Chapter 1: Q17DQ. (page 29)
Define (a) assets, (b) liabilities, (c) equity, and (d) net assets.
Assets are the resources owned by business; creditor’s claim on assets is liabilities; and equity or net assets are the claims of owners on the assets of the business.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Question: Identify three types of services typically offered by accounting professionals.
Rivera Roofing Company, owned by Reyna Rivera, began operations in July and completed these transactions during that first month of operations.
July 1 Reyna Rivera invested \(80,000 cash in the company in exchange for its common stock.
2 The company rented office space and paid \)700 cash for the July rent.
3 The company purchased roofing equipment for \(5,000 by paying \)1,000 cash and agreeing to pay the \(4,000 balance in 30 days.
6 The company purchased office supplies for \)600 cash.
8 The company completed work for a customer and immediately collected \(7,600 cash for the work.
10 The company purchased \)2,300 of office equipment on credit.
15 The company completed work for a customer on credit in the amount of \(8,200.
17 The company purchased \)3,100 of office supplies on credit.
23 The company paid \(2,300 cash for the office equipment purchased on July 10.
25 The company billed a customer \)5,000 for work completed; the balance is due in 30 days.
28 The company received \(8,200 cash for the work completed on July 15.
30 The company paid an assistant’s salary of \)1,560 cash for this month.
31 The company paid \(295 cash for this month’s utility bill.
31 The company paid \)1,800 cash in dividends to the owner (sole shareholder).
Required 1. Create the following table similar to the one in Exhibit 1.9.
Use additions and subtractions within the table to show the dollar effects of each transaction on individual items of the accounting equation. Show new balances after each transaction.
Sanyu Sony started a new business and completed these transactions during December.
Dec. 1 Sanyu Sony transferred \(65000 cash from a personal savings account to a checking account in the name of Sony Electric in exchange for its common stock.
2 The company rented office space and paid \)1000 cash for the December rent.
3 The company purchased \(13000 of electrical equipment by paying \)4800 cash and agreeing to pay the \(8200 balance in 30 days.
5 The company purchased office supplies by paying \)800 cash.
6 The company completed electrical work and immediately collected \(1200 cash for these services.
8 The company purchased \)2530 of office equipment on credit.
15 The company completed electrical work on credit in the amount of \(5000.
18 The company purchased \)350 of office supplies on credit.
20 The company paid \(2530 cash for the office equipment purchased on December 8.
24 The company billed a client \)900 for electrical work completed; the balance is due in 30 days.
28 The company received \(5000 cash for the work completed on December 15.
29 The company paid the assistant’s salary of \)1400 cash for this month.
30 The company paid \(540 cash for this month’s utility bill.
31 The company paid \)950 cash in dividends to the owner (sole shareholder).
Required Analysis Component 4. Assume that the owner investment transaction on December 1 was \(49,000 cash instead of \)65,000 and that Sony Electric obtained another $16,000 in cash by borrowing it from a bank. Compute the dollar effect of this change on the month-end amounts for (a) total assets, (b) total liabilities, and (c) total equity.
On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed \(84,000 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts. Use this information to prepare an October income statement for the business.
Cash . . . . . . . . . . . . . . . . . . . . . . . \)11,360
Cash dividends . . . . . . . . . . . . . . . . . . . . . . $ 2,000
Accounts receivable . . . . . . . . . . . 14,000
Consulting revenue . . . . . . . . . . . . . . . . . . 14,000
Office supplies . . . . . . . . . . . . . . . 3,250
Rent expense . . . . . . . . . . . . . . . . . . . . . . . 3,550
Land . . . . . . . . . . . . . . . . . . . . . . . . 46,000
Salaries expense . . . . . . . . . . . . . . . . . . . . . 7,000
Office equipment . . . . . . . . . . . . . 18,000
Telephone expense . . . . . . . . . . . . . . . . . . 760
Accounts payable . . . . . . . . . . . . . 8,500
Miscellaneous expenses . . . . . . . . . . . . . . 580
Common stock . . . . . . . . . . . . . . . 84,000
Coca-Cola and PepsiCo both produce and market beverages that are direct competitors. Key financial figures (in \( millions) for these businesses for a recent year follow.
Check (1a) 11.3%; (1b) 9.2%
Key Figures (\) millions) Coca-Cola PepsiCo
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(46,542 \)66,504
Net income . . . . . . . . . . . . . . . . . . . . . . . 8,634 6,462
Average assets . . . . . . . . . . . . . . . . . . . . 76,448 70,518
Required 3. Which company is more successful in returning net income from its assets invested?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
