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ACC280 Week 1

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·       Chapter 1: 
o   Exercise E1-1
o   Exercise E1-6
o   Exercise E1-14
o   Exercise E1-15 
·       Chapter 2:
o   Exercise E2-4  
o   Exercise E2-5  
·       Chapter 7: 
Exercise E7-3

E1-1 Urlacher Company performs the following accounting tasks during the year.

Analyzing and interpreting information.
Classifying economic events.
Explaining uses, meaning, and limitations of data.
Keeping a systematic chronological diary of events.
Measuring events in dollars and cents.
Preparing accounting reports.
Reporting information in a standard format.
Selecting economic activities relevant to the company.
Summarizing economic events.

Accounting is “an information system that identifies, records, and communicates the economic events of an organization to interested users.”

Instructions: Categorize the accounting tasks performed by Urlacher as relating to either the identification (I), recording (R), or communication (C) aspects of accounting.

E1-6 Selected transactions for Evergreen Lawn Care Company are listed below.
1. Sold common stock for cash to start business.
2. Paid monthly rent.
3. Purchased equipment on account.
4. Billed customers for services performed.
5. Paid dividends.
6. Received cash from customers billed in (4).
7. Incurred advertising expense on account.
8. Purchased additional equipment for cash.
9. Received cash from customers when service was performed.

List the numbers of the above transactions and describe the effect of each transaction on assets,
liabilities, and stockholders’ equity. For example, the first answer is: (1) Increase in assets and increase
in stockholders’ equity.

E1-14 Deer Park, a public camping ground near the Lake Mead National Recreation Area, has compiled the following financial information as of December 31, 2008.

(a) Determine Jan Nab’s net income from Deer Park for 2010.
(b) Prepare a balance sheet for Deer Park as of December 31, 2010.

E1-15 Presented below is financial information related to the 2008 operations of Summers
Cruise Company.
Maintenance expense 95,000
Property tax expense (on dock facilities) 10,000
Salaries expense 142,000
Advertising expense 3,500
Ticket revenue 325,000

Prepare the 2008 income statement for Summers Cruise Company.

E2-4 Presented below is information related to Hanshew Real Estate Agency.

Oct. 1 Pete Hanshew begins business as a real estate agent with a cash investment of $15,000
in exchange for common stock.
2 Hires an administrative assistant.
3 Purchases office furniture for $1,900, on account.
6 Sells a house and lot for B. Kidman; bills B. Kidman $3,200 for realty services provided.
27 Pays $700 on the balance related to the transaction of October 3.
30 Pays the administrative assistant $2,500 in salary for October.

Prepare the debit-credit analysis for each transaction as illustrated on pages 61–66.

E2-5 Transaction data for Hanshew Real Estate Agency are presented in E2-4.
Journalize the transactions. (You may omit explanations.)

E7-3 Presented below are the assumptions, principles, and constraints discussed in this chapter.

1. Economic entity assumption 6. Matching principle
2. Going concern assumption 7. Full disclosure principle
3. Monetary unit assumption 8. Revenue recognition principle
4. Time period assumption 9. Materiality
5. Cost principle 10. Conservatism

Identify by number the accounting assumption, principle, or constraint on page 323 that describes
each situation below. Do not use a number more than once.

(a) Is the rationale for why plant assets are not reported at liquidation value. (Do not use
historical cost principle.)
(b) Indicates that personal and business record-keeping should be separately maintained.
(c) Ensures that all relevant financial information is reported.
(d) Assumes that the dollar is the “measuring stick” used to report on financial performance.
(e) Requires that the operational guidelines be followed for all significant items.
(f ) Separates financial information into time periods for reporting purpose.
(g) Requires recognition of expenses in the same period as related revenues.
(h) Indicates that market value changes subsequent to purchase are not recorded in the accounts

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