Exercise for the accounting equation

I. Classify the following items as investment by owner (I), owner’s drawings (D), revenues
(R), or expenses (E).
1. Rent Expenses
2. Drawings
3. Service Revenues
4. Salaries and wages expenses

II. Presented below is the basic accounting equation. Determine the missing amounts.

III. Given the accounting equation, answer each of the following questions.
A) The liabilities of Berber Company are $120,000 and the owner’s equity is $230,000.
What is the amount of Berber Company’s total assets?
B) The total assets of Berber Company are $190,000 and its owner’s equity is $89,000.
What is the amount of its total liabilities?
C) The total assets of Berber Company are $900,000 and its liabilities are equal to one-
half of its total assets. What is the amount of Berber Company’s owner’s equity?
IV. 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?
 V. Use the expanded accounting equation to answer each of the following questions.
A) The liabilities of Platt Company are $90,000. Owner’s capital is $150,000; drawings
are $40,000; revenues, $450,000; and expenses, $340,000. What is the amount of
Platt Company’s total assets?
B) The total assets of Sierra Company are $57,000. Owner’s capital is $35,000;
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 Birch Co. are $660,000 and its liabilities are equal to two-thirds
of its total assets. What is the amount of Birch Co.’s owner’s equity?

VI. Indicate whether each of the following items is an asset (A), liability (L), or part of
owner’s equity (OE)

a. Accounts receivables b. Supplies

c. Salaries and Wages payable d. Owner’s capital

e. equipment f. Notes payable

VII. Classify each of the following items as owner’s drawings (D), revenue (R), or expense
(E).
a. Advertising Expense b. Rent revenue
c. Service revenue d. Owner’s drawings
e. Insurance expense f. Utilities expense
g. Salaries and wages
expenses