Week 1 Assignment Investments

Exercise A: (10 points)

Explain normal balances. Give three examples of accounts that will normally have a debit balance and three accounts that will normally have a credit balance.

Exercise B: (5 points)

Provide the missing amounts of the accounting equation for each of the following companies.

	Gianni	Forest
Assets	$222,000	$387,000
Liabilities	?	7,000
Equity	147,000	?

Exercise C: (5 points)

EA4 Identify the financial statement on which each of the following accounts would appear: the income statement (IS), the retained earnings statement (RE), or the Balance Sheet (BS).

Insurance Expense

Accounts Receivable

Office Supplies

Sales Revenue

Common Stock

Notes Payable

Exercise D: (5 points)

What is the biggest disadvantage to be considered when exploring the option of equity financing versus debt financing?

Exercise E: (10 points)

For the following accounts please indicate whether the normal balance is a debit or a credit.

A. Sales

B. Dividends

C. Office Supplies

D. Retained Earnings

E. Accounts Receivable

F. Prepaid Rent

G. Prepaid Insurance

H. Wages Payable

I. Building

J. Wages Expense