Chapter 1 Homework Solutions

Chapter 1 Homework Solutions - Chapter 1 Homework Solutions...

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Chapter 1 Homework Solutions LO 1 EXERCISE 1-1 USERS OF ACCOUNTING INFORMATION AND THEIR NEEDS 1. Company management 2. Stockholder 3. Labor union 4. Securities and Exchange Commission 5. Banker 6. Supplier 7. Internal Revenue Service LO 2 EXERCISE 1-2 THE ACCOUNTING EQUATION A = L + OE Case 1: $125,000 = $75,000 + OE OE = $50,000 A = L + OE Case 2: $400,000 = L + $100,000 L = $300,000 A = L + OE Case 3: A = $320,000 + $95,000 A = $415,000 LO 2 EXERCISE 1-3 THE ACCOUNTING EQUATION 1. A = L + OE $500,000 = $250,000 + OE OE = $250,000 2. A = L + OE ($500,000 + $100,000) = ($250,000 + $77,000) + OE OE = $273,000 3. A = L + OE A = ($250,000 + $33,000) + ($250,000* – $58,000) A = $283,000 + $192,000
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A = $475,000 *From 1. above 4. A = L + OE $1,000,000 = L + $250,000* L = $750,000 *From 1. above LO 2 EXERCISE 1-5 CHANGES IN OWNERS’ EQUITY 1. First compute the amount of owners’ equity at the end of each year. Then, compute the change. A = L + OE 2005: $25,000 = $12,000 + OE OE = $13,000 A = L + OE 2006: $79,000 = $67,000 + OE OE = $12,000 A = L + OE 2007: $184,000 = $137,000 + OE OE = $47,000 Change in owners’ equity during 2006: $12,000 – $13,000 = ($1,000 ) Change in owners’ equity during 2007: $47,000 – $12,000 = $35,000 2. 2006: ($1,000) = Income – $0 in dividends Net loss = $1,000 3. 2007: $35,000 = Income – $10,000 in dividends
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Chapter 1 Homework Solutions - Chapter 1 Homework Solutions...

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