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Exam 1: An Introduction to Accounting

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Question 21

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During Year 1, Pace Company issued common stock to stockholders for $12,000, purchased land for $3,200 cash, and paid cash dividends of $1,000 to the company's stockholders. Enter each of these three events into the horizontal financial statements model, below. Indicate dollar amounts of increases and decreases. For cash flows, show whether they are operating activities (OA), investing activities (IA), or financing activities (FA). Enter 0 if there would be no entry in a column.

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Question 22

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Retained Earnings at the beginning and ending of the period were $300 and $800, respectively. If revenues were $1,100 and dividends paid to stockholders were $200, what was the amount of expenses for the period?

A) $500
B) $400
C) $900
D) $700

E) B) and C)
F) B) and D)

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Question 23

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Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $40,000 2) borrowed $25,000 from its bank 3) provided consulting services for $39,000 cash 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment for $12,000 cash 7) paid $3,000 dividends to stockholders 8) paid employees' salaries of $21,000 What is Yowell'snotes payable balance at the end of Year 1?

Grimes Corporation reports the following cash transactions for the year ending December 31, Year 1, its first year of operation:Issued common stock for $35,000 cashBorrowed $25,000 from a local bankPurchased land for $40,000 cashProvided services to clients for $38,000 cashPaid operating expenses of $30,500Paid $2,000 cash dividends to stockholdersRequired:What are the total assets for Grimes Corporation at December 31, Year 1?Prepare an income statement for Year 1.

Stosch Company's balance sheet reported assets of $142,000, liabilities of $35,000 and common stock of $32,000 as of December 31, Year 1. If Retained Earnings on the balance sheet as of December 31, Year 2, amount to $98,000 and Stosch paid a $34,000 dividend during Year 2, then the amount of net income for Year 2 was which of the following?

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions 1) issued stock for $56,0002) borrowed $33,000 from its bank3) provided consulting services for $55,000 cash4) paid back $23,000 of the bank loan5) paid rent expense for $13,0006) purchased equipment for $20,000 cash7) paid $3,800 dividends to stockholders8) paid employees' salaries of $29,000 What is Yowell's net cash flow from operating activities?

Which of the following transactions would be reported on the statement of changes in stockholders' equity?

Classify each of the following events as an asset source (AS), asset use (AU), asset exchange (AX), or not applicable (NA)._______ 1) Borrowed cash from the bank._______ 2) Issued stock for cash._______ 3) Invested cash in the common stock of another company._______ 4) Performed services and collected cash._______ 5) Paid cash for operating expense._______ 6) Purchased equipment for cash._______ 7) Paid dividends to stockholders._______ 8) Repaid the bank loan with cash.

Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts. Increase = I Decrease = D Not Affected = NAWalker Company issued common stock for $150,000 cash.

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) Acquired $6,000 cash from issuing common stock.Borrowed $4,400 from a bank.Earned $6,200 of revenues.Incurred $4,800 in expenses.Paid dividends of $800.Lexington Company engaged in the following transactions during Year 2:Acquired an additional $1,000 cash from the issue of common stock.Repaid $2,600 of its debt to the bank.Earned revenues, $9,000.Incurred expenses of $5,500.Paid dividends of $1,280.The amount of retained earnings on Lexington's balance sheet at the end of Year 1 was:

Santa Fe Company was started on January 1, Year 1, when it acquired $9,100 cash by issuing common stock. During Year 1, the company earned cash revenues of $5,150, paid cash expenses of $3,300, and paid a cash dividend of $850. Based on this information, which of the following statements is true?

At the beginning of Year 2, Jones Company had a balance in common stock of $300,000 and a balance of retained earnings of $15,000. During Year 2, the following transactions occurred: · Issued common stock for $90,000 · Earned net income of $50,000 · Paid dividends of $8,000 · Issued a note payable for $20,000 Based on the information provided, what is the total stockholders' equity on December 31, Year 2?

Jessup Company was founded in Year 1. It acquired $45,000 cash by issuing stock to investors and an additional $15,000 cash by borrowing from creditors. During Year 1, it received $25,000 cash revenues and paid $32,000 in cash expenses. The company then went out of business.Required:Explain the term, "business liquidation."What amount of cash should Jessup Company have had on hand immediately before going out of business?What amount of cash will Jessup's creditors receive?What amount of cash will Jessup's stockholders receive?

The balance sheet of the Algonquin Company reported assets of $50,000, liabilities of $22,000 and common stock of $15,000. Based on this information only, what is the amount of retained earnings?

Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.Increase = I Decrease = D Not Affected = NAPierce Company paid $40,000 cash to purchase land.

How does providing services for cash affect the accounting equation? Is it considered an asset source, asset use, or asset exchange transaction?

Which of following illustrates how selling land for cash affects the financial statements?

The amount of retained earnings is shown on the

Which of the following items is an example of revenue?

Yi Company provided services to a customer for $5,500 cash. As a result of this event: