$ (500) $ 10,000 $ (3,800)




Balance Sheetmonth ending April 30, 2012

Accounts Receivable 3,000 800 3,000



Accounts Payable $ 200 Owner's Equity Owner's Capital 20,700 Total Liabilities & Owner's Equity $ 20,900

Statement of CashFlowsmonth ending April 30, 2012

Cash Flows from Operating Activities cash receipts from revenues $ 7,000 cash payments for expenses (4,400)Net Cash Provided by Operating Activities $ 2,600


Cash Flow from Financing Activities Investment by Owners 15,000 Drawings by Owners (500)

$ 14,500




Transactions

P1-1B

P1-1B On April 1, Vince Morelli established Vince’s Travel Agency. The following transactions

were completed during the month.

1. Invested $15,000 cash to start the agency.

2. Paid $600 cash for April offi ce rent.

3. Purchased offi ce equipment for $3,000 cash.

4. Incurred $700 of advertising costs in the Chicago Tribune, on account.

5. Paid $800 cash for offi ce supplies.

6. Earned $10,000 for services rendered: $3,000 cash is received from customers, and the balance

of $7,000 is billed to customers on account.

7. Withdrew $500 cash for personal use.

8. Paid Chicago Tribune $500 of the amount due in transaction (4).

9. Paid employees’ salaries $2,500.

10. Received $4,000 in cash from customers who have previously been billed in transaction (6).Instructions(a) Prepare a tabular analysis of the transactions using the following column headings: Cash,

Accounts Receivable, Supplies, Equipment, Accounts Payable, Owner’s Capital, Owner’sDrawings, Revenues, and Expenses.(b) From an analysis of the owner’s equity columns, compute the net income or net loss for April.

Problem Set P1 -2AChapter 1, Transaction Analysis & Financial Statements, page 39


Assets = LiabilitiesAccounts Notes Accounts

Cash Receivable Supplies Equipment Payable PayableBalance 9,000 1,700 600 6,000 3,600

1) $ (2,900) $ (2,900)2) 1,300 (1,300)3) (800) 2,100 1,300 4) 2,500 5,300

5) (1,100)6) (1,700)

(900) (450)

7 170 8 10,000 10,000

$ 14,950 $ 5,700 $ 600 $ 8,100 $ 10,000 $ 2,170

summation of assets = summation of liabilities & owner's equity

$ 29,350 $ 29,350


Income Statementmonth ending April 30, 2012


Expenses Salaries & Wages Expense (1,700) Rent Expense (900) Advertising Expense (450)Utilities expense (170)

Total Expenses (3,220)

Net Income $ 4,580

Owner's Equity Statementmonth ending April 30, 2012

Owner's Capital, April 1 0Add: Investments $ 13,700 Add: Net Income $ 4,580

$ 18,280 Less: Drawings $ (1,100)Owner's Capital, April 1 $ 17,180


+ Owner's EquityOwner's -Owner'sCapital Drawings Revenues -Expenses

13,700 Balance forward

Equipment 7,800 Service revenue

(1,100) Owners drawing (1,700) Salaries (900) Rent (450) Advertising

(170) Utilities

$ 13,700 $ (1,100) $ 7,800 $ (3,220)




Balance Sheetmonth ending April 30, 2012

Assets Cash $ 14,950 Accounts Receivable 5,700 Supplies 600 Equipment 8,100 Total Assets $ 29,350


Liabilities Accounts Payable $ 2,170 Notes Payable $ 10,000 Owner's Equity Owner's Capital 17,180 Total Liabilities & Owner's Equity $ 29,350

Statement of CashFlowsmonth ending April 30, 2012

Cash Flows from Operating Activities cash receipts from revenues $ 2,500 cash payments for expenses 9,750 Net Cash Provided by Operating Activities $ 12,250

Cash Flow from Investing Activities Purchase of Equipment $ (800)

Cash Flow from Financing Activities Investment by Owners (2,900) Drawings by Owners (900)

$ (3,800)




Transactions

P1-2A

P1-2A Ramona Castro opened a veterinary business in Nashville, Tennessee, on August 1. On

August 31, the balance sheet showed Cash $9,000, Accounts Receivable $1,700, Supplies $600,

Equipment $6,000, Accounts Payable $3,600, and Owner’s Capital $13,700. During September,

the following transactions occurred.

1. Paid $2,900 cash on accounts payable.

2. Collected $1,300 of accounts receivable.

3. Purchased additional offi ce equipment for $2,100, paying $800 in cash and the balance on

account.

4. Earned revenue of $7,800, of which $2,500 is received in cash and the balance is due in October.

5. Withdrew $1,100 cash for personal use.

6. Paid salaries $1,700, rent for September $900, and advertising expense $450.

7. Incurred utilities expense for month on account $170.

8. Received $10,000 from Capital Bank (money borrowed on a note payable).

(a) Total assets $29,350(b) Net income $4,580Ending capital $17,180

accounting principles 10th edition weygandt & kimmel chapter 1 - solutions for chapter 1 -...

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