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Chapter 1

# Chapter 1 - CHAPTER 1 CHAPTER 1 EXERCISE 1-3 A = L SE Case...

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Unformatted text preview: CHAPTER 1 CHAPTER 1 EXERCISE 1-3 A = L + SE Case 1: \$125,000 = \$75,000 + SE SE = \$50,000 A = L + SE Case 2: \$400,000 = L + \$100,000 L = \$300,000 A = L + SE Case 3: A = \$320,000 + \$95,000 A = \$415,000 EXERCISE 1-4 1. A = L + SE \$500,000 = \$250,000 + SE SE = \$250,000 2. A = L + SE (\$500,000 + \$100,000) = (\$250,000 + \$77,000) + SE SE = \$273,000 * *SE = (\$500,000 + \$100,000) – (\$250,000 + \$77,000) = \$273,000 3. A = L + SE A = (\$250,000 + \$33,000) + (\$250,000* – \$58,000) A = \$283,000 + \$192,000 \$475,000 *From (1) above 4. A = L + SE \$1,000,000 = L + \$250,000* L = \$750,000 *From (1) above 1 CHAPTER 1 EXERCISE 1-5 1. A = L + SE Beginning of year \$100,000 = \$80,000 + \$20,000 + Net income + 25,000 – Dividends – Stockholders’ equity at end of year \$45,000 2. A = L + SE End of year (EOY) \$60,000* = \$40,000 + \$20,000 Reduce by half to beginning of year: divided by 2 Assets, beginning of year \$30,000 * Hint: First, solve for EOY asset amount = \$40,000 + \$20,000 = \$60,000. 3. A = L + SE Beginning of year (BOY) \$30,000 = \$20,000* + \$10,000 Triples during year × 3 Liabilities, end of year \$60,000 * Hint: First, solve for BOY liability amount = \$30,000 – \$10,000 = \$20,000. EXERCISE 1-7 (In thousands of dollars) A = L + CS + (Beg. RE + Income – Div.) Case 1: 40 = L + 10 + (15 + 8 – 2) Liabilities = 9 Case 2: A = 15 + 5 + (8 + 7 – 1) Assets = 34 Case 3: 75 = 25 + 20 + (10 + Income* – 3) Income = 23 * 75 – 52 = 23* Case 4: 50 = 10 + 15 + (20 + 9 – Div*.) Dividends = 4* 50 = 54 – 4* 2 CHAPTER 1 EXERCISE 1-10 1. Revenue – Expenses = Net Income \$25,000 – (\$6,500 + \$12,000) = \$6,500 2. Retained Earnings, Net Retained Earnings, Beginning of Year + Income – Dividends = End of Year \$8,500 + \$6,500 – \$3,000 = \$12,000 3. Total Assets: Cash..................................... \$13,000 Accounts receivable............. 4,500 Office equipment.................. 7,500 Total assets........................ \$25,000 4. Total Liabilities: Accounts payable................. \$5,000 5. Stockholders’ Equity: Capital Stock + Retained Earnings = Stockholders’ Equity \$8,000 + \$12,000 = \$20,000 (Or \$25,000 in total assets less \$5,000 in total liabilities.) 6. A = L + SE \$25,000 = \$5,000 + \$20,000 EXERCISE 1-11 ACE CORPORATION STATEMENT OF RETAINED EARNINGS FOR THE MONTH ENDED FEBRUARY 28, 2010 Retained earnings, beginning of month.............................................. \$229,800* Add: Net income.................................................................................. 14,000** Deduct: Dividend for the month..........................................................Deduct: Dividend for the month....
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Chapter 1 - CHAPTER 1 CHAPTER 1 EXERCISE 1-3 A = L SE Case...

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