Basic Accounting Equation

Matching
Match the following transactions with their affects to the accounting equation.
a.Increase assets, increase liabilities
b.Increase liabilities, decrease owner’s equity
c.Increase assets, increase owner’s equity
d.No affect
e.Decrease assets, decrease liabilities
f.Decrease assets, decrease owner’s equity
____1.Received cash for services provided
____2.Received utility invoice to be paid next month
____3.Investment of land by owner
____4.Paid part of an amount owed to a creditor
____5.Paid cash for the purchase of a one year insurance policy
____6.Received payment from a customer for an invoice that was billed last month
____7.Cash withdrawal by owner
____8.Provided a service to a customer on account
____9.Purchased supplies on credit
____10.Paid wages
Exercise/Other
11.The assets and liabilities of Robinson Tree Services at May 31, 2008, the end of
the current year, and its revenue and expenses for the year are listed below. The
capital of the owner was P190,000 at June 1, 2007, the beginning of the current
year.
Accounts Payable P1,200 Miscellaneous Expense P220
Accounts Receivable P12,340 Office Expense P560
Cash P32,990 Supplies P1,670
Fees Earned P78,350 Wages Expense P26,770
Land P65,000 Drawing P3,000
Building P143,670
Prepare an income statement for the current year ended May 31, 2008.
12. The assets and liabilities of Robinson Tree Services at May 31, 2008, the end of
the current year, and its revenue and expenses for the year are listed below. The
capital of the owner was P190,000 at June 1, 2007, the beginning of the current
year. Mr. Robinson invested an additional P15,000 in the business during the year.
Accounts Payable P1,200 Miscellaneous Expense P220
Accounts Receivable P12,340 Office Expense P560
Cash P32,990 Supplies P1,670
Fees Earned P78,350 Wages Expense P26,770
Land P65,000 Drawing P3,000
Building P143,670
Prepare a statement of owner’s equity for the current year ended May 31, 2008.
13.The assets and liabilities of Robinson Tree Services at May 31, 2008, the end of
the current year, and its revenue and expenses for the year are listed below. The
capital of the owner was P190,000 at June 1, 2007, the beginning of the current
year. Additional information: Mr. Robinson made an additional investment of
P15,000 during the year.
Accounts Payable P1,200 Miscellaneous Expense P220
Accounts Receivable P12,340 Office Expense P560
Cash P32,990 Building P143,670
Fees Earned P78,350 Wages Expense P26,770
Land P65,000 Drawing P3,000
Prepare a balance sheet for the current year ended May 31, 2008.
14.A summary of cash flows for Robinson Tree Services for the year ended May 31,
2008, is shown below.
Cash receipts:
Cash received from customers P82,990
Cash received from additional investment by owner 15,000
Cash payments:
Cash paid for expenses P26,000
Cash paid for land 65,000
Cash paid for supplies 430
Drawing 3,000
The cash balance as of June 1, 2007 P29,340
Prepare a statement of cash flows for Robinson Tree Services for the year ended
May 31, 2008.Problem15.Selected transactions completed by a proprietorship are
described below. Indicate the effects of each transaction on assets, liabilities, and
owner's equity by inserting "+" for increase and "-" for decrease in the appropriate
columns at the right. If appropriate, you may insert more than one symbol in a
column.
A L OE
(a)Received cash from owner as an additional investment _____ _____ _____
(b)Purchased supplies on account _____ ____ ____
(c)Paid rent for the current month _____ _____ ____
(d)Received cash for services sold to customers _____ _____ _____
(e)Returned some defective supplies purchased in (b) _____ _____ _____
(f)Paid insurance premiums in advance _____ _____ _____
(g)Paid cash to creditor for purchases in (b) _____ _____ _____
(h)Charged customers for services sold on account _____ _____ _____
(i)Paid cash to a customer as a refund for an overcharge _____ _____ _____
(j)Received cash on account from customers _____ _____ _____
(k)Owner withdrew cash for personal use _____ _____ _____
(l)Recorded the cost of supplies used during the year _____ _____ _____
(m)Received invoice for electricity used _____ _____ _____
(n)Paid wages _____ _____ _____
(o)Purchased a truck for cash _____ _____ _____
16.Koger Consultants began operations on June 1, 2007. The financial statements
for Koger Consultants are shown below for the month ended June 30, 2007 (the first
month of operations). Determine the missing amounts for letters (a) through (o).
Koger Consultants
Income Statemen
tFor the Month Ended June 30, 2007
Fees earned P22,000 Operating
expenses:Wages expenseP7,250Rent expense(a)Supplies expense1,600Utilities
expense900Miscellaneous expense1,550Total operating expenses(b)Net
incomeP(c)Koger ConsultantsStatement of Owner's EquityFor the Month Ended
June 30, 2007Jan Koger, capital, June 1, 20070Investment on June 1,
2007P30,000Net income for June 30, 2007(d)P(e)Less withdrawals4,000Increase in
owner's equity(f)Jan Koger, capital, June 30, 2007P32,100Koger
ConsultantsBalance SheetJune 30, 2007AssetsLiabilitiesCashP(g)Accounts
payableP(i)Supplies1,100Owner's EquityLand(h)Jan Koger, capital(j)Total
assetsP45,900Total liabilities andowner's equityP(k)Koger ConsultantsStatement of
Cash FlowsFor the Month Ended June 30, 2007Cash flows from operating
activities:Cash received from customersP22,000
Deduct cash payments for expenses and payments tocreditors3,200Net cash flow
from operating activitiesP18,800Cash flows from investing activities:Cash payments
for acquisition of land(20,000)Cash flows from financing activities:Cash received as
owner's investmentP(l)Deduct cash withdrawal by owner(m)Net cash flow from
financing activities(n)Net cash flow and Dec. 31, 2007 cash balanceP(o)Place your
answers in the space provided below. Hint: Use the interrelationships among the
financial statements to solve this problem.
(a)___________(b)___________(c)___________(d)___________(e)___________(f
)___________(g)___________(h)___________(i)___________(j)___________(k)__
_________(l)___________(m)___________(n)___________(o)___________17.Jay
Pyle, CPA, was organized on January 1, 2007, as a proprietorship. List the errors
that you find in the following financial statements and prepare the corrected
statements for the three months ended March 31, 2007.Jay Pyle, CPAIncome
StatementFor the Three Months Ended March 31, 2007Fees
earnedP40,000Operating expenses:Salary expenseP7,735Rent
expense3,200Wages expense1,950Utilities expense1,225Miscellaneous
expense2,000Answering service expense550Supplies expense2,000Total operating
expenses29,000Net incomeP11,000Jay Pyle, CPA
Statement of Owner's EquityMarch 31, 2007Jay Pyle, capital, January, 1,
2007P0Investment on January 1, 2007P20,000Net income for the 3
months11,00031,000Less withdrawals5,000Increase in owner's equity36,000Jay
Pyle, capital, March 31, 2007.P36,000Balance SheetFor the Three Months Ended
March 31, 2007AssetsOwner's EquityLandP10,000Jay Pyle,
capitalP36,000Cash15,860LiabilitiesAccounts payable2,670Accounts
receivable12,225Supplies925Total liabilities andTotal assetsP48,125owner's
equity48,12518.Using the following accounts and their amounts, prepare in good
format an IncomeStatement for ABC Tutoring Company, month ended July 31,
2007:Telephone ExpenseP750CashP3,150Accounts PayableP640Victor Moreno,
WithdrawalP300Fees EarnedP10,700Rent ExpenseP1,000SuppliesP230Accounts
ReceivableP1,800Computer EquipmentP15,000Victor Moreno,
CapitalP13,080Wages ExpenseP3,600Utilities ExpenseP350Notes
PayableP2,000Office ExpenseP24019.Using the following accounts and their
amounts, prepare in good format a Balance Sheet for ABC Tutoring Company,
month ended July 31, 2007:Telephone ExpenseP750CashP3,150Accounts
PayableP640Victor Moreno, WithdrawalP300Fees EarnedP10,700Rent
ExpenseP1,000SuppliesP230Accounts ReceivableP1,800
Computer EquipmentP15,000Victor Moreno, CapitalP13,080Wages
ExpenseP3,600Utilities ExpenseP350Notes PayableP2,000Office
ExpenseP24020.Using the following accounts and their amounts, prepare in good
format a Statement of Owner’s Equity for ABC Tutoring Company, month ended July
31, 2007:Telephone ExpenseP750CashP3,150Accounts PayableP640Victor
Moreno, WithdrawalP300Fees EarnedP10,700Rent
ExpenseP1,000SuppliesP230Accounts ReceivableP1,800Computer
EquipmentP15,000Victor Moreno, CapitalP13,080Wages ExpenseP3,600Utilities
ExpenseP350Notes PayableP2,000Office ExpenseP24021.The account balances of
Lovelady Travel Services at December 31, 2007 are listed below:Accounts
PayableP12,000Lovelady, CapitalP10,000Accounts
Receivable6,000Supplies2,000Cash16,000Taxes Expense300Computer
Equip13,000Utilities Expense4,000Fees Earned47,000Wages Expense21,000Rent
Expense6,000Supplies Expense700Prepare and income statement, statement of
owner’s equity, and a balance sheet as of December 31, 2007.