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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