Chapter 2: Q15DQ (page 80)
Which financial statement is sometimes called thestatement of financial position?
A balance sheet is called the statement of financial position.
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Zucker Management Services opened for business and completed these transactions in November.
Nov. 1 Matt Zucker, the owner, invested \(30,000 cash along with \)15,000 of office equipment in the company in exchange for common stock.
2 The company prepaid \(4,500 cash for six months’ rent for an office. (Hint:Debit Prepaid Rent for \)4,500.)
4 The company made credit purchases of office equipment for \(2,500 and of office supplies for \)600. Payment is due within 10 days.
8 The company completed work for a client and immediately received \(3,400 cash.
12 The company completed a \)10,200 project for a client, who must pay within 30 days.
13 The company paid \(3,100 cash to settle the payable created on November 4.
19 The company paid \)1,800 cash for the premium on a 24-month insurance policy.
22 The company received \(5,200 cash as partial payment for the work completed on November 12.
24 The company completed work for another client for \)1,750 on credit.
28 The company paid \(5,300 cash in dividends.
29 The company purchased \)249 of additional office supplies on credit.
30 The company paid $831 cash for this month’s utility bill.
Required
3. Prepare a trial balance as of the end of November.
Angel Martin is a young entrepreneur who operates Martin Music Services, offering singing lessons and instruction on musical instruments. Martin wishes to expand but needs a \(30,000 loan. The bank requests that Martin prepare a balance sheet and key financial ratios. Martin has not kept formal records but is able to provide the following accounts and their amounts as of December 31, 2017.
Cash………………..…..\) 3,600 Accounts Receivable……………… \( 9,600
Prepaid Insurance…... \) 1,500 Prepaid Rent.…………………………. 9,400
Store Supplies…………. 6,600 Equipment.…………………………… 50,000
Accounts Payable……… 2,200 Unearned Lesson Fees……………. 15,600
Total Equity*…………… 62,900
Annual net income….... 40,000
*The total equity amount reflects all owner investments, dividends, revenues, and expenses as of December 31, 2017.
Required
1. Prepare a balance sheet as of December 31, 2017, for Martin Music Services. (Report only the total equity amount on the balance sheet.)
2. Compute Martin’s debt ratio and its return on assets (the latter ratio is defined in Chapter 1). Assume average assets equal its ending balance.
3. Do you believe the prospects of a $30,000 bank loan are good? Why or why not?
Question:Aracel Engineering completed the following transactions in the month of June.
a. Jenna Aracel, the owner, invested \(100,000 cash, office equipment with a value of \)5,000, and \(60,000 of drafting equipment to launch the company in exchange for common stock.
b. The company purchased land worth \)49,000 for an office by paying \(6,300 cash and signing a longterm note payable for \)42,700.
c. The company purchased a portable building with \(55,000 cash and moved it onto the land acquired in b.
d. The company paid \)3,000 cash for the premium on an 18-month insurance policy.
e. The company completed and delivered a set of plans for a client and collected \(6,200 cash.
f. The company purchased \)20,000 of additional drafting equipment by paying \(9,500 cash and signing a long-term note payable for \)10,500.
g. The company completed \(14,000 of engineering services for a client. This amount is to be received in 30 days.
h. The company purchased \)1,150 of additional office equipment on credit.
i. The company completed engineering services for \(22,000 on credit.
j. The company received a bill for rent of equipment that was used on a recently completed job. The \)1,333 rent cost must be paid within 30 days.
k. The company collected \(7,000 cash in partial payment from the client described in transaction g.
l. The company paid \)1,200 cash for wages to a drafting assistant.
m. The company paid \(1,150 cash to settle the account payable created in transaction h.
n. The company paid \)925 cash for minor maintenance of its drafting equipment.
o. The company paid \(9,480 cash in dividends.
p. The company paid \)1,200 cash for wages to a drafting assistant.
q. The company paid $2,500 cash for advertisements on the web during June.
Required
1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).
Identify the four financial statements of a business.
Answer each of the following questions related to international accounting standards.
b. Identify the number and usual titles of the financial statements prepared under IFRS.
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