Question

Assume the November transactions for Camindo Co. are as follows:

Received cash of $60,000 from investors in exchange for capital stock.
Provided services of $16,300 on account.
Purchased supplies on account $750.
Received cash of $11,800 from clients for services previously billed.
Received $6,250 for services provided from clients who paid cash.
Paid $600 on account for supplies that had been purchased.
Paid $3,380 for a one-year insurance policy.
Paid the following expenses: wages, $7,800; utilities, $1,000; rent, $3,750.
Paid dividends of $2,300 to stockholders.
Record the transactions, using the integrated financial statement framework that follows:

Assets = Liabilities + Stockholders' Equity
Cash Accounts Receivable Supplies Prepaid Insurance Accounts Payable Capital Stock Retained Earnings
a. $ $
b. $ $
c. $ $
d. $ $
e. $ $
f. $ $
g. $ $
h. $ $
i. $ $
Bal $ $ $ $ $ $ $
Calculate the November 30 cash balance and the amount of net income for November for Hoover Co.
Ending cash balance $
Net income
$
Prepare a multiple-step income statement for Surry Co. from the following data for the year ended December 31, 2016.
Sales $915,000
cost of merchandise sold $670,000
administrative expenses $30,000
interest expense $12,000
rent revenue $19,000
sales returns and allowances $55,000
selling expenses $120,000
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Multiple-step income statement
Surry Co.
Income Statement
For the Year Ended December 31, 2016
Revenue from sales:
Administrative expenses
Cost of merchandise sold
Gross profit
Income from operations
Sales
Selling expenses
Correct 5
$
Correct 6
Gross profit
Income from operations
Interest expense
Less: Sales returns and allowances
Rent revenue
Selling expenses
Correct 7
Correct 8
Net sales
$
Correct 10
Administrative expenses
Cost of merchandise sold
Income from operations
Interest expense
Less: Sales returns and allowances
Rent revenue
Correct 11
Correct 12
Administrative expenses
Gross profit
Income from operations
Rent revenue
Sales
Selling expenses
Correct 13
$
Correct 14
Operating expenses:
Cost of merchandise sold
Gross profit
Less: Sales returns and allowances
Rent revenue
Sales
Selling expenses
Correct 16
$
Correct 17
Administrative expenses
Cost of merchandise sold
Gross profit
Income from operations
Rent revenue
Sales
Correct 18
Correct 19
Total operating expenses
Correct 21
Administrative expenses
Cost of merchandise sold
Gross profit
Income from operations
Interest expense
Rent revenue
Correct 22
$
Correct 23
Other income:
Administrative expenses
Cost of merchandise sold
Gross profit
Rent revenue
Sales
Selling expenses
Correct 25
$
Correct 26
Other expense:
Administrative expenses
Interest expense
Less: Sales returns and allowances
Rent revenue
Sales
Selling expenses
Correct 28
Correct 29
Correct 30
Net income
$
Given the following list of accounts, calculate Total Assets:
Accounts Receivable $ 10,000
Capital Stock 20,000
Cash 25,300
Equipment 16,800
Fees Earned 44,400
Miscellaneous Expense 17,800
Rent Expense 3,250
Retained Earnings 7,850
Salaries Expense 15,400
Wages Expense 15,000
a. $54,600
b. $40,050
c. $52,100
d. $55,300
Use the following information to determine Total Stockholders' Equity:
Total Assets $ 45,000
Total Liabilities 18,000
Total Stockholders' Equity x
Total Retained Earnings 5,000
a. $27,000
b. $58,000
c. $40,000
d. $32,000
summary of the cash receipts and cash payments for a specific period of time is a(n):
a. income statement.
b. balance sheet.
c. statement of cash flows.
d. retained earnings statement.
During 2015, Trinder Corporation had an increase in total assets of $80,000 and an increase in total liabilities of $60,000. Assuming that capital stock increased by $8,000 and no dividends were paid, calculate Trinder's net income or net loss for 2015.
a. Net income of $72,000
b. Net income of $12,000
c. Net loss of $20,000
d. Net income of $28,000
Which of the following is true about the cost principle?
a. It reports the revenues earned by a company for a period with the expenses incurred in generating the revenues.
b. It assumes that a company will continue in business indefinitely.
c. It initially records assets in the accounting records at their purchase price.
d. It limits the economic data recorded in an accounting system to data related to the activities of that company.
The payment of $20,000 for expenses was incorrectly recorded by Elite Co. as an increase in cash of $20,000 and a decrease in retained earnings of $20,000. What is the effect of this error on the accounting equation?
a. Total assets will exceed total liabilities and stockholders' equity by $40,000. {C}
b. Total assets will exceed total liabilities and stockholders' equity by $20,000.
c. The error will not affect the accounting equation.
d. Total assets will be less than total liabilities and stockholders' equity by $40,000.

Answer 1

1. Surry Co.

Income Statement

For the Year Ended December 31, 2016

Sales $915,000

Less: Sales retiurns and allowances $55,000

Net Sales $860,000

Cost of merchandise sold $670,000

Gross profit $190,000

Less: Administrative expenses $30,000

Selling expenses $120,000 $150,000

Operating Profit $40,000

Other Income and expenses

Rent revenue $19,000

$59,000

Less: Interest expense $12,000

Net Profit $47,000

2) Total assets = Accounts receivable + Cash + equipment = $10000 + $25,300 + $16,800

Total assets = $52,100

3) Total assets = Total Liabilities + Stockholders' equity

$45,000 = $18,000 + Stockholders' equity

Stockholders' Equity = $45,000 - $18,000

Stockholders' Equity = $27,000

Note: retained earning is part of the stock holders' equity

4) The summary of the cash receipts and cash payments for a specific period of time is a(n) is Statement of Cash Flows

5) Increase in total assets = Increase in total liabilities + Increase in stockholders’ equity

$80,000 = $60,000 + (Increase in common stock + increase in retained earnings)

$80,000 = $60,000 + ($8000 + Increase in retained earnings)

Increase in retained earnings = $80,000 - $60,000 - $8,000

Increase in retained earnings = $12,000

As no dividend has been paid, Increase in net income of Trinder = Increase in retained earnings = $12,000

6) Cost principle

It initially records assets in the accounting records at their purchase price.

7) Total assets will exceed total liabilities and stockholders' equity by $40,000.

For the error, cash on the asset side will increase by $20000 and the retained earnings will decrease by $20000 from their current balances. The asset side will exceed the total of the liability and equity side by $20,000 - ($20,000) = $40,000