Solution to practice question 1

Here Comes the Tig

Balance Sheet
30-Jun-12
Assets
Cash
Accounts receivable
notes receivables
Costumes
Props and equipment
Animals
Cages
Tents
Trucks and wagons

$24,450.00
$22,000.00
$8,200.00
$17,000.00
$92,000.00
$200,000.00
$20,000.00
$43,000.00
$110,240.00
$536,890.00

Here Comes the Tigers

Balance Sheet
30-Jun-12
Liabilities and Owners' Equity
Liabilities
Accounts payable
$4,100.00
Salaries payable
$8,090.00
notes payable
$120,000.00
$132,190.00
Owners' equity
Capital Stock
Retained Earning

$350,000.00
$54,700.00
$404,700.00
$536,890.00

Solution to practice question 2

The Town Bakery

Balance Sheet
1-Aug-02
Assets
Cash
Accounts receivable
Supplies
Equipment
Building
Land

$3,200.00
$10,100.00
$6,200.00
$22,000.00
$80,000.00
$40,000.00

Liabilities and Owners' Equity

Liabilities
Accounts payable
Salaries payable
notes payable
Owners' equity
Capital Stock
Retained Earning

$161,500.00

Aug-02

Cash will increase by $ 20,000 and also Capital Stock will increase by the same
Cash balance will become $23,200 from which $6,300 will be paid for accounts

Aug-03

Equipment and Accounts payable will increase by $5,000. Supplies will increase
and Cash will decrease by the same amount.

The Town Bakery

Balance Sheet
3-Aug-02
Assets
Cash
Accounts receivable
Supplies
Equipment
Building
Land

$15,800.00
$10,100.00
$7,300.00
$27,000.00
$80,000.00
$40,000.00

Liabilities and Owners' Equity

Liabilities
Accounts payable
Salaries payable
notes payable
Owners' equity
Capital Stock
Retained Earning

$180,200.00

and Owners' Equity

$6,300.00
$4,200.00
$50,000.00
$60,500.00

$90,000.00
$11,000.00
$101,000.00
$161,500.00

Stock will increase by the same amount.

$6,300 will be paid for accounts payable.

y $5,000. Supplies will increase by $1,100

and Owners' Equity

$5,000.00
$4,200.00
$50,000.00
$59,200.00

$110,000.00
$11,000.00
$121,000.00
$180,200.00

The Town Bakery

Statement of Cash Flows
For the period 01 to 03 August 2002
Cash Flows from Operating Activities
Cash payment for Supplies
Cash Payments for accounts payable
Net Cash Flow from Operating Activities
Cash Flows for Investing Activities
Net cash Flow from Investing Activities
Cash Flows from Financing Activities
Cash Receipts from Borrowing Funds
Cash Receipts from Issuing Common Stock
Cash Payments for Dividends
Net Cash Flow from Financing Activities
Net Increase in Cash
Plus Beginning Cash Balance
Ending Cash Balance

(1,100)
(6,300)

20,000
-

(7,400)
-

20,000
12,600
3,200.00
$

15,800

Practice question 3
New City Playhouse
Balance Sheet
As on 30 September 2002
Assets
Cash
Accounts receivable
Props and constumes
Theater Building
Lighting equipment
Automobile

$18,200.00
$140,100.00
$2,000.00
$27,000.00
$9,100.00
$16,000.00

Liabilities and Owners' Equity

Liabilities
Accounts payable
Salaries payable
notes payable
Owners' equity
Capital Stock

$212,400.00

Practice question 3
New City Playhouse
(Corrected) Balance Sheet
As on 30 September 2002
Assets
Cash
Accounts receivable
Props and constumes
Lighting equipment

$17,100.00
$8,000.00
$19,000.00
$9,100.00

Liabilities and Owners' Equity

Liabilities
Accounts payable
Salaries payable
notes payable
Owners' equity
Capital Stock

$53,200.00

1 Personal cash of the owner will not be reported in the business balance sheet - Entity Conc
2 Accounts receivables are claims for the sales already made.
3 Under Accrual basis of Accounting transactions are recorded irrespective of whether cash is
4 The building is a rented property, not something under the full control or ownership of the b

so it cannot be classified as an asset of the business.

5 The equipment has to be reported at its original cost
6 the automobile is a personal property not owned by the business, so will not be reported on
7 Personal liabilities will not be included - Business Entity concept.
8 Salary expense as payable will only be recognised for the expenses actually incurred during
9 Common Stock or Share Capital has to be reported at the amount actually invested by the

and Owners' Equity

$5,000.00
$31,200.00
$0.00
$36,200.00

$176,200.00
$176,200.00
$212,400.00

and Owners' Equity

$4,000.00
$3,200.00
$16,000.00
$23,200.00

$30,000.00
$30,000.00
$53,200.00

ss balance sheet - Entity Concept

irrespective of whether cash is paid or received.

ull control or ownership of the business,

ness, so will not be reported on balance sheet - Business Entity concept

penses actually incurred during the period - Matching principle

ount actually invested by the Owners.

Practice question 4

Revenue
Aug-01
Aug-04
Aug-09
Aug-16
Aug-21
Aug-24
Aug-27
Aug-28
Aug-31

$2,500.0

$2,500.0

Dr. Dentist
Income Statement
For the Month Ended August 31, 2014
Service revenue
Operating Expenses

Advertising expense
Salary expense

-500
-2700

Net Income / (Loss)

Dr. Dentist
Statement of changes in Equity
For the month Ended August 31, 2014
Beginning Common Stock
Plus: Investment by shareholders
Ending Common Stock
Beginning Retained Earnings
Less: net loss
Ending Retained Earnings
Total Stockholders' Equity

250,000

(700)

Dr. Dentist
Statement of Cash Flows
For the Month Ended August 31, 2004
Cash Flows from Operating Activities
Cash received from service revenue
$
Cash collected from accounts receivable
$
Cash Payments for Salary Expenses
Net Cash Flow from Operating Activities
Cash Flows for Investing Activities
Cash Payments to Purchase Land and Building
Cash payments to purchase medical instruments
Cash payments to purchase office equipment
Cash payments to purchase Supplies
Net Cash Flow from Investing Activities
Cash Flows from Financing Activities
Cash Receipts from Issuing Common Stock
Net Cash Flow from Financing Activities
Net Increase in Cash
Plus Beginning Cash Balance

1,200
400
(2,700)

(100,000)
(62,000)
(5,000)
(3,500)

250,000

Ending Cash Balance

Dr. Dentist
Balance Sheet
As of August 31, 2014
Assets
Cash
Accounts receivable
Office Supplies
Office Equipment
Medical Instruments
Building
Land

$
$
$
$
$
$

78,400
900
3,500
30,000
62,000
235,000
85,000

$
$

25,500
220,000

250,000
(700)

Total Assets
Liabilities
Accounts Payable
Notes Payable

Stockholders' Equity
Commn Stock
Retained Earnings

Total Stockholders' Equity

Total Liabilities and Stockholders' Equity

Expense

Net income

A
Cash
Accounts receivable
$250,000.0
-$100,000.0
-$62,000.0
-$5,000.0
-$3,500.0
$1,200.0
$1,300.0

$500.0
$2,700.0
$3,200.0

-$700.0

$400.0
-$2,700.0
$78,400.0

-$400.0
$900.0

Total Assets=

2,500

(3,200)
$

(700)

250,000

(700)
$

249,300

(1,100)

(170,500)

250,000
78,400
$

78,400

494,800

245,500.00

249,300
$

494,800

Land

Asset
Building

Medical Ins

Office Equip

Office Supplies

$85,000.0 $235,000.0
$62,000.0
$30,000.0
$3,500.0

$85,000.0 $235,000.0

$62,000.0

$30,000.0

$3,500.0
Total Liabilities

$494,800.0

Liabilities
Notes payable
Accounts Payable

Owners' Equity
Share captial
Retained Earning
$250,000.0

$220,000.0
$25,000.0

$500.0

$220,000.0

$25,500.0

$245,500.0 Total Equity=

$494,800.0

$250,000.0
$249,300.0

-$700.0