Problem - Components of the accounting equation
Lang Enterprises was started when it acquired $4000 cash from creditors and $6000 from owners. The company immediately purchased land that cost $9000.
Required
a. Record the events under an accounting equation.
b. After all events have been recorded. Lang's obligations to creditors represents what percent of total assets?
c. After all events have been recorded. Lang's stockholder's equity represents what percent of total assets?
d. Assume the debt is due. Given that Lang has $6000 in stockholders' equity, can the company repay the creditors at this point? Why or why not?
Respond to the following:
Why is the knowledge of accounting concepts and terminology useful to anyone in a business activity?
Is there a difference between bookkeeping and accounting? Discuss.
Accounting reports past performance. How can this be useful when planning future operations?
Problem - Missing Information and Recording Events
As of December 31, 2013, Post Company had total cash of $156,000, notes payable of $85,600, and a common stock of $52,400. During 2014, post earned $36,000 of cash revenue, paid $20,000 for cash expenses, and paid a $3000 cash dividend to the stockholders.
a. Determine the amount of retained earning as of December 31, 2013.
b. Create an accounting equation and record the beginning account balances under the appropriate elements.
c. Record the revenue, expense, and dividend events under the appropriate elements of the accounting equation created equation created in Requirement b.
d. Prove the equality of the accounting equation as December 31, 2014.
e. Identify the beginning and ending balance in the Cash and Common Stock accounts. Explain why the beginning and ending balances in the Cash Account are different, but the beginning and ending balance in the Common Stock account remains the same.
Problem - Accounts titles and the accounting equation
The following account titles were drawn from the general ledger of Gutter Control, Incorporated (GCI): Cash, Notes Payable, Land, Accounts Payable, Office Furniture, Salaries Expenses, Common Stock, Service Revenue, Interest Expense, Utilities Payable, Utilities Expense, Trucks, Supplies, Operating Expense, Rent Revenue, Dividends, Computers, Building, Supplies Expense, Gasoline Expense, Retained Earnings, Dividends.
Required
a. Create an accounting equation using the elements assets, liabilities, and stockholders' equity. List each account title under the elements of the accounting equation to which it belongs.
b. Will all business have the same number of accounts? Explain your answer.