Chap001 Solution Manual

50400 22000 12000 60000 2000 1600 e 7000 7000 bal

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50,400 + + 22,000 = 12,000 + 60,000 + 2,000 – 1,600 e. _______ + $7,000 ______ _______ ______ + 7,000 _____ Bal. 50,400 + 7,000 + 22,000 = 12,000 + 60,000 + 9,000 – 1,600 f. 8,000 ______ + 8,000 _______ ______ _____ _____ Bal. 42,400 + 7,000 + 30,000 = 12,000 + 60,000 + 9,000 – 1,600 g. 2,400 ______ ______ _______ ______ _____ 2,400 Bal. 40,000 + 7,000 + 30,000 = 12,000 + 60,000 + 9,000 – 4,000 h. + 5,000 - 5,000 ______ _______ ______ _____ _____ Bal. 45,000 + 2,000 + 30,000 = 12,000 + 60,000 + 9,000 – 4,000 i. 12,000 ______ ______ 12,000 ______ _____ _____ Bal. 33,000 + 2,000 + 30,000 = 0 + 60,000 + 9,000 – 4,000 j. 500 ______ ______ _______ ______ – $500 _____ _____ Bal. $32,500 + $2,000 + $30,000 = $ 0 + $60,000 $500 + $9,000 $4,000 Exercise 1-12 (20 minutes) a. Started the business with the owner investing $20,000 cash. b. Purchased office supplies for $1,500 by paying $1,000 cash and putting the remaining $500 balance on credit. c. Purchased office furniture by paying $8,000 cash. d. Billed a customer $3,000 for services earned. e. Provided services for $500 cash. 1-16
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Chapter 01 - Accounting in Business Exercise 1-13 (15 minutes) a. Purchased land for $2,000 cash. b. Purchased $500 of office supplies on credit. c. Billed a client $950 for services provided. d. Paid the $500 account payable created by the credit purchase of office supplies in transaction b . e. Collected $950 cash for the billing in transaction c . Exercise 1-14 (15 minutes) REAL SOLUTIONS Income Statement For Month Ended October 31 Revenues: Consulting fees earned ................... $15,000 Expenses: Salaries expense ............................. $6,000 Rent expense ................................... 2,550 Miscellaneous expenses ................. 680 Telephone expense ......................... 660 Total expenses ................................ 9,890 Net income ................................................. $ 5,110 Exercise 1-15 (15 minutes) REAL SOLUTIONS Statement of Owner’s Equity For Month Ended October 31 N. King, Capital, Oct. 1 .................................... $ 0 Add: Investments by owner……………… ...... 74,000 Net income (from Exercise 1-14) ............. 5,110 79,110 Less: Withdrawals by owner .......................... 3,360 N. King , Capital, Oct. 31 ................................. $75,750 1-17
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Chapter 01 - Accounting in Business Exercise 1-16 (15 minutes) REAL SOLUTIONS Balance Sheet October 31 Assets Liabilities Cash .............................. $ 2,000 Accounts payable ................. $ 7,500 Accounts receivable .... 13,000 Office supplies ............. 4,250 Equity Office equipment .......... 28,000 N. King, Capital* .................... 75,750 Land .............................. 36,000 Total assets .................. $83,250 Total liabilities and equity .... $83,250 * Computation of amount from Exercise 1-15. Exercise 1-17 (15 minutes) REAL SOLUTIONS Statement of Cash Flows For Month Ended October 31 Cash flows from operating activities Cash received from customers ........................................... $ 2,000 Cash paid to employees ...................................................... (2,750) Cash paid for rent ................................................................ (2,550) Cash paid for telephone expenses ..................................... (660) Cash paid for miscellaneous expenses .............................. (680 ) Net cash used by operating activities ................................ ( 4,640) Cash flows from investing activities Purchase of office equipment ............................................. (28,000 ) Net cash used by investing activities ............................... (28,000) Cash flows from financing activities Owner’s cash investments .................................................. 38,000 Owner’s cash withdrawals .................................................. (3,360 ) Net cash provided by financing activities .......................... 34,640 Net increase in cash ............................................................ $ 2,000 Cash balance, October 1 ..................................................... 0 Cash balance, October 31 ................................................... $ 2,000 1-18
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Chapter 01 - Accounting in Business Exercise 1-18 (10 minutes) Return on assets = Net income / Average total assets = $20,000 / [($100,000 + $150,000)/2] = 16% Interpretation: Geneva Group’s return on assets of 16% is markedly above the 10% return of its competitors. Accordingly, its performance is assessed as superior to its competitors. Exercise 1-19 (10 minutes) A 1. Cash paid for wages A 5. C ash paid on an account payable C 2. Cash withdrawal by owner C 6. Cash investment by owner B 3. Cash purchase of equipment A 7. Cash received from clients A 4. Cash paid for advertising A 8. Cash paid for rent Exercise 1-20 B (10 minutes) 1. F Financing* 2. I Investing 3. O Operating 4. F Financing 5. I Investing * Would also be listed as “investing” if resources contributed by owner were in the form of non-financial resources.
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