problem 1 27 accounting s role in not for profits teresa hill is struggling to pass 1316150

Problem 1-27      Accounting’s role in not-for-profits

Teresa Hill is struggling to pass her introductory accounting course. Teresa is intelligent but she likes to party. Studying is a low priority for Teresa. When one of her friends tells her that she is going to have trouble in business if she doesn’t learn accounting, Teresa responds that she doesn’t plan to go into business. She says that she is arts oriented and plans someday to be a director of a museum. She is in the school of business to develop her social skills, not her quantitative skills. Teresa says she won’t have to worry about accounting, since museums are not intended to make a  profit.

Required

a.     Write a brief memo explaining whether you agree or disagree with Teresa’s position regard- ing accounting and not-for-profit organizations.

b.     Distinguish between financial accounting and managerial accounting.

c.     Identify some of the stakeholders of not-for-profit institutions that would expect to receive financial accounting reports.

d.     Identify some of the stakeholders of not-for-profit institutions that would expect to receive managerial accounting reports.

 

problem 1 28 accounting entities the following business scenarios are independent fr 1316151

Problem 1-28      Accounting entities

The following business scenarios are independent from one another.

1.  Beth Mays purchased an automobile from Mills Bros. Auto Sales for $9,000.

2.  Bill Becham loaned $15,000 to the business in which he is a stockholder.

3.  First State Bank paid interest to Levi Co. on a certificate of deposit that Levi Co. has invested at First State Bank.

4.  Southside Restaurant paid the current utility bill of $128 to Midwest Utilities.

5.  Filmore, Inc., borrowed $50,000 from City National Bank and used the funds to purchase land from Tuchols Realty.

 

6.  Jing Chu purchased $10,000 of common stock of International Sales Corporation from the corporation.

7.  Bill Mann loaned $4,000 cash to his daughter.

8.  Research Service Co. earned $5,000 in cash revenue.

9.  Yang Imports paid $1,500 for salaries to each of its four employees.

10.  Meyers Inc. paid a cash dividend of $3,000 to its sole shareholder, Mark Meyers.

 

Required

a.     For each scenario, create a list of all of the entities that are mentioned in the description.

b.     Describe what happens to the cash account of each entity that you identified in Requirement a.

 

 

problem 1 29 relating titles and accounts to financial statements required identify 1316152

Problem 1-29   Relating titles and accounts to financial statements

Required

Identify the financial statements on which each of the following items (titles, date descriptions, and accounts) appears by placing a check mark in the appropriate column. If an item appears on more than one statement, place a check mark in every applicable column.

 

 

 

 

Item

 

Income Statement

Statement of Changes in Stockholders’  Equity

 

Balance Sheet

 

Statement of Cash Flows

Notes payable

 

 

 

 

Beginning  common stock

 

 

 

 

Service revenue

 

 

 

 

Utility expense

 

 

 

 

Cash from stock issue

 

 

 

 

Operating activities

 

 

 

 

For the period ended (date)

 

 

 

 

Net income

 

 

 

 

Investing activities

 

 

 

 

Net loss

 

 

 

 

Ending cash balance

 

 

 

 

Salary expense

 

 

 

 

Consulting revenue

 

 

 

 

Dividends

 

 

 

 

Financing activities

 

 

 

 

Ending common stock

 

 

 

 

Interest expense

 

 

 

 

As of (date)

 

 

 

 

Land

 

 

 

 

Beginning cash balance

 

 

 

 

 

 

 

problem 1 30 preparing financial statements for two complete accounting cycles webst 1316153

Problem 1-30      Preparing financial statements for two complete accounting cycles

Webster Consulting experienced the following transactions for 2012, its first year of operations, and 2013. Assume that all transactions involve the receipt or payment of cash.

Transactions for 2012

1.     Acquired $20,000 by issuing common stock.

2.     Received $35,000 cash for providing services to customers.

3.     Borrowed $25,000 cash from creditors.

4.     Paid expenses amounting to $22,000.

5.     Purchased land for $30,000 cash.

 

Transactions for 2013

Beginning account balances for 2013 are:

 

 

Cash

$28,000

Land

30,000

Notes payable

25,000

Common stock

20,000

Retained  earnings

13,000

 

1.     Acquired an additional $24,000 from the issue of common stock.

2.     Received $95,000 for providing services.

3.     Paid $15,000 to creditors to reduce loan.

4.     Paid expenses amounting to $71,500.

5.     Paid a $3,000 dividend to the stockholders.

6.     Determined that the market value of the land is $47,000.

 

Required

a.     Write an accounting equation, and record the effects of each accounting event under the appropriate headings for each year. Record the amounts of revenue, expense, and dividends in the Retained Earnings column. Provide appropriate titles for these accounts in the last column of the table.

b.     Prepare an income statement, statement of changes in stockholders’ equity, year-end bal- ance sheet, and statement of cash flows for each year.

c.     Determine the amount of cash that is in the retained earnings account at the end of 2012 and 2013.

d.     Examine the balance sheets for the two years. How did assets change from 2012 to 2013?

e.     Determine the balance in the Retained Earnings account immediately after Event 2 in 2012 and in 2013 are recorded.

 

 

problem 1 31 interrelationships among financial statements gofish enterprises starte 1316154

Problem 1-31      Interrelationships among financial statements

Gofish Enterprises started the 2012 accounting period with $50,000 of assets (all cash), $18,000 of liabilities, and $4,000 of  common stock. During the year, Gofish earned cash revenues of

$38,000, paid cash expenses of $32,000, and paid a cash dividend to stockholders of $2,000. Gofish also acquired $15,000 of  additional cash from the sale of  common stock and paid

$10,000 cash to reduce the liability owed to a bank.

 

Required

a.     Prepare an income statement, statement of changes in stockholders’ equity, period-end balance sheet, and statement of cash flows for the 2012 accounting period. (Hint: Determine the amount of beginning retained earnings before considering the effects of the current period events. It also might help to record all events under an accounting equation before preparing the statements.)

b.     Determine the percentage of total assets that were provided by creditors, investors, and retained earnings.

problem 1 32 classifying events as asset source use or exchange the following unrela 1316155

Problem 1-32   Classifying events as asset source, use, or exchange

The following unrelated events are typical of those experienced by business entities.

1.  Acquire cash by issuing common stock.

2.  Purchase land with cash.

3.  Purchase equipment with cash.

4.  Pay monthly rent on an office building.

5.  Hire a new office manager.

6.  Borrow cash from a bank.

7.  Pay a cash dividend to stockholders.

8.  Pay cash for operating expenses.

9.  Pay an office manager’s salary with cash.

10.  Receive cash for services that have been performed.

11.  Pay cash for utilities expense.

12.  Acquire land by accepting a liability (financing the purchase).

13.  Pay cash to purchase a new office building.

14.  Discuss plans for a new office building with an architect.

15.  Repay part of a bank loan.

Required

Identify each of the events as an asset source, use, or exchange transaction. If an event would not be recorded under generally accepted accounting principles, identify it as not applicable (NA). Also indicate for each event whether total assets would increase, decrease, or remain unchanged. Organize your answer according to the following table. The first event is shown in the table as an example.

 

Event No.

Type of Event

Effect on Total Assets

1

Asset source

Increase

 

problem 1 33 recording the effect of events in a horizontal statements model texas c 1316156

Problem 1-33   Recording the effect of events in a horizontal statements model

Texas Corporation experienced the following transactions during 2012.

1.     Paid a cash dividend to the stockholders.

2.     Acquired cash by issuing additional common stock.

3.     Signed a contract to perform services in the future.

4.     Performed services for cash.

5.     Paid cash expenses.

6.     Sold land for cash at an amount equal to its cost.

7.     Borrowed cash from a bank.

8.     Determined that the market value of the land is higher than its historical cost.

Required

Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases (I), decreases (D), or does not affect (NA) each element of the financial statements. Also, in the Cash Flows col- umn, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example.

 

	 Event No.		Balance Sheet 			Cash	1	Land	5	N. Pay	1	C. Stock.	1	Ret. Ear. 	1.		D	1	NA	5	NA	1	NA	1	D    Income Statement Rev.	2	Exp.	5	Net Inc. NA	2	NA	5	NA	 Statement of Cash Flows	 	D    FA

 

 

 

problem 1 34 recording events in a horizontal statements model cooley company was st 1316157

Problem 1-34      Recording events in a horizontal statements model

Cooley Company was started on January 1, 2012, and experienced the following events during its first year of operation.

1.     Acquired $30,000 cash from the issue of common stock.

2.     Borrowed $40,000 cash from National Bank.

3.     Earned cash revenues of $48,000 for performing services.

4.     Paid cash expenses of $45,000.

5.    Paid a $1,000 cash dividend to the stockholders.

6.     Acquired an additional $20,000 cash from the issue of common stock.

7.     Paid $10,000 cash to reduce the principal balance of the bank note.

8.     Paid $53,000 cash to purchase land.

9.     Determined that the market value of the land is $75,000.

 

Required

a.     Record the preceding transactions in the horizontal statements model. Also, in the Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first event is shown as an example.

 

 

 

 

 

 

Event No.

 

Balance Sheet

 

 

Rev.

NA

Income Statement

2      Exp.       5      Net Inc.

2       NA      5          NA

 

Statement of Cash Flows

 

Cash

1

Land

5

N. Pay

1

C. Stock.

1

Ret. Ear.

 

1.

30,000

1

NA

5

NA

1

30,000

1

NA

30,000

FA

 

 

 

b.     Determine the amount of total assets that Cooley would report on the December 31, 2012, balance sheet.

c.      Identify the asset source transactions and related amounts for 2012.

d.     Determine the net income that Cooley would report on the 2012 income statement. Explain why dividends do not appear on the income statement.

e.      Determine the net cash flows from operating activities, financing activities, and investing activities that Cooley would report on the 2012 statement of cash flows.

f.      Determine the percentage of assets that were provided by investors, creditors, and retained earnings.

g.      What is the balance in the Retained Earnings account immediately after Event 3 is recorded?

 

 

 

 

atc 1 1 business applications case understanding real world annual reports required 1316158

ATC 1-1     Business Applications Case    Understanding real-world annual reports

Required

Use the Target Corporation’s annual report in Appendix B to answer the following questions. Note that net income and net earnings are synonymous  terms.

a.     What was Target’s net income for 2009?

b.     Did Target’s net income increase or decrease from 2008 to 2009, and by how much?

c.     What was Target’s accounting equation for 2009?

d.     Which of the following had the largest percentage change from 2008 to 2009: net sales, cost of sales, or selling, general, and administrative expenses? Show all computations.

atc 1 3 research assignment finding real world accounting information this chapter i 1316160

ATC 1-3   Research Assignment   Finding real-world accounting information

This chapter introduced the basic four financial statements companies use annually to keep their stakeholders informed of their accomplishments and financial situation. Complete the requirements below using the most recent (20xx) financial statements available on the McDonald Corporation’s website. Obtain the statements on the Internet by following the steps below. (The formatting of the company’s website may have changed since these instructions were written.)

1.     Go to www.mcdonalds.com.

2.     Click on the “Corporate” link at the bottom of the page. (Most companies have a link titled “investors relations” that leads to their financial statements; McDonald’s uses “corporate” instead.)

3.     Click on the “INVESTORS” link at the top of the page.

 

4.     Click on “McDonald’s 20xx Annual Report” and then on “20xx Financial Report.”

5.     Go to the company’s financial statements that begin on page 45 of the annual report.

Required

a.     What was the company’s net income in each of the last 3 years?

b.     What amount of total assets did the company have at the end of the most recent year?

c.     How much retained earnings did the company have at the end of the most recent year?

d.     For the most recent year, what was the company’s cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities?