Solution Ch1

BRIEF EXERCISE 1-5
A (a) Accounts receivable A (d) Supplies

L (b) Salaries and wages payable OE (e) Owner’s capital
A (c) Equipment L (f) Notes payable
BRIEF EXERCISE 1-6
Assets Liabilities Owner’s Equity

(a) + + NE
(b) + NE +
(c) – NE –
BRIEF EXERCISE 1-7
Assets Liabilities Owner’s Equity

(a) + NE +
(b) – NE –
(c) NE NE NE
BRIEF EXERCISE 1-8
E (a) Advertising expense D (e) Owner’s drawings

R (b) Service revenue R (f) Rent revenue
E (c) Insurance expense E (g) Utilities expense
E (d) Salaries and wages expense
BRIEF EXERCISE 1-9
R (a) Received cash for services performed

NOE (b) Paid cash to purchase equipment
E (c) Paid employee salaries
1-10 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
BRIEF EXERCISE 1-10
MENDOZA COMPANY
Balance Sheet
December 31, 2017
Assets
Cash ............................................................................................... $ 49,000
Accounts receivable ..................................................................... 72,500
Total assets ............................................................................ $121,500
Liabilities and Owner’s Equity

Liabilities
Accounts payable .................................................................. $ 90,000
Owner’s equity
Owner’s capital ...................................................................... 31,500
Total liabilities and owner’s equity ............................... $121,500
BRIEF EXERCISE 1-11
BS (a) Notes payable

IS (b) Advertising expense
OE, BS (c) Owner’s capital
BS (d) Cash
IS (e) Service revenue
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 1-1
1. False. The three steps in the accounting process are identification,

recording, and communication.
2. True.
3. False. Financial accounting provides reports to help investors and
creditors evaluate a company.
4. True.
5. True.
Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 1-11
DO IT! 1-2
1. False. Congress passed the Sarbanes-Oxley Act to reduce unethical

behavior and decrease the likelihood of future corporate scandals.
2. False. The standards of conduct by which actions are judged as right
or wrong, honest or dishonest, fair or not fair, are ethics.
3. False. The primary accounting standard-setting body in the United
States is the Financial Accounting Standards Board (FASB).
4. True.
5. True.
DO IT! 1-3
1. Drawings is owner’s drawings (D); it decreases owner’s equity.

2. Rent Revenue is revenue (R); it increases owner’s equity.
3. Advertising Expense is an expense (E); it decreases owner’s equity.
4. When the owner puts personal assets into the business, it is investment
by owner (I); it increases owner’s equity.
DO IT! 1-4
Assets = Liabilities + Owner’s Equity

Accounts Accounts Owner’s Owner’s
Cash + Receivable = Payable + Capital – Drawings + Revenues – Expenses
(1) +$20,000 +$20,000

(2) +$20,000 –$20,000
(3) +$2,300 –$2,300
(4) –$ 3,600 –$3,600
DO IT! 1-5
(a) The total assets are $49,000, comprised of Cash $6,500, Accounts
Receivable $13,500, and Equipment $29,000.
(b) Net income is $20,500, computed as follows:
Revenues
Service revenue.................................................. $53,500
Expenses
Salaries and wages expense ............................. $16,500
Rent expense ...................................................... 10,500
Advertising expense .......................................... 6,000
Total expenses ........................................... 33,000
Net income ................................................................. $20,500
(c) The ending owner’s equity balance of Kirby Company is $21,000. By

rewriting the accounting equation, we can compute Owner’s Equity as
Assets minus Liabilities, as follows:
Total assets [as computed in (a)] ............................. $49,000

Less: Liabilities
Notes payable ..................................................... $25,000
Accounts payable .............................................. 3,000 28,000
Owner’s equity ........................................................... $21,000
Note that it is not possible to determine the company’s owner’s equity in

any other way, because the beginning balance for owner’s equity is not
provided.
SOLUTIONS TO EXERCISES
EXERCISE 1-1
C Analyzing and interpreting information.

R Classifying economic events.
C Explaining uses, meaning, and limitations of data.
R Keeping a systematic chronological diary of events.
R Measuring events in dollars and cents.
C Preparing accounting reports.
C Reporting information in a standard format.
I Selecting economic activities relevant to the company.
R Summarizing economic events.
EXERCISE 1-2
(a) Internal users

Marketing manager
Production supervisor
Store manager
Vice-president of finance
External users
Customers
Internal Revenue Service
Labor unions
Securities and Exchange Commission
Suppliers
(b) I Can we afford to give our employees a pay raise?

E Did the company earn a satisfactory income?
I Do we need to borrow in the near future?
E How does the company’s profitability compare to other companies?
I What does it cost us to manufacture each unit produced?
I Which product should we emphasize?
E Will the company be able to pay its short-term debts?
EXERCISE 1-3
Angela Duffy, president of Duffy Company, instructed Jana Barth, the head
of the accounting department, to report the company’s land in its
accounting reports at its fair value of $170,000 instead of its cost of $100,000,
in an effort to make the company appear to be a better investment. The
historical cost principle requires that assets be recorded and reported at
their cost, because cost is faithfully representative and can be objectively
measured and verified. In this case, the historical cost principle should be
used and Land reported at $100,000, not $170,000.
The stakeholders include stockholders and creditors of Duffy Company,

potential stockholders and creditors, other users of Duffy’s accounting
reports, Angela Duffy, and Jana Barth. All users of Duffy’s accounting
reports could be harmed by relying on information that may be unreliable.
Angela Duffy could benefit if the company is able to attract more investors,
but would be harmed if the inappropriate reporting is discovered. Similarly,
Jana Barth could benefit by pleasing her boss, but would be harmed if the
inappropriate reporting is discovered.
Jana’s alternatives are to report the land at $100,000 or to report it at

$170,000. Reporting the land at $170,000 is not appropriate since it may
mislead many people who rely on Duffy’s accounting reports to make finan-
cial decisions. Jana should report the land at its cost of $100,000. She
should try to convince Angela Duffy that this is the appropriate course of
action, but be prepared to resign her position if Duffy insists.
EXERCISE 1-4
1. Incorrect. The historical cost principle requires that assets (such as

buildings) be recorded and reported at their cost.
2. Correct. The monetary unit assumption requires that companies include

in the accounting records only transaction data that can be expressed
in terms of money.
3. Incorrect. The economic entity assumption requires that the activities of

the entity be kept separate and distinct from the activities of its owner
and all other economic entities.
EXERCISE 1-5
Asset Liability Owner’s Equity

Cash Accounts payable Owner’s capital
Equipment Notes payable
Supplies Salaries and wages
Accounts receivable payable
EXERCISE 1-6
1. Increase in assets and increase in owner’s equity.

2. Decrease in assets and decrease in owner’s equity.
3. Increase in assets and increase in liabilities.
5. Decrease in assets and decrease in owner’s equity.
6. Increase in assets and decrease in assets.
7. Increase in liabilities and decrease in owner’s equity.
8. Increase in assets and decrease in assets.
EXERCISE 1-7
1. (c) 5. (d)
2. (d) 6. (b)
3. (a) 7. (e)
4. (b) 8. (f)
EXERCISE 1-8
(a) 1. Owner invested $15,000 cash in the business.

2. Purchased equipment for $5,000, paying $2,000 in cash and the
balance of $3,000 on account.
3. Paid $750 cash for supplies.
4. Performed $8,500 of services, receiving $4,600 cash and $3,900
on account.
5. Paid $1,500 cash on accounts payable.
EXERCISE 1-8 (Continued)
6. Owner withdrew $2,000 cash for personal use.

7. Paid $650 cash for rent.
8. Collected $450 cash from customers on account.
9. Paid salaries and wages of $4,800.
10. Incurred $400 of utilities expense on account.
(b) Investment............................................................................... $15,000

Service revenue ...................................................................... 8,500
Drawings ................................................................................. (2,000)
Rent expense .......................................................................... (650)
Salaries and wages expense ................................................. (4,800)
Utilities expense ..................................................................... (400)
Increase in owner’s equity ..................................................... $15,650
(c) Service revenue ...................................................................... $8,500

Rent expense .......................................................................... (650)
Salaries and wages expense ................................................. (4,800)
Utilities expense ..................................................................... (400)
Net income .............................................................................. $2,650
EXERCISE 1-9
ARTHUR COOPER & CO.

Income Statement
For the Month Ended August 31, 2017
Revenues
Service revenue ......................................................... $8,500
Expenses
Salaries and wages expense .................................... $4,800
Rent expense ............................................................. 650
Utilities expense ........................................................ 400
Total expenses ................................................... 5,850
Net income ......................................................................... $2,650
ARTHUR COOPER & CO.

Owner’s Equity Statement
Owner’s capital, August 1 ............................................ $ 0

Add: Investments ....................................................... $15,000
Net income......................................................... 2,650 17,650
17,650
Less: Drawings ............................................................ 2,000
Owner’s capital, August 31 .......................................... $15,650
ARTHUR COOPER & CO.

Balance Sheet
August 31, 2017
Assets
Cash ............................................................................................... $ 8,350
Accounts receivable...................................................................... 3,450
Supplies ......................................................................................... 750
Equipment ...................................................................................... 5,000
Total assets ............................................................................ $17,550

Liabilities
Accounts payable .................................................................. $ 1,900
Owner’s equity
Owner’s capital ...................................................................... 15,650
EXERCISE 1-10
(a) Owner’s equity—12/31/16 ($400,000 – $250,000) ................. $150,000

Owner’s equity—1/1/16 .......................................................... 100,000
Increase in owner’s equity .................................................... 50,000
Add: Drawings ..................................................................... 15,000
Net income for 2016 ............................................................... $ 65,000
(b) Owner’s equity—12/31/17 ($460,000 – $300,000) ............... $160,000

Owner’s equity—1/1/17—see (a) ......................................... 150,000
Increase in owner’s equity .................................................. 10,000
Less: Additional investment .............................................. 45,000
Net loss for 2017 .................................................................. $ (35,000)
(c) Owner’s equity—12/31/18 ($590,000 – $400,000) ............... $190,000

Owner’s equity—1/1/18—see (b)......................................... 160,000
Increase in owner’s equity .................................................. 30,000
Less: Additional investment .............................................. 15,000
15,000
Add: Drawings ................................................................... 25,000
Net income for 2018............................................................. $ 40,000
EXERCISE 1-11
(a) Total assets (beginning of year) ......................................... $110,000

Total liabilities (beginning of year) ..................................... 85,000
Total owner’s equity (beginning of year) ........................... $ 25,000
(b) Total owner’s equity (end of year) ...................................... $ 40,000

Total owner’s equity (beginning of year) ........................... 25,000
Increase in owner’s equity .................................................. $ 15,000
Total revenues ..................................................................... $220,000

Total expenses ..................................................................... 175,000
Net income ........................................................................... $ 45,000
Increase in owner’s equity ............................. $ 15,000

Less: Net income ........................................... $(45,000)
Add: Drawings .............................................. 37,000) (8,000)
Additional investment .................................... $ 7,000
(c) Total assets (beginning of year) ......................................... $129,000

Total liabilities (beginning of year) ..................................... $ 49,000
(d) Total owner’s equity (end of year) ...................................... $130,000

Increase in owner’s equity .................................................. $ 50,000
Total revenues ..................................................................... $100,000

Total expenses ..................................................................... 60,000
Net income ........................................................................... $ 40,000
Increase in owner’s equity ............................. $ 50,000

Less: Net income ........................................... $(40,000)
Additional investment ......................... (25,000) (65,000)
Drawings ......................................................... $ 15,000
EXERCISE 1-12
ARMANDA CO.
Income Statement
For the Year Ended December 31, 2017
Revenues
Service revenue .................................................... $63,600
Expenses
Salaries and wages expense ................................ $29,500
Rent expense ........................................................ 10,400
Utilities expense ................................................... 3,100
Advertising expense ............................................. 1,800
Total expenses .............................................. 44,800
Net income .................................................................... $18,800
ARMANDA CO.
Owner’s capital, January 1 ............................................................. $48,000

Add: Net income ............................................................................ 18,800
66,800
Less: Drawings ............................................................................... 6,000
Owner’s capital, December 31 ........................................................ $60,800
EXERCISE 1-13
CHENG COMPANY
Balance Sheet
December 31, 2017
Assets
Cash ............................................................................................... $15,000
Accounts receivable ..................................................................... 6,500
Supplies ......................................................................................... 8,000
Equipment...................................................................................... 46,000
Total assets ............................................................................ $75,500

Liabilities
Accounts payable .................................................................. $21,000
Owner’s equity
Owner’s capital ($67,500 – $13,000) ..................................... 54,500
EXERCISE 1-14
(a) Camping fee revenues .......................................................... $140,000

General store revenues ......................................................... 65,000
Total revenue .................................................................. 205,000
Expenses ................................................................................ 150,000
Net income ............................................................................. $ 55,000
(b) CLEAR VIEW PARK

Balance Sheet
December 31, 2017
Assets
Cash........................................................................................ $ 23,000
Accounts Receivable ............................................................. 17,500
Equipment .............................................................................. 105,500
Total assets .................................................................... $146,000
CLEAR VIEW PARK

Balance Sheet (Continued)
December 31, 2017
Liabilities
Notes payable ................................................................. $ 60,000
Accounts payable........................................................... 11,000
Total liabilities ......................................................... 71,000
Owner’s equity
Owner’s capital ($146,000 – $71,000) ............................ 75,000
Total liabilities and owner’s equity ........................ $146,000
EXERCISE 1-15
SEA LEGS CRUISE COMPANY

Income Statement
Revenues
Ticket revenue .................................................. $410,000
Expenses
Salaries and wages expense ........................... $142,000
Maintenance and repairs expense .................. 95,000
Advertising expense ........................................ 24,500
Utilities expense .............................................. 13,000
Total expenses ......................................... 274,500
Net income ............................................................... $135,500
EXERCISE 1-16
ALICE HENNING, ATTORNEY
Owner’s capital, January 1 .................................................... $ 34,000 (a)
Add: Net income ................................................................... 124,000 (b)
158,000
Less: Drawings ...................................................................... 90,000
Owner’s capital, December 31 ............................................... $ 68,000 (c)
Supporting Computations
(a) Assets, January 1, 2017 ........................................................ $ 96,000

Liabilities, January 1, 2017.................................................... 62,000
Capital, January 1, 2017 ........................................................ $ 34,000
(b) Legal service revenue ........................................................... $335,000

Total expenses ....................................................................... 211,000
Net income ............................................................................. $124,000
(c) Assets, December 31, 2017 ................................................... $168,000

Liabilities, December 31, 2017 .............................................. 100,000
Capital, December 31, 2017................................................... $ 68,000
1-24
(a) SPENGEL’S TRAVEL AGENCY

Owner’s Equity
Copyright © 2015 John Wiley & Sons, Inc.
Accounts Accounts Owner’s Owner’s

Cash + Receivable + Supplies + Equipment = Payable + Capital – Drawings + Revenues – Expenses
1. +$15,000 +$15,000
+ 15,000 = + 15,000
2. + –600 + –$600
+ 14,400 = + 15,000 –600
3. + –3,000 +$3,000 +000,000
PROBLEM 1-1A
+ 11,400 + + 3,000 = + 15,000 –600
4. +000,000 +00,000 +$700 + –700
Weygandt, Accounting Principles, 12/e, Solutions Manual
+ 11,400 + + 3,000 = + 700 + + 15,000 –1,300

5. + –900 +$900 +00,000 +0000 +000,000
+ 10,500 + + 900 + + 3,000 = + 700 + + 15,000 –1,300
6. – +3,000 +$7,000 +0000 +00,000 +0000 – +$10,000
+ 13,500 + + 7,000 + + 900 + + 3,000 = + 700 + + 15,000 10,000 –1,300
7. + –600 + 0,000 +0000 +00,000 +0000 + –$600
+ 12,900 + + 7,000 + + 900 + + 3,000 = + 700 + + 15,000 –600 10,000 –1,300
8. + –500 + 0,000 +0000 +00,000 +–500 +000,000
+ 12,400 + + 7,000 + + 900 + + 3,000 = 200 + 15,000 –600 10,000 –1,300
9. + –2,500 + 0,000 +0000 +00,000 +0000 –2,500
+ 9,900 + + 7,000 + + 900 + + 3,000 = 200 + 15,000 –600 10,000 –3,800
10. – +4,000 +–4,000 + +
(For Instructor Use Only)
+$13,900 + +$3,000 + +$900 + +$3,000 = +$200 + +$15,000 – $600 + $10,000 – $3,800
$20,800 $20,800
PROBLEM 1-1A (Continued)
(b) Service revenue ...................................................... $10,000

Expenses
Salaries and wages ......................................... $2,500
Rent .................................................................. 600
Advertising ...................................................... 700 3,800
Net income ............................................... $ 6,200
1-26
(a) JUDI SALEM, ATTORNEY AT LAW

Owner’s Equity
Accounts Notes Accounts Owner’s Owner’s
Cash + Receivable + Supplies + Equipment = Payable + Payable + Capital – Drawings + Revenues – Expenses
Bal. $5,000 + $1,500 + $500 + $6,000 = $4,200 + $8,800
1. +1,200 –1,200 0000 00,000 00,000 000,000
6,200 + 300 + 500 + 6,000 = 4,200 + 8,800
2. –2,800 00,000 0000 00,000 –2,800 000,000
3,400 + 300 + 500 + 6,000 = 1,400 + 8,800
PROBLEM 1-2A
3. +3,000 +4,500 0000 00,000 00,000 +$7,500
6,400 + 4,800 + 500 + 6,000 = 1,400 + 8,800 7,500

4. –400 00,000 0000 +2,000 +1,600 000,000
6,000 + 4,800 + 500 + 8,000 = 3,000 + 8,800 + 7,500
5. –3,800 –$2,500
–900
00,000 0000 00,000 00,000 –400
2,200 + 4,800 + 500 + 8,000 = 3,000 + 8,800 + 7,500 –3,800
6. –700 00,000 0000 00,000 00,000 –$700
1,500 + 4,800 + 500 + 8,000 = 3,000 + 8,800 –700 + 7,500 –3,800
7. +2,000 00,000 0000 00,000 +$2,000 00,000 000,000
3,500 + 4,800 + 500 + 8,000 = + 2,000 + 3,000 + 8,800 –700 + 7,500 –3,800
8. +270 –270
– –
$3,500 + $4,800 + $500 + $8,000 = +$2,000 + $3,270 + $8,800 $700 + $7,500 $4,070
$16,800 $16,800
(b) JUDI SALEM, ATTORNEY AT LAW

Income Statement
Revenues
Service revenue............................................. $7,500
Expenses
Salaries and wages expense ........................ $2,500
Rent expense ................................................. 900
Advertising expense ..................................... 400
Utilities expense ............................................ 270
Total expenses....................................... 4,070
Net income ............................................................ $3,430
JUDI SALEM, ATTORNEY AT LAW

Owner’s capital, August 1 ...................................................... $ 8,800

Add: Net income ................................................................... 3,430
12,230
Less: Drawings ...................................................................... 700
Owner’s capital, August 31 .................................................... $11,530
JUDI SALEM, ATTORNEY AT LAW

Balance Sheet
August 31, 2017
Assets
Cash ......................................................................................... $ 3,500
Accounts receivable ............................................................... 4,800
Supplies ................................................................................... 500
Equipment ............................................................................... 8,000
Total assets ..................................................................... $16,800

Liabilities
Notes payable .................................................................. $ 2,000
Accounts payable............................................................ 3,270
Total liabilities .......................................................... 5,270
Owner’s equity
Owner’s capital ................................................................ 11,530
Total liabilities and owner’s equity ......................... $16,800
PROBLEM 1-3A
(a) DIVINE DESIGNS CO.

Income Statement
For the Month Ended June 30, 2017
Revenues
Service revenue............................................ $6,500
Expenses
Rent expense ................................................ $1,600
Advertising expense .................................... 500
Gasoline expense......................................... 200
Utilities expense ........................................... 150
Total expenses...................................... 2,450
Net income ........................................................... $4,050
DIVINE DESIGNS CO.

Owner’s capital, June 1 ....................................... $ 0

Add: Investments .............................................. $12,000
Net income ................................................ 4,050 16,050
16,050
Less: Drawings ................................................... 1,300
Owner’s capital, June 30 ..................................... $14,750
DIVINE DESIGNS CO.

Balance Sheet
June 30, 2017
Assets
Cash......................................................................................... $10,150
Supplies .................................................................................. 2,000
Equipment ............................................................................... 10,000
Total assets ..................................................................... $24,950
DIVINE DESIGNS CO.

Balance Sheet (Continued)
June 30, 2017

Liabilities
Notes payable .................................................................. $ 9,000
Owner’s equity
Owner’s capital ................................................................ 14,750
(b) DIVINE DESIGNS CO.

Income Statement
Revenues
Service revenue ($6,500 + $900) ................. $7,400
Expenses
Rent expense ............................................... $1,600
Advertising expense ................................... 500
Gasoline expense ($200 + $150) ................. 350
Utilities expense .......................................... 150
Total expenses ..................................... 2,600
Net income .......................................................... $4,800
DIVINE DESIGNS CO.

Owner’s capital, June 1 ...................................... $ 0

Add: Investments.............................................. $12,000
Net income ............................................... 4,800 16,800
16,800
Less: Drawings .................................................. 1,300
Owner’s capital, June 30 .................................... $15,500
(a) MATRIX CONSULTING
Assets = Liabilities + Owner’s Equity

Accounts Notes Accounts Owner’s Owner’s

Date Cash + Receivable + Supplies + Equipment = Payable + Payable + Capital – Drawings + Revenues – Expenses
May 1 ($ 7,000) $7,000)
PROBLEM 1-4A
2 (900) ($ 900)
3 $600 ($ 600)
5 (125) (125)
9 (4,000) $ 4,000
12 (1,000) ($1,000)
15 ($5,400) 5,400
17 (2,500) (2,500)
20 (600) (600)
23 (4,000) (4,000)
26 (5,000) $5,000
29 $4,200 (4,200)
30 (275) (275)
($14,600)+ ($1,400) + $600 + $4,200 = $5,000 + ($4,200) + $7,000) – $1,000 + $9,400 – $3,800
1-31
(b) MATRIX CONSULTING

Income Statement
For the Month Ended May 31, 2017
Revenues
Service revenue ($4,000 + $5,400) ................ $9,400
Expenses
Salaries and wages expense ........................ $2,500
Rent expense ................................................. 900
Utilities expense ............................................ 275
Advertising expense ..................................... 125
Total expenses ....................................... 3,800
Net income ............................................................ $5,600
(c) MATRIX CONSULTING

Balance Sheet
May 31, 2017
Assets
Cash ......................................................................................... $14,600
Supplies ................................................................................... 600
Equipment ............................................................................... 4,200
Total assets ..................................................................... $20,800

Liabilities
Notes payable .................................................................. $ 5,000
Owner’s equity
Owner’s capital ................................................................ 11,600*
*($7,000 + $5,600 – $1,000)
PROBLEM 1-5A
(a) Alpha Beta Psi Omega

Company Company Company Company
(a) $ 39,000 (d) $50,000 (g) $129,000 (j) $ 60,000
(b) 110,000 (e) 40,000 (h) 88,000 (k) 251,000
(c) 9,000 (f) 33,000 (i) 385,000 (l) 444,000
(b) ALPHA COMPANY

Owner’s capital, January 1 .................................. $39,000

Add: Investment ................................................ $ 9,000
Net income ................................................ 17,000 26,000
65,000
Less: Drawings ................................................... 15,000
Owner’s capital, December 31 ............................ $50,000
(c) The sequence of preparing financial statements is income statement,

owner’s equity statement, and balance sheet. The interrelationship of
the owner’s equity statement to the other financial statements results
from the fact that net income from the income statement is reported in
the owner’s equity statement and ending capital reported in the owner’s
equity statement is the amount reported for owner’s equity on the
balance sheet.

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BRIEF EXERCISE 1-5

A (a) Accounts receivable A (d) Supplies

BRIEF EXERCISE 1-6

Assets Liabilities Owner’s Equity

BRIEF EXERCISE 1-7

Assets Liabilities Owner’s Equity

BRIEF EXERCISE 1-8

E (a) Advertising expense D (e) Owner’s drawings

BRIEF EXERCISE 1-9

R (a) Received cash for services performed

Liabilities and Owner’s Equity

BRIEF EXERCISE 1-11

BS (a) Notes payable

SOLUTIONS FOR DO IT! REVIEW EXERCISES

1. False. The three steps in the accounting process are identification,

1. False. Congress passed the Sarbanes-Oxley Act to reduce unethical

1. Drawings is owner’s drawings (D); it decreases owner’s equity.

Assets = Liabilities + Owner’s Equity

(1) +$20,000 +$20,000

(b) Net income is $20,500, computed as follows:

(c) The ending owner’s equity balance of Kirby Company is $21,000. By

Total assets [as computed in (a)] ............................. $49,000

Note that it is not possible to determine the company’s owner’s equity in

C Analyzing and interpreting information.

(a) Internal users

(b) I Can we afford to give our employees a pay raise?

The stakeholders include stockholders and creditors of Duffy Company,

Jana’s alternatives are to report the land at $100,000 or to report it at

1. Incorrect. The historical cost principle requires that assets (such as

2. Correct. The monetary unit assumption requires that companies include

3. Incorrect. The economic entity assumption requires that the activities of

Asset Liability Owner’s Equity

1. Increase in assets and increase in owner’s equity.

(a) 1. Owner invested $15,000 cash in the business.

6. Owner withdrew $2,000 cash for personal use.

(b) Investment............................................................................... $15,000

(c) Service revenue ...................................................................... $8,500

ARTHUR COOPER & CO.

ARTHUR COOPER & CO.

Owner’s capital, August 1 ............................................ $ 0

ARTHUR COOPER & CO.

Liabilities and Owner’s Equity

(a) Owner’s equity—12/31/16 ($400,000 – $250,000) ................. $150,000

(b) Owner’s equity—12/31/17 ($460,000 – $300,000) ............... $160,000

(c) Owner’s equity—12/31/18 ($590,000 – $400,000) ............... $190,000

(a) Total assets (beginning of year) ......................................... $110,000

(b) Total owner’s equity (end of year) ...................................... $ 40,000

Total revenues ..................................................................... $220,000

Increase in owner’s equity ............................. $ 15,000

(c) Total assets (beginning of year) ......................................... $129,000

(d) Total owner’s equity (end of year) ...................................... $130,000

Total revenues ..................................................................... $100,000

Increase in owner’s equity ............................. $ 50,000

Owner’s capital, January 1 ............................................................. $48,000

Liabilities and Owner’s Equity

(a) Camping fee revenues .......................................................... $140,000

(b) CLEAR VIEW PARK

CLEAR VIEW PARK

SEA LEGS CRUISE COMPANY

(a) Assets, January 1, 2017 ........................................................ $ 96,000