Current assets and current liabilities for Brimstone Company follow:

Current assets and current liabilities for Brimstone Company follow: 

                                       2018 | 2019

Current assets.    $1,586,250 | $1,210,000

Current liabilities.      705,000 | 550,000

a. Determine the working capital and current ratio for 2019 and 2018. 

b. Does the change in the current ratio from 2018 to 2019 indicate a favorable or an unfavorable change?

Answer:

a.

Current assets..................

Current liabilitites...............

Working capital..................

Current ratio.....................

2.25

($1,586,250 ÷ $705,000)

2.20

($1,210,000 ÷ $550,000)

b. The increase from 2.20 to 2.25 indicates a favorable change.

Current assets and current liabilities for HQ Properties Company follow:

Current assets and current liabilities for HQ Properties Company follow:

                                        2018 | 2019

Current assets       $2,175,000 | $1,900,000

Current liabilities.     1,500,000 | 1,250,000

a. Determine the working capital and current ratio for 2019 and 2018.

b. Does the change in the current ratio from 2018 to 2019 indicate a favorable or an unfavorable change?

Answer:

a.

Current assets...............

Current liabilitites.........

Working capital............

Current ratio..................

1,250,000

$ 650,000

1.52

($1,900,000 ÷ $1,250,000)

b. The decrease from 1.52 to 1.45 indicates an unfavorable change.

From the following list of steps in the accounting cycle, identify what two steps are missing:

From the following list of steps in the accounting cycle, identify what two steps are missing:

a. Transactions are analyzed and recorded in the journal.

b. Transactions are posted to the ledger.

c. An unadjusted trial balance is prepared.

d. An optional end-of-period spreadsheet is prepared.

e. Adjusting entries are journalized and posted to the ledger.

f. An adjusted trial balance is prepared.

g. Financial statements are prepared.

h. A post-closing trial balance is prepared.

Answer:

The following two steps are missing: (1) assembling and analyzing adjustment data and (2) journalizing and posting the closing entries. The adjustment data should be assembled and analyzed after step (c). The closing entries should be journalized and posted to the ledger after step (g).

After the accounts have been adjusted at April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.:

After the accounts have been adjusted at April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.:

Felix Godwin, Capital $643,600

Felix Godwin, Drawing 10,500

Fees Earned 356,500

Wages Expense 283,100

Rent Expense 56,000

Supplies Expense 11,500

Miscellaneous Expense 13,000

Journalize the two entries required to close the accounts.

Answer:

Closing Entries

Apr. 30 Felix Godwin, Capital 7,100 Fees Earned 356,500 Wages Expense 283,100 Rent Expense 56,000 Supplies Expense 11,500 Miscellaneous Expense 13,000 30 Felix Godwin, Capital 10,500 Felix Godwin, Drawing 10,500

From the following list of steps in the accounting cycle, identify what two steps are missing:

From the following list of steps in the accounting cycle, identify what two steps are missing:

a. Transactions are analyzed and recorded in the journal.

b. An unadjusted trial balance is prepared.

c. Adjustment data are assembled and analyzed.

d. An optional end-of-period spreadsheet is prepared.

e. Adjusting entries are journalized and posted to the ledger.

f. An adjusted trial balance is prepared.

g. Closing entries are journalized and posted to the ledger.

h. A post-closing trial balance is prepared.

Answer:

The following two steps are missing: (1) posting the transactions to the ledger and (2) preparing the financial statements. Transactions should be postedto the ledger after step (a). The financial statements should be prepared after step (f).

After the accounts have been adjusted at December 31, the end of the fiscal year, the following balances were taken from the ledger of Pioneer Delivery Services Co

After the accounts have been adjusted at December 31, the end of the fiscal year, the following balances were taken from the ledger of Pioneer Delivery Services Co.:

Kerry Buckner, Capital $9,556,300

Kerry Buckner, Drawing 80,000

Fees Earned 1,878,400

Wages Expense 1,415,500

Rent Expense 125,000

Supplies Expense 30,600

Miscellaneous Expense 22,100

Journalize the two entries required to close the accounts.

Answer:

Closing Entries Dec. 31 Fees Earned 1,878,400 Wages Expense 1,415,500 Rent Expense 125,000 Supplies Expense 30,600 Miscellaneous Expense 22,100 Kerry Buckner, Capital 285,200 31 Kerry Buckner, Capital 80,000 Kerry Buckner, Drawing 80,000

The following accounts appear in an adjusted trial balance of Waterloo Consulting. Indicate whether each account would be reported

The following accounts appear in an adjusted trial balance of Waterloo Consulting. Indicate whether each account would be reported in the (a) current asset; (b) property, plant, and equipment; (c) current liability; (d) long-term liability; or (e) owner’s equity section of the December 31, 2018, balance sheet of Waterloo Consulting.

1. Building

2. Cindy Sue Delaney, Capital

3. Notes Payable (due in five years)

4. Prepaid Rent

5. Salaries Payable

6. Supplies

7. Taxes Payable

8. Unearned Service Fees

Answer:

1. Property, plant, and equipment (b)

2. Owner’s equity (e)

3. Long-term liability (d)

4. Current asset (a)

5. Current liability (c)

6. Current asset (a)

7. Current liability (c)

8. Current liability (c)

The following accounts appear in an adjusted trial balance of Kangaroo Consulting. Indicate whether each account would be reported

The following accounts appear in an adjusted trial balance of Kangaroo Consulting. Indicate whether each account would be reported in the (a) current asset; (b) property, plant, and equipment; (c) current liability; (d) long-term liability; or (e) owner’s equity section of the December 31, 2018, balance sheet of Kangaroo Consulting.

1. Accounts Payable

2. Accounts Receivable

3. Accumulated Depreciation—Building

4. Cash

5. Lea Gabel, Capital

6. Note Payable (due in ten years)

7. Supplies

8. Wages Payable

Answer:

1. Current liability (c)

2. Current asset (a)

3. Property, plant, and equipment (b)

4. Current asset (a)

5. Owner’s equity (e)

6. Long-term liability (d)

7. Current asset (a)

8. Current liability (c)

Blake Knudson owns and operates Grab Bag Delivery Services. On January 1, 2018, Blake Knudson, Capital had a balance of $918,000

Blake Knudson owns and operates Grab Bag Delivery Services. On January 1, 2018, Blake Knudson, Capital had a balance of $918,000. During the year, Blake made no additional investments and withdrew $15,000. For the year ended December 31, 2018, Grab Bag Delivery Services reported a net loss of $43,500. Prepare a statement of owner’s equity for the year ended December 31, 2018.

Answer:

GRAB BAG DELIVERY SERVICES

Statement of Owner’s Equity

For the Year Ended December 31, 2018

Blake Knudson, capital, January 1, 2018$918,000

Net loss$(43,500)

Withdrawals(15,000)

Decrease in owner’s equity(58,500)

Blake Knudson, capital, December 31, 2018$859,500

Marcie Davies owns and operates Gemini Advertising Services. On January 1, 2018, Marcie Davies, Capital had a balance of $618,500.

Marcie Davies owns and operates Gemini Advertising Services. On January 1, 2018, Marcie Davies, Capital had a balance of $618,500. During the year, Marcie invested an additional $40,000 and withdrew $15,000. For the year ended December 31, 2018, Gemini Advertising Services reported a net income of $92,330. Prepare a statement of owner’s equity for the year ended December 31, 2018.

Answer:

GEMINI ADVERTISING SERVICES

Statement of Owner’s Equity

For the Year Ended December 31, 2018

Marcie Davies, capital, January 1, 2018$618,500

Additional investment during 2018$ 40,000

Net income92,330

Withdrawals(15,000)

Increase in owner’s equity117,330

Marcie Davies, capital, December 31, 2018$735,830

The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet

The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, statement of owner’s equity, or balance sheet.

1. Accounts Payable

2. Depreciation Expense

3. Nat Hager, Capital (beginning of period)

4. Office Equipment

5. Rent Revenue

6. Supplies Expense

7. Unearned Rent 

8. Wages Payable

Answer:

1. Balance sheet

2. Income statement

3. Statement of owner’s equity

4. Balance sheet

5. Income statement

6. Income statement

7. Balance sheet

8. Balance sheet

The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet

The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, statement of owner’s equity, or balance sheet.

1. Accumulated Depreciation

2. Cash

3. Fees Earned

4. Insurance Expense

5. Prepaid Rent

6. Supplies

7. Tina Greer, Drawing

8. Wages Expense

Answer:

1. Balance sheet

2. Balance sheet

3. Income statement

4. Income statement

5. Balance sheet

6. Balance sheet

7. Statement of owner’s equity

8. Income statement