BE1.1 (LO 3), AP The following is the basic accounting equation.
Determine the missing
amounts.
Assets = Liabilities + Stockholders’ Equity
a. $78,000 $50,000 $28,000
b. $115,000 $45,000 $70,000
c. $94,000 $34,000 $60,000
Use basic accounting equation.
BE1.2 (LO 3), AP Given the accounting equation, answer each of the following questions.
a.) The liabilities of Holland Company are $120,000 and its stockholders’ equity is $232,000.
What is the amount of Holland Company’s total assets? $352,000
b.) The total assets of Holland Company are $190,000 and its stockholders’ equity is $86,000.
What is the amount of its total liabilities? $104,000
c.) The total assets of Holland Company are $600,000 and its liabilities are equal to one-half of
its total assets. What is the amount of Holland Company’s stockholders’ equity? $300,000
Use basic accounting equation
BE1.3 (LO 3), AP At the beginning of the year, Canon Company had total assets of $870,000
and total liabilities of $500,000. Answer the following questions.
a.) If total assets increased $150,000 during the year and total liabilities decreased $80,000, what
is the amount of stockholders’ equity at the end of the year? $939,500
b.) During the year, total liabilities increased $100,000 and stockholders’ equity decreased
$66,000. What is the amount of total assets at the end of the year? $904,000
c.) If total assets decreased $80,000 and stockholders’ equity increased $120,000 during the year,
what is the amount of total liabilities at the end of the year? $300,000
Solve accounting equation.
BE1.4 (LO 3), AP Use the accounting equation to answer each of the following questions.
a.) The liabilities of Olga Company are $90,000. Common stock account is $150,000; dividends
are $40,000; revenues, $450,000; and expenses, $320,000. What is the amount of Olga
Company’s total assets? $810,000
b.) The total assets of Lafayette Company are $57,000. Common stock account is $23,000;
dividends are $7,000; revenues, $50,000; and expenses, $35,000. What is the amount of the
company’s total liabilities? $49,000
c.) The total assets of Dierdorf Co. are $600,000 and its liabilities are equal to two-thirds of its
total assets. What is the amount of Dierdorf Co.’s stockholders’ equity? $200,000
Identify assets, liabilities, and stockholders’ equity.
BE1.5 (LO 3), C Indicate whether each of the following items is an asset (A), liability (L), or
part of stockholders’ equity (SE).
Accounts receivable (A)
Salaries and wages payable (L)
Equipment (A)
Supplies (A)
Dividends (SE)
Notes payable (L)
Determine effect of transactions on basic accounting equation.
BE1.6 (LO 4), C The following are three business transactions. Create a table with rows (a), (b),
and (c), and columns for assets, liabilities, and stockholders’ equity. For each column, indicate
whether the transactions increased (+), decreased (−), or had no effect (NE) on assets, liabilities,
and stockholders’ equity.
a.) Purchased supplies on account.
A |L |SE
+ + -
b.) Received cash for performing a service.
A |L |SE
+ NE +
c.) Paid expenses in cash.
A |L |SE
- NE -
Determine effect of transactions on accounting equation.
BE1.7 (LO 4), C The following are three business transactions. Create a table with rows (a), (b),
and (c), and columns for assets, liabilities, and stockholders’ equity. For each column, indicate
whether the transactions increased (+), decreased (−), or had no effect (NE) on assets, liabilities,
and stockholders’ equity.
a.) Stockholders invested cash in the business for common stock.
A |L |SE
+ NE +
b.) Paid a cash dividend.
A |L |SE
- NE -
c.) Received cash from a customer who had previously been billed for services performed.
A |L |SE
+ NE NE
Classify items affecting stockholders’ equity.
BE1.8 (LO 4), C Classify each of the following items as dividends (D), revenue (R), or expense
(E).
Advertising expense (E)
Service revenue (R)
Insurance expense (E)
Salaries and wages expense (E)
Dividends (D)
Rent revenue (R)
Utilities expense (E)
Determine effect of transactions on stockholders’ equity.
BE1.9 (LO 4), C The following are three transactions. Mark each transaction as affecting
common stock (C), dividends (D), revenue (R), expense (E), or not affecting stockholders’
equity (NSE).
a.) Received cash for services performed (R)
b.) Paid cash to purchase equipment (E)
c.) Paid employee salaries (D)
Prepare a balance sheet.
BE1.10 (LO 5), AP In alphabetical order below are balance sheet items for Ellerby Company at
December 31, 2022. Prepare a balance sheet, following the format of Illustration 1.10.
ASSETS
Cash $44,000
Accounts Receivable $72,500
Total assets $116,500
LIABILITIES
Accounts payable $85,000
Common stock $21,500
Retained earnings $10,000 $31,500
Total Liabilities and stockholders' equity $116,500
Determine where items appear on financial statements.
BE1.11 (LO 5), C Indicate whether the following items would appear on the income statement
(IS), balance sheet (BS), or retained earnings statement (RE).
Notes payable (IS)
Advertising expense (RE)
Common stock (BS)
Cash (BS)
Service revenue (IS)
Dividends (RE)
