I just started Accounting 220 and I am looking for tutor to help me through the semester. Below you will find the Homework for week 1. Thanks
- Professor Pacioli was recently asked the following five questions by his aspiring accounting students. Prepare a summary of the professor’s reply to each question.
(a) Professor, I cannot quite put my finger on it, but your name has a familiar ring to it . . .why is that?
(b) Professor, I have no interest in being a bookkeeper. Why should I study accounting?
(c) Professor, I am not sure I understand why there is a distinction between financial and managerial accounting. If you are accounting for one business, how can there possibly be two separate approaches?
(d) Professor, haven’t computers and modern information systems made accountants obsolete?
(e) Professor, I am interested in becoming a CPA. What do I need to do, apply to the FASB?
2. Determine whether each of the following items is an: Asset Liability Revenue Expense Owners’ equity Other
(b) Dividend to shareholders
(d) Accounts payable
(e) Capital stock
(f ) Notes payable
(g) Accounts receivable
(j) Cost of utilities used
(k) Customer order not yet filled
(l) The value of completed services provided to customers
(m) Obligation to pay for utilities consumed
3. Indicate the impact (increase/decrease/no change) for each of the following transactions on total assets, liabilities, and owners’ equity.
(a) Paid the current month’s rent.
(b) Provided services to customers for cash.
(c) Provided services to customers on account.
(d) Recorded receipt of an electric bill to be paid next month.
(e) Paid an electric bill received in a prior month.
(f ) Purchased land for cash.
(g) Purchased equipment in exchange for a note payable (loan).
(h) Collected a previously recorded account receivable.
(i) Purchased a building by paying 20% in cash and agreeing to
pay the remainder over future years.
(j) Declared and paid a dividend to shareholders.
4. Goudar Bloodcare is a blood donation center where eligible donors give a pint of blood about once every other month. Assess each of the following to decide if Goudar should record the item as an asset, a liability, a revenue, or expense.
(a) The monthly fee paid to maintain Goudar’s website.
(b) Needles, bags, plastic bandages, etc. that were used to collect blood.
(c) Needles, bags, plastic bandages, etc. that will be used in the future to collect blood.
(d) Amounts received from hospitals to pay for the blood products.
(e) A loan that is owed to a bank.
(f ) The building and equipment that serves as the home office for Goudar.
(g) Amounts owed to a printing company that prepared T-shirts that were given away at a recent
blood drive campaign.
(h) The salaries of employees of Goudar.
5. Magee Corporation provided the following summary balance sheet information:
Dec. 31, 20X1 Dec. 31, 20X2
Total assets $1,500,000 $2,300,000
Total liabilities 700,000 1,400,000
Compute net income for the year ending December 31, 20X2, under each of the following independent scenarios:
(a) Magee paid no dividends, and no additional capital was raised via share issuances.
(b) Magee paid $100,000 in dividends, and no additional capital was raised via share issuances.
(c) Magee paid no dividends, but raised $250,000 via issuances of additional shares of stock.
(d) Magee paid $100,000 in dividends, and raised $250,000 via issuances of additional shares of stock.
6.CUE Corporation was formed at the beginning of 20X2, and presents the following incomplete financial statements for three years. CUE has requested your help in completing the missing values for each year.
Begin by solving the unknowns in the 20X2 year, and work forward to subsequent years. Remember that
20X2 is the first year of business, so Cue begins with a zero balance in 20X2 beginning retained earnings.
7. Think very broadly about accounting, its societal role, and its underlying premises, then provide a general answer to each of the following.
(a) What is the role of accounting in society?
(b) Is accounting complete? Does it provide all of the information that investors and creditors need
for rationale decision making?
(c) Consider an intrinsic principle of accounting, such as the historical cost principle. Are the underlying principles and assumptions of accounting immutable truths, or is there some degree of arbitrariness that is apt to evolve over time?
8. As you study accounting, you will become increasingly familiar with a variety of generally accepted accounting principles. Already, you are beginning to appreciate some of the fundamental principles, rules, and procedures. Evaluate the following ten comments, and state whether you agree or disagree:
(a) The fundamental accounting equation precludes a situation where liabilities exceed assets.
(b) A complete set of financial statements would include a cash flow statement.
(c) The balance sheet can prepared in a vertical or horizontal format.
(d) The form of dating each financial statement is identical.
(e) Many assets are reported at their historical cost.
(f ) Revenue should not be recognized before it is collected.
(g) The term income is synonymous with the term revenue.
(h) Dividends are reported as an expense on the income statement.
(i) Retained earnings will equal cash on hand.
(j) Issuing stock does not increase a company’s revenue or income.
9. Review the following facts for four separate companies. Identify the two companies that lost money during the year, explaining how you reached your conclusion for each.
COMPANY A Ending retained earnings was less than beginning retained earnings and dividends were twice as much as income during the year.
COMPANY B Ending retained earnings was more than beginning retained earnings, but the company issued stock in an amount greater than the increase in retained earnings; no dividends were declared or paid.
COMPANY C No stock was issued and no dividends were declared or paid; total liabilities went up more than total assets.
COMPANY D Expenses exceeded revenues, but the company issued additional shares of stock in an amount that exceeded the difference between revenues and expenses.
Prepare Bisceglia’s income statement, statement of retained earnings, and balance sheet for the year ending December 31, 20X5. The following information is all that is available. Be sure to prepare proper headings and dates on each financial statement.
Capital stock $41,000
Rent expense $10,000
Wage expense 37,000
Accounts payable 4,000
Utilities expense 6,000
Accounts receivable 19,000
Beginning retained earnings 11,000
Notes payable 20,000
Bingo Corporation is a newly formed company. Below are the first 10 transactions that Bingo encountered. Prepare an income statement, statement of retained earnings, and balance sheet immediately following each of these consecutive transactions.
(1) Issued capital stock for $50,000 cash.
(2) Purchased building for $120,000, making a $20,000 down payment and signing a promissory
note payable for the balance.
(3) Paid wages expense of $5,000.
(4) Provided services to customers for $15,000 cash.
(5) Paid utilities expense of $2,000.
(6) Reduced note payable with an $8,000 cash payment (ignore interest costs).
(7) Provided services to customers on account, $10,000.
(8) Incurred wages expense of $3,000, to be paid in the future.
(9) Collected $4,000 on an outstanding account receivable.
(10) Declared and paid dividend of $6,000.
- Perhaps you have watched the game show known as “Jeopardy.” Contestants must prepare a question that is answered by a given prompt. It is your turn to play “Jeopardy” and your category is “tools of accounting.” For instance, if your prompt was “book of original entry,” you would reply: “What is the general journal?” And remember, the prompts get harder as you go. Don’t forget to answer in the form of a question!
(a) Debits must equal these
(b) Used to increase expense accounts
(c) The process of transferring data from journal to ledger
(d) Not a financial statement, showing balance
(e) The offspring of a control account
(f ) A “scratch pad” for accountants