BUS214_SOLUTIONS

# BUS214_SOLUTIONS - 1 At assets were \$1,391,500 and...

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1. At December 31, 2005, assets were \$1,391,500 and liabilities were \$598,800. For the year ended December 31, 2006, revenues of \$632,400 were earned, expenses of \$594,300 were incurred, dividends of \$31,100 were declared and paid, and \$54,700 of common stock was issued. At December 31, 2006, liabilities were \$614,700. What were assets at December 31, 2006? a. \$1,469,100 (1point) b. \$1,437,300 c. \$1,345,700 d. \$1,392,900 e. None of the above A. Use the Assets = Liabilities + Shareholders’ Equity formula. Enter the known amounts and compute assets at December 31, 2005: Assets = Liabilities + Shareholders’ Equity 12/31/04 \$1,391,500 = \$598,800 + \$792,700 (1 point) Rev 632,400 Exp (594,300) Div (31,100) Stock 54,700 \$1,469,100 = \$614,700 + \$854,400 (1 point) 12/31/05 2.. Retained Earnings had a beginning balance of \$1,628,900 and an ending balance of \$2,452,300. Total revenues for the year were \$6,707,500. During the year \$518,100 in dividends were declared and paid and \$288,000 in stock was issued for cash. Which of the following is true? a. Total expenses for the year were \$5,884,100. b. Net income for the year was \$1,341,500 (1 point) c. Total expenses for the year were \$6,172,100. d. Net income for the year was \$823,400. e. More than one of the above answers is correct. B. Beginning balance of \$1,628,900 + Revenues of \$6,707,500 - Expenses ------------------------------ 1 point (see below = 5,366,000) – \$518,100 of dividends = \$2,452,300 ending balance. (The issuance of stock for cash does not affect retained earnings = 1 point .) Therefore, Expenses were \$5,366,000 . This is not one of the answers, so we solve for net income = \$1,341,500 (\$6,707,500 – \$5,366,000) and that is an answer. 3.. The following transactions occurred:

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- contributed 100,000 of cash to start the business - purchased \$10,000 of supplies on account - performed \$20,000 of services for clients (all on account) - incurred expenses of\$5,000 (\$2,500 paid in cash and the rest charged on account) - paid for \$4,000 of the supplies and collected \$18,000 of the accounts receivable - declared and paid a \$500 dividend.
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BUS214_SOLUTIONS - 1 At assets were \$1,391,500 and...

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