1. Assume that Esquire consulting erroneously recorded the payment of $30,000 of dividends as salary expense.
(a) How would this error affect the equality of the accounting equation?
(b) How would this error affect the income statement, retained earnings statement, balance sheet, and statement of cash flows?
2. Assume that Larsh Realty Inc. borrowed $75,000 from Country Bank and Trust. In recording the transaction, Larsh erroneously recorded the receipt as an increase in cash, $75,000, and an increase in fees earned, $75,000.
(a) How would this error affect the equality of the accounting equation?
(b) How would this error affect the income statement, retained earnings statement, balance sheet, the statement of cash flows?
3. Assume that as of January 1, 20Y8, Sylvester Consulating has total assets of $500,000 and total liabilties of $150,000. As of December 31, 20Y8, Sylvester has total liabilities of $200,000 and total stockholders equity of $400,000.
(a) What was Sylvester's stockholders equity as of January 1, 20Y8?
(b) Assume that Sylvester did not pay for any dividends during 20Y8. What was the amount of net income for 20Y8?
4. Using the January 1 and December 31, 20Y8 data given in Question 10, answer the following question:
If Sylvester Consulting paid $18,000 of dividens during 20Y8, what was the amount of net income for 20Y8?