1 19 chapter 01 accounting in business exercise 1 21

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Chapter 01 - Accounting in Business Exercise 1-21 (20 minutes) NINTENDO Income Statement For Year Ended March 31, 2009 Net sales .................................................................... ¥ 1,838,622 Expenses Cost of sales ........................................................... ¥1,044,981 Selling, general and administrative expenses ...... 238,378 Other expenses ...................................................... 276,174 Total expenses ....................................................... 1,559,533 Net income ................................................................... ¥ 279,089 1-20
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Chapter 01 - Accounting in Business PROBLEM SET A Problem 1-1A (25 minutes) Balance Sheet Income Statement Statement of Cash Flows Transaction Total Assets Total Liab. Total Equity Net Income Operating Activities Financing Activities Investing Activities 1 Owner invests cash in business + + + 2 Incurs legal costs on credit + 3 Pays cash for employee wages 4 Borrows cash by signing L-T note payable + + + 5 Receives cash for services provided + + + + 6 Buys land by signing note payable + + 7 Buys office equipment for cash +/– 8 Provides ser- vices on credit + + + 9 Collects cash on receivable from (8) +/– + 10 Owner withdraws cash 1-21
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Chapter 01 - Accounting in Business Problem 1-2A (40 minutes) Part 1 Company A: (a) Equity on December 31, 2010: Assets ........................................................ $45,000 Liabilities ................................................... (23,500 ) Equity ......................................................... $21,500 (b) Equity on December 31, 2011: Equity, December 31, 2010 ....................... $21,500 Plus owner investments ........................... 5,000 Plus net income ......................................... 7,500 Less owner’s withdrawals ........................ (2,500 ) Equity, December 31, 2011 ...................... $31,500 (c) Amount of liabilities on December 31, 2011: Assets ........................................................ $48,000 Equity ......................................................... (31,500 ) Liabilities ................................................... $16,500 1-22
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Chapter 01 - Accounting in Business Part 2 Company B: (a) and (b) Equity: 12/31/2010 12/31/2011 Assets .................................. $35,000 $41,000 Liabilities ............................. (22,500 ) (27,500 ) Equity .................................. $12,500 $13,500 (c) Net income for 2011: Equity, December 31, 2010 .................... $12,500 Plus owner investments ........................ 1,500 Plus net income ...................................... ? Less owner’s withdrawals ..................... (3,000 ) Equity, December 31, 2011 .................... $13,500 Therefore, net income must have been $ 2,500 . 1-23
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Chapter 01 - Accounting in Business Problem 1-2A (continued) Part 3 Company C: First, calculate the beginning balance of equity: Dec. 31, 2010 Assets ........................................................ $29,000 Liabilities ................................................... (14,000 ) Equity ......................................................... $15,000 Next, find the ending balance of equity by completing this table: Equity, December 31, 2010 ....................... $15,000 Plus owner investments ........................... 7,750 Plus net income ......................................... 9,000 Less owner’s withdrawals ........................ (3,875 ) Equity, December 31, 2011 ....................... $27,875 Finally, find the ending amount of assets by adding the ending balance of equity to the ending balance of liabilities: Dec. 31, 2011 Liabilities ................................................... $19,000 Equity ......................................................... 27,875 Assets ........................................................ $46,875 Part 4 Company D: First, calculate the beginning and ending owner’s equity balances: 12/31/2010 12/31/2011 Assets ..................................... $80,000 $ 125,000 Liabilities ................................ (38,000 ) (64,000 ) Owner’s Equity ....................... $42,000 $ 61,000 Then, find the amount of owner investments during 2011: Equity, December 31, 2010 .......................... $42,000 Plus owner investments .............................. ? Plus net income ........................................... 12,000 Less owner withdrawals .............................. 0 Equity, December 31, 2011 .......................... $61,000 1-24
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Chapter 01 - Accounting in Business Thus, owner investments must have been: $ 7,000 1-25
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Chapter 01 - Accounting in Business Problem 1-2A ( Concluded ) Part 5 Company E: First, compute the balance of equity as of December 31, 2011: Assets ........................................................ $112,500 Liabilities .................................................. (75,000 ) Equity ......................................................... $ 37,500 Next, find the beginning balance of equity as follows: Equity, December 31, 2010 ....................... $ ? Plus owner investments ........................... 4,500 Plus net income ......................................... 18,000 Less owner’s withdrawals ........................ (9,000 ) Equity, December 31, 2011 ...................... $37,500 Thus, the beginning balance of equity was $24,000 .
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