Required:
a. Write an accounting equation and record the effects of each transaction under the appropriate heading. (Use specific accounting titles below the statement
elements.) Enter 0 for items not affected.
b. Prepare an income statement and a balance sheet for the Year 1 accounting period.
a.
Event
Assets Liabilities Stockholder's Equity
Cash Land = Notes Payable +
Common
Stock +
Retained
Earnings
Issued stock 60,000 0 0 60,000 0
Borrowed cash 40,000 0 40,000 0 0
Revenue 72,000 0 0 0 72,000
Land purchase (80,000) 80,000 0 0 0
Salaries (50,000) 0 0 0 (50,000)
Dividends (10,000) 0 0 0 (10,000)
Ending balances 32,000 80,000 40,000 60,000 12,000
b.
Campbell Company
Income Statement
For the Year Ended December 31, Year 1
Service revenue $ 72,000
Operating expenses (50,000)
Net income $ 22,000
References
Essay Learning Objective: 01-04 Show
how business events affect the
accounting equation.
Difficulty: 2 Medium Learning Objective: 01-07
Prepare an income statement, a
statement of changes in
stockholders equity, and a
balance sheet.
60.
Award: 10.00 points
Pinehurst Company was formed in Year 1 and experienced the following accounting events during the year:
1. Issued common stock for $15,000 cash.
2. Earned cash revenue of $28,000.
3. Paid cash expenses of $20,500.
These were the only events that affected the company during the year.
Required:
a. Write the accounting equation and record the effects of each accounting event under the appropriate general ledger account heading. Enter 0 for items not
affected.
b. Prepare an income statement for Year 1 and a balance sheet as of December 31, Year 1.
a.
Event
Assets Liabilities Stockholder's Equity
Cash = +
Common
Stock +
Retained
Earnings
1. 15,000 15,000
2. 28,000 28,000
3. (20,500) (20,500)
Pinehurst Company
Income Statement
For the Year Ended December 31, Year 1
Service revenue $ 28,000
Operating expenses (20,500)
Net income $ 7,500
b.
Pinehurst Company
Balance Sheet
As of December 31, Year 1
Assets
Cash $ 22,500
Liabilities $ 0
Stockholders' equity
Common stock 15,000
Retained earnings 7,500
Total stockholders' equity 22,500
Total liabilities and stockholders' equity $ 22,500
References
Essay Learning Objective: 01-04 Show
how business events affect the
accounting equation.
Difficulty: 2 Medium Learning Objective: 01-07
Prepare an income statement, a
statement of changes in
stockholders equity, and a
balance sheet.
61.
Award: 10.00 points
Fieldstone Company was founded on January 1, Year 1. During Year 1, the company experienced the following events:
1. Received cash revenue of $25,500
2. Paid cash expenses of $20,000
3. Issued common stock for $30,000 cash
4. Paid cash dividend of $2,000 to stockholders.
Required:
1. Write an accounting equation and record effects of each accounting event under appropriate general ledger account headings, showing dollar amounts of
increases and decreases and totals at the end of the year. Enter 0 for items not affected.
2. Prepare the Year 1 income statement and balance sheet for Fieldstone Company.
a.
Event
Assets Liabilities Stockholder's Equity
Cash = Notes Payable +
Common
Stock +
Retained
Earnings
1. 25,500 25,500
2. (20,000) (20,000)
3. 30,000 30,000
4. (2,000) (2,000)
Totals 33,500 30,000 3,500
b.
Fieldstone Company
Income Statement
For the Year Ended December 31, Year 1
Service revenue $ 25,500
Operating expenses (20,000)
Net income $ 5,500
Fieldstone Company
Balance Sheet
As of December 31, Year 1
Assets:
Cash $ 33,500
Total Assets $ 33,500
Liabilities $ 0
Stockholders' equity: