ACCT 229- Spring 2021 | Head, Barrett, & Foster Session Times/Locations:

SI Leader: Braeden Barrett (braedenbarrett@tamu.edu) Monday: 5:30 - 7:00pm CST

Website: https://sites.google.com/tamu.edu/acct229si Wednesday: 5:30 - 7:00pm CST
Date: 01/27/20 Zoom ID: 959 6291 5383 / Password: SI

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ACCT 229 Session 2: Investing and Financing Decisions & Balance Sheet

Warm Up
1. Identify each account for the accounting equation (be specific):

Cash Wages Payable Rent Expense

Accounts Payable Taxes Payable Insurance Expense
Sales Revenue Cost of Goods Sold Land
Service Revenue Dividends Supplies Expense
Accounts Receivable Interest Payable Buildings
Supplies Supplies Expense LT Note Payable
Inventory ST Note Payable Mortgage Payable
Prepaid Expenses Wage Expense Bonds Payable
Furniture Utilities Expense Interest Expense
Patents Equipment Accum. Depreciation
Goodwill Copyrights Trademarks

2. Write out the equation for a single-step & multi-step income statement:

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Main Activity
1. Aggie Flying School, Inc. was started on September 1, 2018 with an investment of
$45,000 cash in exchange for common stock. Following are the account balances at the
end of the month.

Cash $ 8,000 Notes Payable 30,000

Accounts Receivable 9,400 Rent Expense 1,200
Equipment 64,000 Repair Expense 400
Service Revenue 11,200 Fuel Expense 2,200
Advertising Expense 500 Insurance Expense 400
Common Stock 45,000 Retained Earnings (9/1) 0
Supplies 1,500 Accounts Payable 3,100
Dividends 1,700

Determine Assets, Liabilities, Net Income and Ending Stockholders’ Equity at the end of
September 2018.

Assets Liabilities Net Income Stockholders’ Equity

a. $81,400 $3,100 $5,000 $48,300
b. $18,900 $33,100 $6,000 $45,000
c. $81,400 $3,100 $4,800 $48,100
d. $82,900 $33,100 $4,800 $48,100
e. $82,900 $33,100 $6,500 $49,800

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Use the following information to answer questions 1-5

The account balances for a company are listed below. All balances are as of Dec. 31,
2018, except where noted otherwise:

Prepaid Insurance $500 Equipment 75,000

Cash 16,600 Loss from Sale of Equip. 1,700
Accumulated Depreciation 7,000 Furniture 14,000
Unearned Revenue 4,500 Notes Payable (12/31/20) 40,900
Dividends 2,000 Sales Revenue 98,900
Accounts Receivable 8,400 Retained Earnings (1/1/18)10,650
Supplies 300 Salary Expense 22,000
Cost of Goods Sold 44,600 Salaries Payable 1,600
Depreciation Expense 1,350 Common Stock 40,000
Goodwill 10,000 Utility Expense 5,400
Supplies Expense 400 Marketable Securities 9,500
Notes Payable (due 2/28/19) 1,000 Accounts Payable 7,200

2. Determine total assets as of Dec. 31, 2018:

a. $127,300
b. $141,300
c. $117,300
d. $125,950
e. None of the above

3. Determine total liabilities as of Dec. 31, 2018:

a. $76,150
b. $80,650
c. $50,700
d. $55,200
e. None of the above

4. Determine the Gross Profit ratio for 2018:

a. 54.9%
b. 16.6%
c. 59.5%
d. 23.7%
e. None of the above

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5. Determine the ending retained earnings:
a. $13,650
b. $32,100
c. $26,300
d. $44,300
e. None of the above

6. Determine working capital on Dec. 31, 2018:

a. $25,500
b. $11,500
c. $21,000
d. $72,100
e. None of the above

7. A company was organized on January 1, 2016, with an investment of $40,000 by

each of its three stockholders.

The company’s net income and dividends for the first three year of operations were:

Net Income Dividends

2016 $65,000 $ 5,000
2017 $72,000 $15,000
2018 $74,000 $ 8,000

Additionally, during 2017, each owner invested an additional $10,000. Determine

ending stockholders’ equity on December 31, 2018.
a. $361,000
b. $183,000
c. $333,000
d. $233,000
e. $261,000

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Cool Down
1. Schneider, Inc., a manufacturer of tires, has given you its most recent annual report
in an effort to obtain a sizable loan. The company is very profitable and appears to have
a sound financial position. Based on a report presented on prime-time television last
night, you are aware that Schneider is a defendant in several lawsuits related to its
defective tires that cause vehicles to overturn. The information presented on television
is an example of financial information that is

a. Relevant
b. Consistent
c. Comparable
d. Conservative

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