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Accounting with tables and multiple choice questions.pdf
Accounting_with_tables_and_multiple_choice_questions.pdf
Showing 46-47 out of 53
CHAPTER 1 ACCOUNTING IN ACTION SUMMARY OF QUESTI
CHAPTER 1 ACCOUNTING IN ACTION SUMMARY OF QUESTI
CHAPTER 1 ACCOUNTING IN ACTION SU...
CHAPTER 1 ACCOUNTING IN ACTION SUMMARY OF QUESTI
Test Bank for Accounting Principles, Eighth Edition
1 - 46
Ex. 199
Don Harder was reviewing his business activities at the end of the year (2008) and decided to
prepare an Owner's Equity Statement. At the beginning of the year his assets were $500,000 and
his liabilities were $200,000. At the end of the year the assets had grown to $950,000 but
liabilities had also increased to $350,000. The net income for the year was $420,000. Don had
withdrawn $120,000 during the year for his personal use.
Prepare an Owner's Equity Statement in good form.
Solution 199
(5 min.)
DON HARDER
Owner's Equity Statement
For the Year Ended 2008
D. Harder, Beginning Capital
$300,000
Add: Net Income
420,000
720,000
Less: Drawings
120,000
D. Harder, Ending Capital
$600,000
Ex. 200
At September 1, the balance sheet accounts for Debbie’s Restaurant were as follows:
Accounts Payable
$
3,800
Land
$33,000
Accounts Receivable
1,600
Debbie, Capital
?
Building
68,000
Notes Payable
48,000
Cash
10,000
Supplies
6,600
Furniture
18,700
The following transactions occurred during the next two days:
Debbie invested an additional $22,000 cash in the business. The accounts payable were paid in
full. (No payment was made on the notes payable.)
Instructions
Prepare a balance sheet at September 3, 2008.
Accounting in Action
1 - 47
Solution 200
(10 min.)
DEBBIE'S RESTAURANT
Balance Sheet
September 3, 2008
ASSETS
Cash
$
28,200
Accounts receivable
1,600
Supplies
6,600
Furniture
18,700
Building
68,000
Land
33,000
Total assets
$156,100
LIABILITIES
Accounts payable
$
-0-
Notes payable
48,000
OWNER'S EQUITY
Debbie, Capital
108,100
Total liabilities and owner's equity
$156,100
Cash ($10,000 + $22,000 – $3,800) = $28,200
Accounts Payable ($3,800 – $3,800) = $0
Debbie, Capital: Beginning balance ($137,900 – $51,800)
$
86,100
Additional investment
22,000
Ending balance
$108,100
Ex. 201
Presented below are balance sheet items for Higgins Company at December 31, 2008.
Accounts payable
$35,000
Accounts receivable
36,000
Cash
27,000
Equipment
52,000
Higgins, capital
30,000
Notes payable
50,000
Compute each of the following:
1. Total assets.
2. Total liabilities.
Solution 201
(5 min.)
1. Total assets = $115,000
($36,000 + $27,000 + $52,000)
2. Total liabilities = $85,000
($35,000 + $50,000)
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