Problem 1
As of December 31, Charles Company had Rs.12,000 in cash, held Rs.95,000 of inventory, and
owned other items that originally cost Rs. 13,000. Charles Company had also borrowed
Rs.40,000 from First City Bank. Prepare a balance sheet for Charles Company as of December
31. Be sure to label each item and each column with appropriate terms
CHARLES COMPANY
BALANCE SHEET AS OF DECEMBER 31,_ _ _,
Assets Liabilities and Owners' Equity
Cash Bank Loan
Inventory Owners' Equity
Other Assets Owners' equity
Total Assets TLand E
Problem 2
Selected balance sheet items are shown for the Microtech Company. Compute the missing
amounts for each of the four years. What basic accounting equation did you apply in making
your calculations?
Year 1 Year 2 Year 3 Year 4
Current assets Rs. 113,624 Rs. ? Rs. 85124
Noncurrent assets 198014 162011 151021
Total assets Rs. 524,600 Rs.220,111
Current liabilities Rs. 56,142 Rs.40,220
Noncurrent
60100 30222
liabilities
Paid-in capital 214155 173295 170000 170000
Retained earnings 13785 -3644 1452 2350
Total liabilities and
Rs. 524,600 Rs. 288,456 Rs.220,111
owners' equity
Problem-3
During the month of June, Bon Voyage Travel recorded the following transactions:
1. Owners invested Rs.25,000 in cash to start the business. They received common stock.
2. The month's rent of Rs.500 was paid in cash. .
3. Equipment costing Rs.8,000 was bought on credit.
4. Rs.500 was paid for office supplies.
5. Advertising expenses of Rs.750 was paid for with cash.
6. Paid Rs.3,000 employee salaries in cash.
7. Earned travel commissions of Rs.10,000 of which Rs.2,000 was received in cash.
8. Paid Rs.5,000 of the Rs.8,000 owed to the equipment supplier.
9. Used Rs.100 of the office supplies.
10. Charged Rs.1,000 of miscellaneous expenses on the corporate credit card.
Required:
a.Prepare an analysis of the month's transactions using the s tabular format given below
b.Prepare a balance sheet as of the end of the month.
c.Prepare an income statement for the month.
d.Explain the changes in the Cash account.
e.Explain why the change in the Cash account and the month's income are not the same.
Account Supplies Accounts Owners'
Cash + Receivable + Inventory + Equipment = Payable + Equity
1 Investment
2 Rent
3
4
5 Advertising
6 Salaries
Commissio
7 ns
8
9
1
0 Expenses
BON VOYAGE TRAVEL
BALANCE SHEET AS OF JUNE 30,_ _ _,
Assets Liabilities and Owners' Equity
Cash Accounts payable
Accounts receivable Current Liabilities
Supplies inventory Owners' equity
Current assets
Equipment
Total Assets Liabilities & Equity
BON VOYAGE TRAVEL
INCOME STATEMENT JUNE 1-30,___,
Commissions
Expenses
Rent
Advertising
Salaries
Supplies
Misc. Expenses
Net Income
BON VOYAGE TRAVEL
CASH RECEIPTS AND DISBURSEMENTS JUNE 1-30,___,
Operating CF
Investing CF
Financing CF
Increase in cash
