Professional Documents
Culture Documents
Hart Concerts Inc. was organized on May 1, 2014, by two students majoring in education. The
two entrepreneurs provided entertainment for childrens birthday parties to supplement their
college career. The following transactions occurred during the first month of operations:
May 1: Received contribution of $6,000 from each of the two principal owners of the new
business in exchange for shares of stock.
May 1: Purchased lighting equipment for $300 on an open account. The company has 30 days to
pay for the equipment.
May 5: Registered as a vendor with the city and paid the $25 monthly fee.
May 9: Purchased an event tent to set up at parties for $2,400 cash.
May 10: Purchased $100 in miscellaneous supplies on account. The company has 30 days to pay
for the supplies.
May 15: Paid a $75 bill from local printer for advertisement signs.
May 17: Customers paid for services with cash of $1,500.
May 24: Billed the local park district $800 entertainment provided to a summer camp. The park
district is to pay one-half of the bill within five working days and the rest within 30 days.
May 29: Received 50% of the amount billed to the park district (i.e. from May 24).
May 30: Customers paid cash for parties of $2,000.
May 30: Paid wages of $300 to a friend who helped over the weekend.
May 31: Paid the balance due on the supplies.
Required
1. Prepare necessary journal entries for May. Note: most of the account titles are presented
in the Appendix.
2. Prepare an income statement for May
3. Prepare a classified balance sheet at May 31, 2014
Tasty Catering purchased a van on January 1, 2014 for $48,000. The company decided to
depreciate the van over a 5-year period using the straight-line method. The company estimated
its residual value at $3,000. Show how the costs should be presented on Tastys balance sheet
and income statement for the full year ended June 30, 2016. Label the statements properly.
2. Which of the following invests funds into a business and is considered an owner?
a. Stockholders
b. Creditors
c. Bankers
d. Lenders
e. All of the above
5. The Holmes Company purchased a building for $75,000 in cash. What is the effect on current
assets?
a. Increase in current assets
b. Decrease in current assets
c. No effect on current assets
d. Unable to determine
6. The system of accounting in which there are at least two accounts affected in every
transaction so that the accounting equation stays in balance is a(an)
a. Double-entry system
b. Debit
c. Credit
d. Journalizing
8. Checks returned by a bank because customers did not have sufficient funds in their account are
called
a. Canceled checks
b. Certified checks
c. NSF checks
d. Outstanding checks
e. None of the above
10. Which one of the following ratios is a common analytical tool used by merchandise corporations,
but not by service corporations?
a. Gross profit ratio
b. Earnings per share
c. Current ratio
d. Profit margin
e. None of the above
13. The landlord records the security deposit she collects from the tenant as a(n)
a. asset
b. liability
c. contingent liability
d. contra liability
Music Corporation
$236,000
820,000
590,000
8,000
8,700
9,600
PROBLEM
Honda Corporation of Japan is a leading international manufacturer of cars and motorcycles. Its
recent balance sheet contained the below items (in billions). You have two assignments:
1) Prepare a balance sheet as of March 31, 2014. To finalise this you need to calculate the
total liabilities and stockholders equity (see below table).
2) Calculate Hondas liquidity. Please provide some comments on the outcome of your
liquidity analysis and explain why liquidity is important (or not) to companies.
USD
690
259
4.237
1.244
639
1.933
2.148
6.244
1.519
3.871
11.819
?
854
At December 31, 2011, Moofy Corporation reported the following plant assets:
All values are in USD ($)
Land
Buildings
Less: accumulated
depreciation buildings
3,000,000
28,500,000
12,100,000
1)
2)
3)
4)
balance sheet.