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ACC557 Week 1

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ACC557 Week 1 E1-2 E1-4 E1-8 E1-14 P1-4A P1-5A

E1-2 (a) The following are users of financial statements.

Internal Revenue Service
Labor unions
Marketing manager
Production supervisor
Securities and exchange commission
Store manager
Vice president  of finance
Identify the users as being either external users or internal users.

E1-4 The following situations involve accounting principles and assumptions.
1. Grossman Company owns buildings that are worth substantially more than they originally
cost. In an effort to provide more relevant information, Grossman reports the buildings at
market value in its accounting reports.
2. Jones Company includes in its accounting records only transaction data that can be
expressed in terms of money.
3. Caleb Borke, president of Caleb’s Cantina, records his personal living costs as expenses of
the Cantina.

For each of the three situations, say if the accounting method used is correct or incorrect. If
correct, identify which principle or assumption supports the method used. If incorrect, identify

which principle or assumption has been violated

E1-8 An analysis of the transactions made by S. Moses & Co., a certified public accounting
firm, for the month of August is shown below. Each increase and decrease in stockholders’ equity
is explained.

and so on ....

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.

P1-4A Mark Miller started a delivery service, Miller Deliveries, on June 1, 2008.The following
transactions occurred during the month of June.

June 1 Stockholders invested $10,000 cash in the business.
2 Purchased a used van for deliveries for $12,000. Mark paid $2,000 cash and signed a
note payable for the remaining balance.
3 Paid $500 for office rent for the month.
5 Performed $4,400 of services on account.
9 Paid $200 in cash dividends.
12 Purchased supplies for $150 on account.
15 Received a cash payment of $1,250 for services provided on June 5.
17 Purchased gasoline for $100 on account.
20 Received a cash payment of $1,500 for services provided.
23 Made a cash payment of $500 on the note payable.
26 Paid $250 for utilities.
29 Paid for the gasoline purchased on account on June 17.

30 Paid $1,000 for employee salaries.

(a) Show the effects of the previous transactions on the accounting equation using the following

(b) Prepare an income statement for the month of June.
(c) Prepare a balance sheet at June 30, 2008

P1–5A Financial statement information about four different companies is as follows
January 1, 2008
 Assets  95,000 110,000 (g)   170,000
 Liabilities  50,000 (d)   75,000 (j) 
 Owner's equity  (a)   60,000 45,000 90,000
December 31, 2008
 Assets  (b)   141,000 200,000 (k) 
 Liabilities  55,000 75,000 (h)   80,000
 Owner's equity  63,000 (e)   130,000 162,000
Owner's equity changes in year
 Additional investment  (c)   15,000 10,000 15,000
 Drawings  25,000 (f)   14,000 20,000
 Total revenues  350,000 420,000 (i)   520,000
 Total expenses  320,000 385,000 342,000 (l)  

(a) Determine the missing amounts. (Hint: For example, to solve for (a), Assets - Liabilities -
Owner’s equity = $45,000.)
(b) Prepare the owner’s equity statement for Ramirez Company.

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