Ch 2 Homework 2-1B, 2-3B, 2-6B, 2-11B, 2-13B EXERCISE 2-1B Burke Company Effect of Events on the Year 1 Accounting Equation Assets = Liabilities + Stockholders Equity Event Cash + Accounts Rec. = BONDS PAYABLE + Common Stock + Retained Earnings Earned Revenue $1200 Coll. Acct. Rec. $9800 Ending Balance $9800 a. Accounts Receivable: $___1200______ b. $__9800______cash collected from accounts receivable. c. $_____1200___ d. $____1200____ of revenue was earned but only $____9800___ of it was collected. EXERCISE 2-3B (cont. on next page) EXERCISE 2-3B a. Coates, Inc. General Ledger Accounts for the Year Ended December 31, Year 1 Assets = Liabilities + Stockholders Equity Event Cash Accts. Rec. = Salaries Pay. + Common Stock Retained Earnings Acct. Title for RE 1. 20,000 20,000 2. 38000 3. 2500 4. 21000 5. 15000 6. 2000 Totals b. Coates, Inc. Income Statement For the Year Ended December 31, Year 1 Revenue $38,000 Expenses 2500 Total Expenses (17,500) EXERCISE 2-3B b. (cont. on next page) EXERCISE 2-3B b. (cont.) Coates, Inc. Statement of Changes in Stockholders Equity For the Year Ended December 31, Year 1 Beginning Common Stock $ -0- Ending Common Stock Beginning Retained Earnings $ -0- Total Stockholders Equity $20000 Coates, Inc. Balance Sheet As of December 31, Year 1 Assets Total Assets Liabilities Total Liabilities Stockholders Equity Total Stockholders Equity Total Liab. and Stockholders Equity $53,500 EXERCISE 2-3B b. (cont. on next page.) EXERCISE 2-3B b. (cont.) Coates, Inc. Statement of Cash Flows For the Year Ended December 31, Year 1 Cash Flow From Operating Activities Net Cash Flow from Operating Act. $18,500 Cash Flow From Investing Activities Cash Flow From Financing Activities Net Cash Flow from Financing Act. Net Change in Cash 36,500 Ending Cash Balance c. Net income is based on income ___________of $____________ and expenses ___________of $__________ for a net income of $___________. Net cash flow from operating activities is based on__________________________ of $__________ and expenses_________ of $__________, for a net cash flow from operating activities of $___________. The difference of $___________ is reflected in the ________________account of $_____________, and the _______________________ account of $_____________. EXERCISE 2-6B a. & c. Event Revenue Expense Statement of Cash Flows 1. NA NA $50,000 FA 2. 3. 4. 5. 6. 7. EXERCISE 2-6B (cont.) EXERCISE 2-6B (Cont.) b. Computation of Net Income d. Cash Flow from Operating Activities Net Cash Flow from Operating Act. $ 6,000 e. The before-closing balance in the Revenue account is $________. After it is closed to Retained Earnings, the balance will be $_______. Other accounts that would be closed are. f. The balance of Retained Earnings on the Year 1 Balance Sheet will be $_____________. EXERCISE 2-11B a. Therapy, Inc. Effect of Events on the Accounting Equation Assets = Stockholders Equity Event Cash Prepaid Rent = Retained Earnings 1. Performed Services 2. 3. Used Rent Totals EXERCISE 2-11B (cont.) EXERCISE 2-11B (cont.) b. Therapy, Inc. Income Statement For the Year Ended December 31, Year 1 Revenue Expense Net Income Therapy, Inc. Balance Sheet As of December 31, Year 1 Assets Total Assets Liabilities Stockholders Equity Retained Earnings Total Stockholders Equity Total Liab. and Stockholders Equity EXERCISE 2-11B b. (cont.) EXERCISE 2-11B b. (cont.) Therapy, Inc. Statement of Cash Flows For the Year Ended December 31, Year 1 Cash Flows From Operating Activities: Net Cash Flow from Operating Activities $6,000 c. The balance of the Prepaid Rent will be expensed in Year 2, $_________. EXERCISE 2-13B a. Interior Design Consultants Accounting Equation Year 1 Event Assets = Liabilities + Stockholders Equity Cash = Unearned Revenue + Retained Earnings Coll. Unearned rev Recog. _____________ ____________________ EXERCISE 2-13B (cont.) EXERCISE 2-13B (cont.) b. Interior Design Consultants Income Statement For the Year Ended December 31, Year 1 Interior Design Consultants Balance Sheet As of December 31, Year 1 Assets Liabilities -0- Stockholders Equity Total Liab. and Stockholders Equity EXERCISE 2-13B b. (cont.) EXERCISE 2-13B b. (cont.) Interior Design Consultants Statement of Cash Flows For the Year Ended December 31, Year 1 Cash Flows From Operating Activities: Net Cash Flow from Operating Activities Cash Flows From Investing Activities Cash Flows From Financing Activities: Net Change in Cash Plus: Beginning Cash Balance Ending Cash Balance b. _________ months of unearned revenue will be recognized in Year 2 for $_____________.