Questions -
Q1. Owner's equity on 1/1/2013 and 12/31/2013 were $130,000 and $140,000, respectively. Assets on 1/1/2013 and 12/31/2013 were $210,000 and $250,000, respectively. Liabilities on 1/1/2013 were $80,000. What is the amount of liabilities on 12/31/2013? Describe how you used the accounting equation to come up with your answer. Why is the accounting equation so important to accounting?
Q2. Journalize the following transactions:
i. Began business by making a deposit in a company bank account of $36,000, in exchange for 3,600 shares of common stock.
ii. Paid the premium on a 1-year insurance policy, $3,600.
iii. Paid the current month's rent, $4,000.
Q3. Flamingo, Inc. has the following assets, liabilities, revenues, and expenses for the current year.
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Equipment
Rent expense
Salary expense
Cash
Land
Service revenue
Note payable
Supplies expense
Interest payable
Building
Insurance expense
Accounts receivable
Common stock
Accounts payable
Utilities expense
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$45,000
$24,000
$68,000
$10,000
$18,000
$125,000
$30,000
$4,000
$500
$100,000
$1,500
$14,500
$21,000
$19,500
$12,000
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Prepare the Income Statement for ABC, Inc. for the current year.
Q4. Prepare adjusting entries for the year ended December 31, 2013, based on the following data:
i. A 2-year insurance policy costing $3,000 was purchased on September 30, 2013.
ii. Employee salaries are owed for 3 days of a regular 5-day work week. Weekly payroll, $8,000.
iii. The balance in Supplies before adjustment is $1,600. A physical count reveals $350 of supplies on hand on December 31, 2013.
iv. Equipment was purchased at the beginning of the year for $20,000. The equipment has a useful life of 4 years and no salvage value.
v. Unearned Service Revenue has a balance of $4,200 before adjustment. Records show that $2,725 of that amount has been earned by December 31, 2013.