Ex. 2.

3 KINER COMPANY
Balance Sheet
December 31, Current Year
Assets
Cash …………………………. $36,300

Accounts receivable …………. 56,700

Office Equipment …………………………. 12,400
Building …………………….. 210,000
Land……………. 90,000

Total …………………………. $405,400

The amount of retained earnings is calculated as the difference between total assets and liabilities plus capital
– ($250,800 + $88,000) = $66,600

Ex. 2.5 a. $293,000: Assets $635,000 - liabilities $342,000 = owners’ equity $293,000

b. $1,172,500: Liabilities $562,500 + owners’ equity $610,000 = assets $1,172,500

c. $120,300: Assets $307,500 - owners’ equity $187,200 = liabilities $120,300

Ex. 2.6 Transaction Assets = Liabilities

a I I
b NE* NE
c D D
d D D
e I NE
f I I
g I NE
h NE* NE
i NE* NE
*Could be I/D offsetting

Ex. 3.9 Transaction Net Income Assets Liabilities

a. NE I NE
 b. NE I I

c. D NE I

d. NE NE NE

e. NE D D

f. NE NE I

g. NE NE NE

h. NE NE NE

Ex. 3.10 a. May 3 Cash……………………………………………

Capital Stock…………………………….
Issued capital stock for $950,000.
4 Office Rent Expense……………………………
Cash……………………………………….
Paid May office rent expense.

5 Office Supplies………………………………
Cash………………………………….
Purchased office supplies.
15 Office Equipment……………………………
Accounts Payable………………………
Purchased office equipment on account.
Amount due June 15.
18 Vehicles………………………………………
Cash …………………………………….
Notes Payable……………………………
 Purchased a company car. Paid $15,000 cash
and issued a $30,000 note payable for the
balance.

20 Accounts
Receivable…………………………
Client Revenue………………………..
Billed clients for services on account.

26 Dividends……………………………………
…. Dividends
Payable……………………..
Declared dividend to be distributed in June.

29 Utilities
Expense………………………………
Cash
Paid May utilities.

30 Cash…………………………………………
… Accounts Receivable
Collected cash on account from clients billed
on May 20.

31 Salary
Expense…………………………………
Cash
Paid salary expense incurred in May.

b.
Cash
May 3 950,000 May 4 1,800
May 30 90,000 May 5 600
May 18 15,000
May 29 500
May 31 32,000
May 31 bal. 990,100

Office Supplies
May 5 600

May 31 bal. 600

 Vehicles
May 18 45,000

May 31 bal. 45,000

Accounts Payable
May 15 12,400

May 31 bal. 12,400

Capital Stock
May 3 950,000

May 31 bal. 950,000

Office Rent Expense

May 4 1,800

May 31 bal. 1,800

Utilities Expense
May 29 500

May 31 bal. 500

c.

Janet Enterprises Incorporated

Trial Balance
May 31, Current Year

Debit Credit
Cash………………… $ 990,100
Accounts receiv 30,000
Office supplie 600
Office equipmen 12,400
Vehicles…………… 45,000
Notes payable… $ 30,000
Accounts payabl 12,400
 Dividends payabl 8,000
Dividends………… 8,000
Capital stock…… 950,000
Client revenue 120,000
Office rent exp 1,800
Salary expense… 32,000
Utilities expens 500
Total……………… $ 1,120,400 $ 1,120,400

Ex. 4.2 Income Statement

Adjusting Entry
Revenue - Expenses

a. NE I
b. NE I
c. I NE
d. NE I
e. NE I
f. I NE

Ex. 4.3 1. Rent Expense ………………………………………………………….

Prepaid Rent ……………………………………………………
To record rent expense in February ($33,000/6 months = $5,500 per month).

2. Unearned Ticket Revenue ……………………………………………..

Ticket Revenue Earned …………………………………………..
To record earned portion of season ticket revenue relating to home skating events in Feb

Ex. 5.2 Classifying balance sheet accounts

a.
GREEN LAWNS, INC.
Income Statement
For the Year Ended December 31, Current Year
Revenues:
Lawn care revenue earned $ 230,400
 Expenses:
Salary expense $ 124,800
Supply expense 2,880
Advertising expense 720
Depreciation expense: 2,400 130,800
equipment
Income before taxes $ 99,600
Income taxes expense 27,840
Net income $ 71,760

GREEN LAWNS, INC.

Statement of Retained Earnings
For the Year Ended December 31, Current Year
Retained earnings (1/1) $ 108,000
Add: Net Income 71,760
Less: Dividends 4,800
Retained earnings (12/31) $ 174,960

Ex. 5.2 (concluded)

GREEN LAWNS, INC.

Balance Sheet
December 31, Current Year
Assets
Cash $ 218,640
Accounts receivable 10,800
Supplies 720
Equipment $ 28,800
Less: Accumulated 12,000 16,800
depreciation: equipment
Total assets $ 246,960

Liabilities
Accounts payable $ 3,600
Income taxes payable 8,400
Total liabilities $ 12,000
 Stockholders' Equity
Capital stock $ 60,000
Retained earnings 174,960
Total stockholders' equity $ 234,960

Total liabilities and $ 246,960

stockholders' equity

b. The company appears to be extremely liquid. Cash and accounts receivable comprise 93% of
total assets. Together, these highly liquid assets total $229,440, compared to only $12,000 in
liabilities coming due. In other words, the combined total of cash and accounts receivable are
19 times the obligations coming due in the near future.

c. The $108,000 credit Retained Earnings balance reported in the company’s adjusted trial
balance is its beginning balance. In order to have retained $108,000 in earnings, in excess of
any prior years' dividends, the company must have been profitable in the past.
 Liabilities & Owners' Equity
Liabilities:

Notes payabl $207,000

Accounts paya 43,800
Total liabilities…………………………..
$250,800
Owners’ equity:
Capital stoc 88,000
Retained earn 66,600
Total………………… $405,400

and liabilities plus capital stock: $405,400

所有者将现金投资于业务会对资产
负债表产生以下影响：
资产方面：
现金账户增加：投资会使现金账户
ty $293,000 增加，因为业主将现金注入业务。
其他资产增加：如果投资的现金用
ssets $1,172,500 于购买其他资产（例如设备、库存
等），那么这些其他资产的价值将
es $120,300 增加。
负债方面：
+ Owners’ 负债不变：投资现金并不会直接导
Equity 致负债的变化。负债主要涉及借款
NE 和应付款项，业主投资并不涉及这
些负债项目。
NE
所有者权益方面：
NE
股东权益增加：所有者投资被视为
NE
对企业的所有者权益的增加。资产
I
负债表的基本公式是：资产 = 负债
NE
+ 所有者权益。通过投资，所有者
I 权益会增加，以保持该公式平衡。
NE
NE

Equity

I
 NE

NE

NE

NE

NE

950,000
…………………. 950,000

1,800
…………………. 1,800

600
………………. 600

12,400
………………… 12,400

45,000
………………. 15,000
………………… 30,000
 120,000
………………….. 120,000

8,000
8,000

500
500

90,000
90,000

32,000
32,000

Accounts Receivable
May 20 120,000 May 30 90,000

May 31
bal.
30,000

Office Equipment
May 15 12,400

May 31
bal.
12,400
 Notes Payable
May 18 30,000

May 31 bal 30,000

Dividends Payable
May 26 8,000

May 31 bal 8,000

Client Revenue
May 20 120,000

May 31 bal 120,000

Salary Expense
May 31 32,000

May 31 bal 32,000

Dividends
May 26 8,000

May 31 bal 8,000

nt Balance Sheet
Net
= Income Assets Liabilitie =
-
s

D D NE
D NE I
I I NE
D NE I
D D NE
I NE D

……. 5,500
………………
0 per month).

…….. 7,000
………………..
home skating events in February.
Owners'
Equity

D
D
I
D
D
I

5,500

7,000