1． Determine the net effect of the transactions listed below, using I = income; D = decrease; NE
= no effect.
(a) Invested cash in a business. (b) Purchased equipment for cash. (c) Purchased supplies on account. (d) Paid creditors.
(e) Borrowed ﹩5000 from bank. (f) Received fees.
(g) Withdrew money for personal use.
Assets = Liabilities + Capital (a) (b) (c) (d) (e) (f) (g)
2. Two items are omitted from each of the following summaries of the balance sheet and income statement data for three solo-proprietorships for the year 2008. Tomlin Co., Dienslake Enterprises, and Brandtmac, CPA.
Dienslake Brandtmac, Tomlin Co. Enterprises CPA Beginning of year:
Total assets ﹩90 000 ﹩110 000 (e) Total liabilities 40 000 (c) ﹩50 000 Total owner’s equity (a) 70 000 80 000 End of year:
Total assets 140 000 150 000 170 000 Total liabilities 60 000 60 000 70 000 Changes during year in owner’s equity:
Additional investment (b) 10 000 20 000 Drawings 12 000 (d) 14 000 Total revenues 85 000 95 000 110 000 Total expenses 65 000 70 000 (f) Required:
Determine the missing amounts.
3. The trial balance of Bruce Howat Co. as shown below does not balance.
BRUCE HOWAT CO.
Trial Balance April 30, 2005
Debit Credit Cash ﹩2 881 Accounts Receivable ﹩3 200 Supplies 800 Furniture and Equipment 2 600
Accounts Payable 2 666 B. Howat, Capital 9 000 Fees Earned 2 350 Wages Expense 3 400
Office Expense 940 Totals ﹩10 940 ﹩16 897 An examination of the ledger and journal reveals the following errors:
(1) Each of the above listed accounts has a normal balance per the general ledger.
(2) Cash received from a customer on account was debited for ﹩650 instead of ﹩560
(Accounts Receivable was also credited for ﹩650). (3) The purchase of a typewriter on account for ﹩340 was recorded as a debit to Office
Expense for ﹩340 and a credit to Accounts Payable for ﹩340. (4) Services were performed on account for a client, ﹩890, for which Accounts Receivable
was debited for ﹩890 and Fees Earned was credited for ﹩89.
(5) A Payment of ﹩30 for telephone charges was entered as a debit to Office Expense for ﹩
30 and a debit to Cash for ﹩30. (6) When the Fees Earned account was reviewed, it was found to total ﹩2 360, not ﹩2 350. (7) A debit posting to Wages Expense of ﹩600 was omitted.
(8) A payment on account for ﹩260 was credited to Cash for ﹩260 and credited to
Accounts Payable for ﹩206.
(9) No one counted the inventory of Supplies to determine that only ﹩500 of supplies were
on hand April 30 and that ﹩300 were used during April.
Required:
Prepare a correct trial balance.
4．
A Comparative balance sheet for hernan Perez Pictures appears below:
Dec.31 Assets Cash Accounts Receivable Inventory Stock investments Equipment Accumulated depreciation 2007 ﹩61,000 65,000 155,000 100,000 170,000 (31,000) 2006 ﹩35,000 50,000 96,000 70,000 100,000 (20,000) Change ﹩26,000 15,000 59,000 30,000 70,000 (11,000) Liabilities and Stockholders’ Equity Accounts payable Long-term note payable Bonds payable Common stock, no par Retained earnings ﹩520,000 ﹩331,000 ﹩189,000 ﹩31,000 72,000 100,000 250,000 67,000 60,000 0 200,000 31,000 12,000 100,000 50,000 36,000 ﹩40,000 ﹩(9,000)
Additional information:
﹩520,000 ﹩331,000 ﹩189,000 ⑴ New equipment costing ﹩80,000 was purchased for cash. ⑵ Old equipment was sold at a loss of ﹩4,500. ⑶ Bonds were issued for cash.
⑷ An investment costing ﹩30,000 was acquired by issuing a long-term note payable.
⑸ Cash dividends of ﹩14,000 were declared and paid during the year.
⑹ Depreciation expense for 2007 was ﹩15,000.
⑺ Accounts payable relate to operating expenses.
⑻ Stock investments are classified as available-for-sale securities.
Required:
Prepare a statement of cash flows for 2007 using the indirect method.
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