EXERCISE FOR FINANCIAL ACCOUNTING AND FINANCIAL STATEMENTS
Exercise 1: Given the accounting equation, answer each of the following questions. (a) The liabilities of Weber Company are $120,000 and the owner’s equity is $232,000. What is the amount of Weber Company’s total assets? (b) The total assets of Weber Company are $190,000 and its owner’s equity is $91,000. What is the amount of its total liabilities? (c) The total assets of Weber Company are $800,000 and its liabilities are equal to one-half of its total assets. What is the amount of Weber Company’s owner’s equity?
Exercise 2: At the beginning of the year, Gilles Company had total assets of $800,000 and total liabilities of $300,000. Answer the following questions. (a) If total assets increased $150,000 during the year and total liabilities decreased $60,000, what is the amount of owner’s equity at the end of the year? (b) During the year, total liabilities increased $100,000 and owner’s equity decreased $70,000. What is the amount of total assets at the end of the year? (c) If total assets decreased $80,000 and owner’s equity increased $120,000 during the year, what is the amount of total liabilities at the end of the year?
Exercise 3: Use the expanded accounting equation to answer each of the following questions. (a) The liabilities of Kafka Company are $90,000. Owner’s capital is $150,000; drawings are $40,000; revenues, $450,000; and expenses, $320,000. What is the amount of Kafka Company’s total assets? (b) The total assets of Rivera Company are $57,000. Owner’s capital is $25,000; drawings are $7,000; revenues, $52,000; and expenses, $35,000. What is the amount of the company’s total liabilities? (c) The total assets of Alcorn Co. are $600,000 and its liabilities are equal to two-thirds of its total assets. What is the amount of Alcorn Co.’s owner’s equity? Exercise 4: The following are the major balance sheet classifi cations. Current assets (CA) Current liabilities (CL) Long-term investments (LTI) Long-term liabilities (LTL) Property, plant, and equipment (PPE) Owner’s equity (OE) Intangible assets (IA) Instructions Classify each of the following accounts taken from Faust Company’s balance sheet. ________ Accounts payable ________ Accumulated depreciation—equipment ________ Accounts receivable ________ Buildings ________ Cash ________ Land (in use) ________ Owner’s capital ________ Notes payable (due in 2 years) ________ Patents ________ Supplies ________ Salaries and wages payable ________ Equipment ________ Inventory ________ Prepaid expenses ________ Stock investments (to be sold in 7 months) Exercise 5: The following items were taken from the fi nancial statements of J. Pineda Company. (All amounts are in thousands.) Long-term debt $ 1,000 Accumulated depreciation—equipment $5,655 Prepaid insurance 880 Accounts payable 1,444 Equipment 11,500 Notes payable (due after 2018) 400 Stock investments (long-term) 264 Owner’s capital 12,955 Debt investments (short-term) 3,690 Accounts receivable 1,696 Notes payable (due in 2018) 500 Inventory 1,256 Cash 2,668 Instructions Prepare a classified balance sheet in good form as of December 31, 2017.
Exercise 6: These financial statement items are for Basten Company at year-end, July 31, 2017. Salaries and wages payable $ 2,080 Notes payable (long-term) $1,800 Salaries and wages expense 48,700 Cash 14,200 Utilities expense 22,600 Accounts receivable 9,780 Equipment 34,400 Accumulated depreciation—equipment 6,000 Accounts payable 4,100 Owner’s drawings 3,000 Service revenue 63,000 Depreciation expense 4,000 Rent revenue 8,500 Owner’s capital (beginning of the year) 51,200 Instructions (a) Prepare an income statement and an owner’s equity statement for the year. The owner did not make any new investments during the year. (b) Prepare a classified balance sheet at July 31.
