Question

ACC 101 Chapter 1 and 2 Practice Questions: 1. Presented below is selected financial information for Stanley's Bike Shop. Using the appropriate information, prepare the income statement for 2004. Total Assets at December 31, 2004 $91,00 2004 Expenses 38,000 Total Equity at December 31,2003 48,000 Total Liabilities at December 31, 2004 35,000 2004 Revenues 46,000 0 > 2. Prepare a December 31 balance sheet in proper form for Surety Insurance from the following items and amounts: Commissions earned $40,000 Accounts payable 3,500 Accounts receivable 5,000 M. Bruno, Capital 103,500 Office equipment 10,000 Advertising expense 3.200 Cash 7,500 35,000 Note payable 50,000 Office supplies 500 Salaries expense 12,000 Salaries payable 1,000 Building 100,000 Land a. 3.Ann Maslow's consulting practice had equity of $172,500 at December 31, 2003. Net income for 2004 amounted to $56,400. Ann's withdrawals during 2004 were $48,000, and Ann made no investments in the business during 2004. Prepare the statement of owner's equity for 2004. 4.FastForward has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows. Beginning cash balance $3,200 b. Cash investment by owner 15,000 Cash payment toward long-term loan 1,000 Cash payment of rent 1.800 Purchased equipment for cash 7.500 f. Purchased store supplies for cash 1,500 Cash collected from customers 7,750 h. Cash withdrawal by owner 2.000 i. Cash payment of wages 4,000 c. d.

Answer 1

Answer 1
Income statement
Revenue		$        46,000
Less: Expenses		$        38,000
Net income		$          8,000
Answer 2
Balance sheet
Assets
Cash		$          7,500
Accounts receivable		$          5,000
Office Supplies		$              500
Land		$        35,000
Buildings		$     100,000
Office Equipment		$        10,000
Total assets		$     158,000
Liabilities and owner's Equity
Liabilities
Accounts Payable	$          3,500
Salary payable Payable	$          1,000
Notes Payable	$        50,000
Total Liabilities		$        54,500
Owner' equity
Owner's capital		$     103,500
Total Liabilities and Owner' equity		$     158,000
Answer 3
Statement of Owner's capital
Owner's capital, beginning		$     172,500
Add: net income		$        56,400
Less: withdrawals		$     (48,000)
Owner's capital, ending		$     180,900
Answer 4
Statement of cash flows
Operating activity
Collected from customers	$          7,750
Cash payment for wages	$        (4,000)
Cash payment of rent	$        (1,800)
Purchase of store supplies for cash	$        (1,500)
Net cash flow provided by operating activity		450
Investing activity
Purchase of equipment for cash	$        (7,500)
Net cash flow used by Investing activity		(7,500)
Financing activity
Cash contributed by owner	$        15,000
Cash payment towards loan	$        (1,000)
Cash withdrawal by owner	$        (2,000)
Net cash flow provided by Financing activity		12,000
Increase in cash		4,950
Add: Cash balance at the beginning		3,200
Cash balance at the end of the year		8,150