Transcript nobles acct4 demoppt Ch.01

Accounting and the
Business
Environment
Chapter 1
Demonstration Problems
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E1-21D
Future Enterprise's balance sheet data at May 31, 2014, and June 30,
2014, follow:
Total assets
Total liabilities
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
For each of the following situations with regard to common stock and
dividends of a corporation, compute the amount of net income or net loss
during June 2014.
a. The company issued $20,000 of common stock and paid no dividends.
b. The company issued no common stock. It paid cash dividends of
$15,000.
c. The company issued $18,000 of common stock and paid cash
dividends of $25,000.
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E1-21D
Total assets
Total liabilities
a.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $20,000 of common stock and paid no
dividends.
Stockholders’ equity, May 31, 2014
$40,000 ($160,000 − $120,000)
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E1-21D
Total assets
Total liabilities
a.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $20,000 of common stock and paid no
dividends.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
$40,000 ($160,000 − $120,000)
20,000
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E1-21D
Total assets
Total liabilities
a.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $20,000 of common stock and paid no
dividends.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
$40,000 ($160,000 − $120,000)
20,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-21D
Total assets
Total liabilities
a.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $20,000 of common stock and paid no
dividends.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
Less: Dividends
$40,000 ($160,000 − $120,000)
20,000
0
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-21D
Total assets
Total liabilities
a.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $20,000 of common stock and paid no
dividends.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
$40,000 ($160,000 − $120,000)
20,000
75,000 ($75,000 + $0)
Less: Dividends
0
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-21D
Total assets
Total liabilities
a.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $20,000 of common stock and paid no
dividends.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
Net income for the month
$40,000 ($160,000 − $120,000)
20,000
5,000 ($75,000 − $40,000 − $20,000)
75,000 ($75,000 + $0)
Less: Dividends
0
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-21D
Total assets
Total liabilities
b.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued no common stock. It paid cash
dividends of $15,000.
Stockholders’ equity, May 31, 2014
$40,000 ($160,000 − $120,000)
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E1-21D
Total assets
Total liabilities
b.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued no common stock. It paid cash
dividends of $15,000.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
$40,000 ($160,000 − $120,000)
0
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E1-21D
Total assets
Total liabilities
b.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued no common stock. It paid cash
dividends of $15,000.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
$40,000 ($160,000 − $120,000)
0
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-21D
Total assets
Total liabilities
b.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued no common stock. It paid cash
dividends of $15,000.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
Less: Dividends
$40,000 ($160,000 − $120,000)
0
15,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-21D
Total assets
Total liabilities
b.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued no common stock. It paid cash
dividends of $15,000.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
$40,000 ($160,000 − $120,000)
0
90,000 ($75,000 + $15,000)
Less: Dividends
15,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-21D
Total assets
Total liabilities
b.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued no common stock. It paid cash
dividends of $15,000.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
Net income for the month
$40,000 ($160,000 − $120,000)
0
50,000 ($90,000 − $40,000)
90,000 ($75,000 + $15,000)
Less: Dividends
15,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-21D
Total assets
Total liabilities
c.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $18,000 of common stock and paid
cash dividends of $25,000.
Stockholders’ equity, May 31, 2014
$40,000 ($160,000 − $120,000)
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E1-21D
Total assets
Total liabilities
c.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $18,000 of common stock and paid
cash dividends of $25,000.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
$40,000 ($160,000 − $120,000)
18,000
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E1-21D
Total assets
Total liabilities
c.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $18,000 of common stock and paid
cash dividends of $25,000.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
$40,000 ($160,000 − $120,000)
18,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-21D
Total assets
Total liabilities
c.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $18,000 of common stock and paid
cash dividends of $25,000.
Stockholders’ equity, May 31, 2014
$40,000 ($160,000 − $120,000)
Add: Issuance of common stock
18,000
Less: Dividends
25,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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Total assets
Total liabilities
c.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $18,000 of common stock and paid
cash dividends of $25,000.
Stockholders’ equity, May 31, 2014
Add: Issuance of common stock
$40,000 ($160,000 − $120,000)
18,000
100,000 ($75,000 + $25,000)
Less: Dividends
25,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-21D
Total assets
Total liabilities
c.
May 31, 2014
$ 160,000
120,000
June 30, 2014
$ 225,000
150,000
The company issued $18,000 of common stock and paid
cash dividends of $25,000.
Stockholders’ equity, May 31, 2014
$40,000 ($160,000 − $120,000)
Add: Issuance of common stock
18,000
Net income for the month
42,000 ($100,000 − $40,000 −$18,000)
100,000 ($75,000 + $25,000)
Less: Dividends
25,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
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E1-31D
The account balances of Louis Computer Service at March 31, 2014,
follow:
Equipment
$18,000
Office Supplies
900
Notes Payable
8,000
Rent Expense
700
Service Revenue
$ 13,500
Accounts Receivable
7,600
Accounts Payable
3,500
Common Stock
3,000
Cash
2,500
Salaries Expense
2,000
Dividends
1,300
Retained Earnings, Mar. 1, 2014
2,000
Requirements
1. Prepare the income statement for the month ending March 31, 2014.
2.
Prepare the statement of retained earnings for the month ending March 31,
2014.
3.
Prepare the balance sheet as of March 31, 2014.
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E1-31D—Req.1
Service Revenue
Salaries Expense
Rent Expense
$13,500
2,000
700
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2014
Service Revenue
$13,500
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E1-31D—Req.1
Service Revenue
Salaries Expense
Rent Expense
$13,500
2,000
700
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2014
Service Revenue
$13,500
Expenses:
Salaries Expense
$2,000
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E1-31D—Req.1
Service Revenue
Salaries Expense
Rent Expense
$13,500
2,000
700
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2014
Service Revenue
$13,500
Expenses:
Salaries Expense
Rent Expense
$2,000
700
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E1-31D—Req.1
Service Revenue
Salaries Expense
Rent Expense
$13,500
2,000
700
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2014
Service Revenue
$13,500
Expenses:
Salaries Expense
Rent Expense
Total Expenses
$2,000
700
2,700
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E1-31D—Req.1
Service Revenue
Salaries Expense
Rent Expense
$13,500
2,000
700
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2014
Service Revenue
$13,500
Expenses:
Salaries Expense
Rent Expense
Total Expenses
Net Income
$2,000
700
2,700
$10,800
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E1-31D—Req.2
Retained Earnings, Mar. 1, 2014
Net Income
Dividends
$2,000
10,800
1,300
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2014
Retained Earnings, Mar. 1, 2014
$2,000
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E1-31D—Req.2
Retained Earnings, Mar. 1, 2014
Net Income
Dividends
$2,000
10,800
1,300
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2014
Retained Earnings, Mar. 1, 2014
$2,000
Net income for the month
10,800
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E1-31D—Req.2
Retained Earnings, Mar. 1, 2014
Net Income
Dividends
$2,000
10,800
1,300
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2014
Retained Earnings, Mar. 1, 2014
$2,000
Net income for the month
10,800
12,800
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E1-31D—Req.2
Retained Earnings, Mar. 1, 2014
Net Income
Dividends
$2,000
10,800
1,300
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2014
Retained Earnings, Mar. 1, 2014
$2,000
Net income for the month
10,800
12,800
Less: Dividends
1,300
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E1-31D—Req.2
Retained Earnings, Mar. 1, 2014
Net Income
Dividends
$2,000
10,800
1,300
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2014
Retained Earnings, Mar. 1, 2014
$2,000
Net income for the month
10,800
12,800
Less: Dividends
Retained Earnings, Mar. 31, 2014
1,300
$11,500
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Liabilities
$2,500
Stockholders’ Equity
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Accounts Receivable
Liabilities
$2,500
7,600
Stockholders’ Equity
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Accounts Receivable
Office Supplies
Liabilities
$2,500
7,600
900
Stockholders’ Equity
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Accounts Receivable
Office Supplies
Equipment
Liabilities
$2,500
7,600
900
18,000
Stockholders’ Equity
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Accounts Receivable
Office Supplies
Equipment
Liabilities
$2,500
7,600
900
18,000
Accounts Payable
$3,500
Stockholders’ Equity
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Accounts Receivable
Office Supplies
Equipment
Liabilities
$2,500
7,600
900
18,000
Accounts Payable
Note Payable
$3,500
8,000
Stockholders’ Equity
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Accounts Receivable
Office Supplies
Equipment
Liabilities
$2,500
7,600
900
18,000
Accounts Payable
Note Payable
Total Liabilities
Stockholders’ Equity
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$3,500
8,000
11,500
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Accounts Receivable
Office Supplies
Equipment
Liabilities
$2,500
7,600
900
18,000
Accounts Payable
Note Payable
Total Liabilities
Stockholders’ Equity
Common Stock
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$3,500
8,000
11,500
6,000
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Accounts Receivable
Office Supplies
Equipment
Liabilities
$2,500
7,600
900
18,000
Accounts Payable
Note Payable
Total Liabilities
Stockholders’ Equity
Common Stock
Retained Earnings
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$3,500
8,000
11,500
6,000
11,500
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Accounts Receivable
Office Supplies
Equipment
Liabilities
$2,500
7,600
900
18,000
Accounts Payable
Note Payable
Total Liabilities
Stockholders’ Equity
Common Stock
Retained Earnings
Total Stockholders’ Equity
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$3,500
8,000
11,500
6,000
11,500
17,500
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E1-31D—Req.3
Cash
Accounts Receivable
Office Supplies
Equipment
$2,500
7,600
900
18,000
Accounts Payable
Notes Payable
Retained Earnings, Mar. 31, 2014
Common Stock
$3,500
8,000
11,500
6,000
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets
Cash
Accounts Receivable
Office Supplies
Equipment
Total Assets
Liabilities
$2,500
7,600
900
18,000
$29,000
$3,500
Accounts Payable
8,000
Note Payable
11,500
Total Liabilities
Stockholders’ Equity
6,000
Common Stock
11,500
Retained Earnings
17,500
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity $29,000
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E1-39D
Star Motor Service had net income for the year of $30,000. In
addition, the balance sheet reports the following balances:
Jan.1, 2014 Dec.31, 2014
Notes Payable
$28,000
$35,000
Cash
10,000
22,000
Office Furniture
25,000
30,000
100,000
100,000
8,000
6,000
130,000
160,000
2,000
12,000
25,000
35,000
4,000
2,000
Building
Accounts Payable
Total Stockholders’ Equity
Accounts Receivable
Equipment
Office Supplies
Calculate the return on assets (ROA) for Star Motor Service for the year
ending December 31, 2014.
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E1-39D
Cash
Accounts Receivable
Office Supplies
Equipment
Office Furniture
Building
Jan.1, 2014
$10,000
2,000
4,000
25,000
25,000
100,000
Dec.31, 2014
$22,000
12,000
2,000
35,000
30,000
100,000
Average Total Assets = (Beginning total assets + ending total assets) / 2
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E1-39D
Cash
Accounts Receivable
Office Supplies
Equipment
Office Furniture
Building
Jan.1, 2014
$10,000
2,000
4,000
25,000
25,000
100,000
Dec.31, 2014
$22,000
12,000
2,000
35,000
30,000
100,000
Average Total Assets = (Beginning total assets + ending total assets) / 2
Beginning total assets ═ $10,000 + $2,000 + $4,000 + $25,000 + $25,000 + $100,000
═ $166,000
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E1-39D
Cash
Accounts Receivable
Office Supplies
Equipment
Office Furniture
Building
Jan.1, 2014
$10,000
2,000
4,000
25,000
25,000
100,000
Dec.31, 2014
$22,000
12,000
2,000
35,000
30,000
100,000
Average Total Assets = (Beginning total assets + ending total assets) / 2
Beginning total assets ═ $10,000 + $2,000 + $4,000 + $25,000 + $25,000 + $100,000
═ $166,000
Ending total assets ═ $22,000 + $12,000 + $2,000 + $35,000 + $30,000 + $100,000
═ $201,000
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E1-39D
Beginning total assets
Ending total assets
$166,000
$201,000
Average Total Assets ═ (Beginning total assets + ending total assets) / 2
═ $166,000 + $201,000 ∕ 2
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E1-39D
Beginning total assets
Ending total assets
$166,000
$201,000
Average Total Assets ═ (Beginning total assets + ending total assets) / 2
═ $166,000 + $201,000 ∕ 2
═ $183,500
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E1-39D
Net income
Average total assets
Return on Assets ═
$30,000
$183,500
Net income
Average total assets
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall
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E1-39D
Net income
Average total assets
Return on Assets ═
$30,000
$183,500
Net income
Average total assets
═ $30,000 ∕ $183,500
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall
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E1-39D
Net income
Average total assets
Return on Assets ═
$30,000
$183,500
Net income
Average total assets
═ $30,000 ∕ $183,500
═ 0.163
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall
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E1-39D
Net income
Average total assets
Return on Assets ═
$30,000
$183,500
Net income
Average total assets
═ $30,000 ∕ $183,500
═ 0.163
═ 1.63%
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall
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End of Chapter 1
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall
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