Ch.1 - SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 1-1 (a)...

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SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 1-1 (a) P Shared control, tax advantages, increased skills and resources. (b) SP Simple to set up and maintains control with founder. (c) C Easier to transfer ownership and raise funds, no personal liability. BRIEF EXERCISE 1-2 (a) 4 Investors in common stock (b) 3 Marketing managers (c) 2 Creditors (d) 5 Chief Financial Officer (e) 1 Internal Revenue Service BRIEF EXERCISE 1-3 O (a) Cash received from customers. F (b) Cash paid to stockholders (dividends). F (c) Cash received from issuing new common stock. O (d) Cash paid to suppliers. I (e) Cash paid to purchase a new office building. BRIEF EXERCISE 1-4 E (a) Advertising expense R (b) Service revenue E (c) Insurance expense E (d) Salaries expense D (e) Dividends
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R (f) Rent revenue E (g) Utilities expense NSE (h) Cash purchase of equipment C (i) Issued common stock for cash.
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BRIEF EXERCISE 1-5 MANTLE COMPANY Balance Sheet December 31, 2010 Assets Cash. ................................................................................................... $ 22,000 Accounts receivable. ........................................................................ 81,000 Total assets. ............................................................................... $103,000 Liabilities and Stockholders’ Equity Liabilities Accounts payable. ..................................................................... $ 75,000 Stockholders’ equity Common stock. .......................................................................... 28,000 Total liabilities and stockholders’ equity. ....................... $103,000 BRIEF EXERCISE 1-6 IS (a) Income tax expense BS (b) Inventories BS (c) Accounts payable BS (d) Retained earnings BS (e) Property, plant, and equipment IS (f) Net sales IS (g) Cost of goods sold BS (h) Common stock BS (i) Receivables IS (j) Interest expense BRIEF EXERCISE 1-7
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I (a) Revenue during the period. B (b) Supplies on hand at the end of the year. C (c) Cash received from issuing new bonds during the period. B (d) Total debts outstanding at the end of the period.
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BRIEF EXERCISE 1-8 (a) $90,000 + $230,000 = $320,000 (Total assets) (b) $170,000 – $90,000 = $80,000 (Total liabilities) (c) $800,000 – 0.25($800,000) = $600,000 (Stockholders’ equity) BRIEF EXERCISE 1-9 (a) ($800,000 + $150,000) – ($500,000 – $80,000) = $530,000 (Stockholders’ equity) (b) ($500,000 + $100,000) + ($800,000 – $500,000 – $70,000) = $830,000 (Assets) (c) ($800,000 – $90,000) – ($800,000 – $500,000 + $110,000) = $300,000 (Liabilities) BRIEF EXERCISE 1-10 A (a) Accounts receivable L (b) Salaries payable A (c) Equipment A (d) Office supplies SE (e) Common stock L (f) Notes payable BRIEF EXERCISE 1-11 (d) All of these are required.
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SOLUTIONS TO DO IT! REVIEW EXERCISES DO IT! 1-1 (1) Easier to transfer ownership: corporation (2) Easier to raise funds: corporation (3) More owner control: sole proprietorship (4) Tax advantages: sole proprietorship and partnership (5) No personal legal liability: corporation
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Ch.1 - SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 1-1 (a)...

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