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Solution Chapter 1

1. The document provides a series of transactions for a business including: (1) catering services revenue of $35,000, (2) purchase of land for $15,000, and (3) payments of expenses totaling $26,000. It also lists the recognition of $3,000 in supply costs. 2. The second problem provides income statements, statements of owner's equity, and balance sheets for OMH Computer Services for July 2010. It shows the business earned $50,250 in fees and had $22,975 in net income for the month. 3. The third problem provides income statements and statements of owner's equity for Colfax Dry Cleaners for November 2010

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156 views8 pages

Solution Chapter 1

1. The document provides a series of transactions for a business including: (1) catering services revenue of $35,000, (2) purchase of land for $15,000, and (3) payments of expenses totaling $26,000. It also lists the recognition of $3,000 in supply costs. 2. The second problem provides income statements, statements of owner's equity, and balance sheets for OMH Computer Services for July 2010. It shows the business earned $50,250 in fees and had $22,975 in net income for the month. 3. The third problem provides income statements and statements of owner's equity for Colfax Dry Cleaners for November 2010

Uploaded by

Khải Hưng Nguyễn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Ex.

1–13

a. (1) Provided catering services for cash, $35,000.


(2) Purchase of land for cash, $15,000.
(3) Payment of expenses, $26,000.
(4) Purchase of supplies on account, $1,500.
(5) Withdrawal of cash by owner, $2,000.
(6) Payment of cash to creditors, $7,200.
(7) Recognition of cost of supplies used, $3,000.

b. $15,200 ($30,000 – $14,800)


c. $4,000 (–$2,000 + $35,000 – $29,000)
d. $6,000 ($35,000 – $29,000)
e. $4,000 ($6,000 – $2,000)

Prob. 1–3A

1.
OMH COMPUTER SERVICES
Income Statement
For the Month Ended July 31, 2010
Fees earned.......................................................................... $ 50,250
Expenses:
Salaries expense.......................................................... $ 12,000
Rent expense................................................................ 8,000
Auto expense................................................................ 3,875
Supplies expense......................................................... 1,525
Miscellaneous expense............................................... 1,875
Total expenses.......................................................... 27,275
Net income........................................................................... $ 22,975

2.
OMH COMPUTER SERVICES
Statement of Owner’s Equity
For the Month Ended July 31, 2010
Doug Van Buren, capital, July 1, 2010.............................. $ 0
Investment on July 1, 2010................................................. $30,000
Net income for July............................................................. 22,975
$52,975
Less withdrawals................................................................. 7,500
Increase in owner’s equity................................................. 45,475
Doug Van Buren, capital, July 31, 2010............................ $45,475

3.
OMH COMPUTER SERVICES
Balance Sheet
July 31, 2010
Assets Liabilities
Cash.................................. $ 25,000 Accounts payable........... $ 1,350
Accounts receivable........ 20,750
Supplies............................ 1,075 Owner’s Equity
Doug Van Buren, capital 45,475
Total liabilities and
Total assets...................... $ 46,825 owner’s equity............ $ 46,825

4. (Optional)
OMH COMPUTER SERVICES
Statement of Cash Flows
For the Month Ended July 31, 2010
Cash flows from operating activities:
Cash received from customers................................... $ 29,500
Deduct cash payments for expenses
and payments to creditors....................................... 27,000*
Net cash flow from operating activities..................... $ 2,500
Cash flows from investing activities:................................ 0
Cash flows from financing activities:
Cash received as owner’s investment....................... $ 30,000
Deduct cash withdrawal by owner............................. 7,500
Net cash flow from financing activities..................... 22,500
Net cash flow and July 31, 2010, cash balance................ $ 25,000
*$8,000 + $1,250 + $5,750 + $12,000

Prob. 1–5A

1.
Assets = Liabilities + Owner’s Equity

Accounts Accounts
Cash + Receivable + Supplies + Land = Payable + Maria Acosta, Capital
34,200 + 40,000 + 5,000
+ 50,000 = 16,400 + Maria Acosta, Capital
129,200 = 16,400 + Maria Acosta, Capital
112,800 = Maria Acosta, Capital
2.
Owner’s
Assets = Liabilities + Equity

Maria Maria
Accounts Accounts Acosta, Acosta,
Cash + Receivable + Supplies + Land = Payable + Capital – Drawing

Bal. 34,200 40,000 5,000 50,000 16,400 112,800


a. + 35,000 + 35,000
Bal. 69,200 40,000 5,000 50,000 16,400 147,800
b. – 30,000 + 30,000
Bal. 39,200 40,000 5,000 80,000 16,400 147,800
c. – 4,500
Bal. 34,700 40,000 5,000 80,000 16,400 147,800
d. + 18,250
Bal. 34,700 58,250 5,000 80,000 16,400 147,800
e. – 9,000 – 9,000
Bal. 25,700 58,250 5,000 80,000 7,400 147,800
f. + 2,800 + 2,800
Bal. 25,700 58,250 7,800 80,000 10,200 147,800
g. + 31,750
Bal. 57,450 58,250 7,800 80,000 10,200 147,800
h. + 27,800 – 27,800
Bal. 85,250 30,450 7,800 80,000 10,200 147,800
i. + 14,800
Bal. 85,250 30,450 7,800 80,000 25,000 147,800
j. – 12,500
Bal. 72,750 30,450 7,800 80,000 25,000 147,800
k. – 4,250
Bal. 72,750 30,450 3,550 80,000 25,000 147,800
l. – 10,000 – 10,000
Bal. 62,750 30,450 3,550 80,000 25,000 147,800 – 10,000

3.
COLFAX DRY CLEANERS
Income Statement
For the Month Ended November 30, 2010
Dry cleaning revenue.......................................................... $50,000
Expenses:
Dry cleaning expense.................................................. $ 14,800
Wages expense............................................................ 8,200
Rent expense................................................................ 4,500
Supplies expense......................................................... 4,250
Truck expense.............................................................. 1,875
Utilities expense........................................................... 1,575
Miscellaneous expense............................................... 850
Total expenses.......................................................... 36,050
Net income........................................................................... $ 13,950

COLFAX DRY CLEANERS


Statement of Owner’s Equity
For the Month Ended November 30, 2010
Maria Acosta, capital, November 1, 2010....... $ 112,800
Additional investment by Maria Acosta......... $35,000
Net income for November................................ 13,950
$ 48,950
Less withdrawals.............................................. 10,000
Increase in owner’s equity.............................. 38,950
Maria Acosta, capital, November 30, 2010..... $151,750

COLFAX DRY CLEANERS


Balance Sheet
November 30, 2010
Assets Liabilities
Cash.................................. $ 62,750 Accounts payable........... $ 25,000
Accounts receivable........ 30,450
Supplies............................ 3,550 Owner’s Equity
Land.................................. 80,000 Maria Acosta, capital...... 151,750
Total liabilities and
Total assets $176,750 owner’s equity $176,750

4. (Optional)
COLFAX DRY CLEANERS
Statement of Cash Flows
For the Month Ended November 30, 2010
Cash flows from operating activities:
Cash received from customers................................... $ 59,550*
Deduct cash payments for expenses
and payments to creditors....................................... 26,000**
Net cash flow from operating activities..................... $ 33,550
Cash flows from investing activities:
Purchase of land.......................................................... (30,000)
Cash flows from financing activities:
Cash received as owner’s investment....................... $ 35,000
Deduct cash withdrawal by owner............................. 10,000
Net cash flow from financing activities..................... 25,000
Increase in cash................................................................... $ 28,550
Cash balance, November 1, 2010....................................... 34,200
Cash balance, November 30, 2010..................................... $ 62,750
*$31,750 + $27,800
**$4,500 + $9,000 + $12,500

Prob. 1–5B

1.
Assets = Liabilities + Owner’s Equity

Accounts Accounts
Cash + Receivable + Supplies + Land = Payable + Peyton Keyes, Capital
17,000 + 31,000 + 3,200 + 36,000 = 10,400 + Peyton Keyes, Capital
87,200 = 10,400 + Peyton Keyes, Capital
76,800 = Peyton Keyes, Capital

2.
Owner’s
Assets = Liabilities + Equity

Peyton Peyton
Accounts Accounts Keyes, Keyes,
Cash + Receivable + Supplies + Land = Payable + Capital – Drawing

Bal. 17,000 31,000 3,200 36,000 10,400 76,800


a. + 25,000 + 25,000
Bal. 42,000 31,000 3,200 36,000 10,400 101,800
b. – 24,000 + 24,000
Bal. 18,000 31,000 3,200 60,000 10,400 101,800
c. + 19,500
Bal. 37,500 31,000 3,200 60,000 10,400 101,800
d. – 3,000
Bal. 34,500 31,000 3,200 60,000 10,400 101,800
e. + 1,550 + 1,550
Bal. 34,500 31,000 4,750 60,000 11,950 101,800
f. – 5,100 – 5,100
Bal. 29,400 31,000 4,750 60,000 6,850 101,800
g. + 24,750
Bal. 29,400 55,750 4,750 60,000 6,850 101,800
h. + 8,200
Bal. 29,400 55,750 4,750 60,000 15,050 101,800
i. – 8,050
Bal. 21,350 55,750 4,750 60,000 15,050 101,800
j. + 26,750 – 26,750
Bal. 48,100 29,000 4,750 60,000 15,050 101,800
k. – 2,950
Bal. 48,100 29,000 1,800 60,000 15,050 101,800
l. – 18,000 – 18,000
Bal. 30,100 29,000 1,800 60,000 15,050 101,800 – 18,000

Owner’s Equity (Continued)

Dry Dry
Cleaning Cleaning Wages Rent Supplies Truck Utilities Misc.
+ Revenue – Exp. – Exp. – Exp. – Exp. – Exp. – Exp. – Exp.

Bal.
a.
Bal.
b.
Bal.
c. + 19,500
Bal. 19,500
d. – 3,000
Bal. 19,500 – 3,000
e.
Bal. 19,500 – 3,000
f.
Bal. 19,500 – 3,000
g. + 24,750
Bal. 44,250 – 3,000
h. – 8,200
Bal. 44,250 – 8,200 – 3,000
i. – 5,100 – 1,200 – 800 – 950
Bal. 44,250 – 8,200 – 5,100 – 3,000 – 1,200 – 800 – 950
j.
Bal. 44,250 – 8,200 – 5,100 – 3,000 – 1,200 – 800 – 950
k. – 2,950
Bal. 44,250 – 8,200 – 5,100 – 3,000 – 2,950 – 1,200 – 800 – 950
l.
Bal. 44,250 – 8,200 – 5,100 – 3,000 – 2,950 – 1,200 – 800 – 950
3.
SWAN DRY CLEANERS
Income Statement
For the Month Ended July 31, 2010
Dry cleaning revenue.......................................................... $ 44,250
Expenses:
Dry cleaning expense.................................................. $8,200
Wages expense............................................................ 5,100
Rent expense................................................................ 3,000
Supplies expense......................................................... 2,950
Truck expense.............................................................. 1,200
Utilities expense........................................................... 800
Miscellaneous expense............................................... 950
Total expenses.......................................................... 22,200
Net income........................................................................... $ 22,050

SWAN DRY CLEANERS


Statement of Owner’s Equity
For the Month Ended July 31, 2010
Peyton Keyes, capital, July 1, 2010................ $ 76,800
Additional investment by Peyton Keyes........ $ 25,000
Net income for July.......................................... 22,050
$ 47,050
Less withdrawals.............................................. 18,000
Increase in owner’s equity.............................. 29,050
Peyton Keyes, capital, July 31, 2010.............. $ 105,850

SWAN DRY CLEANERS


Balance Sheet
July 31, 2010
Assets Liabilities
Cash.................................. $ 30,100 Accounts payable........... $ 15,050
Accounts receivable........ 29,000
Supplies............................ 1,800 Owner’s Equity
Land.................................. 60,000 Peyton Keyes, capital.... 105,850
Total liabilities and
Total assets...................... $120,900 owner’s equity............ $120,900
4. (Optional)
SWAN DRY CLEANERS
Statement of Cash Flows
For the Month Ended July 31, 2010
Cash flows from operating activities:
Cash received from customers................................... $46,250*
Deduct cash payments for expenses
and payments to creditors....................................... 16,150**
Net cash flow from operating activities..................... $ 30,100
Cash flows from investing activities:
Purchase of land.......................................................... (24,000)
Cash flows from financing activities:
Cash received as owner’s investment....................... $25,000
Deduct cash withdrawal by owner............................. 18,000
Net cash flow from financing activities..................... 7,000
Increase in cash................................................................... $ 13,100
Cash balance, July 1, 2010................................................. 17,000
Cash balance, July 31, 2010............................................... $ 30,100
*$19,500 + $26,750
**$3,000 + $5,100 + $8,050

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