img:focus { margin: auto; } Unformatted Attachment Preview FINANCIAL ACCOUNTING PRINCIPLES Assessment 1 Practice Problems Worksheet The following practice problems are provided to help you prepare to complete the required exercises for Assessment 1. These problems are optional; please do not submit them for grading. You may use the answer key provided to check your answers to the practice problems. Practice Problems to Prepare for Exercise 1-1 Practice Problem 1 Using the accounting equation (Assets = Liabilities + Equity), determine the missing amounts in each row of the following table. Assets Liabilities Equity (1) a. ? $25,000 $70,000 (2) 86,000 19,000 b. ? (3) 129,000 c. ? 18,000 a. b. c. Practice Problem 2 Laura started an interior design business on April 21. The accounting equation showed the following balances after her company’s initial five transactions. Using the accounting equation, analyze and describe all five transactions, with their amounts. Transaction Cash Accounts Receivable Office Supplies Office Furniture Accounts Payable Common Stock Revenues (1) $15,000 $0 $0 $0 $0 $15,000 $0 (2) 14,500 0 1,250 0 750 15,000 0 (3) 12,000 0 1,250 2,500 750 15,000 0 (4) 12,000 2,000 1,250 2,500 750 15,000 2,000 (5) 12,500 2,000 1,250 2,500 750 15,000 2,500 1. 2. 3. 4. 5. 1 Practice Problem to Prepare for Exercise 1-2 George Harris runs a consulting firm named Innovative Engineering, which began operations on September 1. On September 31, the firm’s financial records show the following amounts for September. Cash ………………………………………….. Accounts receivable …………………….. Office supplies …………………………….. Land …………………………………………… Office equipment …………………………. Accounts payable ………………………… Common stock …………………………….. 1. $7,896 17,500 3,000 44,000 16,000 9,826 78,000 Dividends ……………………………………. Consulting fees earned …………………. Rent expense ………………………………. Salaries expense …………………………. Telephone expense ……………………… Miscellaneous expenses ……………….. $2,800 17,500 4,200 9,000 610 320 Prepare a September income statement for Innovative Engineering. INNOVATIVE ENGINEERING Income Statement For Month Ended September 31 [Create the income statement here.] 2. Prepare a September statement of retained earnings for Innovative Engineering. (Refer to your work in Part 1.) Note: On September 1, the owner invested $78,000 cash in the firm in exchange for common stock. INNOVATIVE ENGINEERING Statement of Retained Earnings For Month Ended September 31 [Create the statement of retained earnings here.] 3. Prepare a September 31 balance sheet for Innovative Engineering. (Refer to your work in Parts 1 and 2.) INNOVATIVE ENGINEERING Balance Sheet September 31 [Create the balance sheet here.] 2 Practice Problems to Prepare for Exercise 1-3 Practice Problem 1 The following table shows two end-of-year income statements for Marsden Enterprises. The left column shows unadjusted entries, and the right column shows the entries after adjustments were applied. Marsden Enterprises records cash receipts and payments associated with prepaid and unearned items in balance sheet accounts. Analyze the two income statements and prepare the eight adjusting entries that were likely recorded. Note: 35 percent of the $5,500 Fees Earned adjustment has been earned but not billed. The remaining 65 percent has been earned by performing services paid in advance. MARSDEN ENTERPRISES Income Statements For Year Ended December 31 Unadjusted Adjusted Revenues Fees earned …………………………………………………………………… Commissions earned ……………………………………………………….. Total revenues ………………………………………………………………… $26,000 45,000 71,000 $31,500 45,000 76,500 Expense Depreciation expense—Computers ……………………………………. Depreciation expense—Office furniture ………………………………. Salaries expense ……………………………………………………………… Insurance expense …………………………………………………………… Rent expense ………………………………………………………………….. Office supplies expense ……………………………………………………. Advertising expense …………………………………………………………. Utilities expense ………………………………………………………………. Total expenses ………………………………………………………………… 0 0 14,000 0 3,800 0 2,800 1,300 21,900 1,300 1,470 16,500 1,500 3,800 525 2,800 1,410 29,305 $49,100 $47,195 Net income [Enter the adjusting entries here.] 3 Practice Problem 2 Shown below is the adjusted trial balance for Hirschfield Transportation for 2012. Use this information to complete parts 1–3. Account Title Debit Cash ……………………………………………………………………………….. Accounts receivable ………………………………………………………….. Office supplies ………………………………………………………………….. Trucks……………………………………………………………………………… Accumulated depreciation—Trucks …………………………………….. Land ……………………………………………………………………………….. Accounts payable ……………………………………………………………… Interest payable ………………………………………………………………… Long-term notes payable …………………………………………………… Common stock …………………………………………………………………. Retained earnings …………………………………………………………….. Dividends …………………………………………………………………………. Trucking fees earned ………………………………………………………… Depreciation expense—Trucks …………………………………………… Salaries expense ………………………………………………………………. Office supplies expense …………………………………………………….. Repairs expense—Trucks ………………………………………………….. Totals ………………………………………………………………………………. $7,250 13,000 1,800 182,000 1. Credit $35,700 68,000 8,950 2,800 49,750 12,500 149,500 17,950 134,750 23,200 65,000 6,800 8,950 $393,950 $393,950 Prepare an income statement and statement of retained earnings. The retained earnings account balance is $149,500 at December 31, 2011. HIRSCHFIELD TRANSPORTATION Income Statement For Year Ended December 31, 2012 [Create the income statement here.] HIRSCHFIELD TRANSPORTATION Statement of Retained Earnings For Year Ended December 31, 2012 [Create in statement of retained earnings here.] 4 2. Prepare Hirschfield Transportation’s classified balance sheet as of December 31, 2012. HIRSCHFIELD TRANSPORTATION Balance Sheet December 31, 2012 [Create the balance sheet here.] 3. Compute and interpret the current ratio as of the balance sheet date (round the ratio to two decimals). Assume that a ratio of 1.5 is the industry average. Current assets Cash…………………………………………………………………………………. Accounts receivable ……………………………………………………………. Office supplies …………………………………………………………………… Total current assets ……………………………………………………………. $7,250 13,000 1,800 $22,050 Current liabilities Accounts payable ………………………………………………………………. Interest payable …………………………………………………………………. Total current liabilities …………………………………………………………. $8,950 2,800 $11,750 Current ratio: Interpretation: 5 FINANCIAL ACCOUNTING PRINCIPLES Assessment 1: Transaction Analysis and Financial Statements Worksheet Use this worksheet to complete the following three exercises for Assessment 1. Refer to the instructions in the course for submitting your assessment. Exercise 1-1 Key comparative figures ($ millions) for two companies, Alltech and SynergyXT, are presented in the following table. Key Figures Alltech SynergyXT Liabilities + owners’ equity …………….. $11,502 $48,823 Net income ………………………………….. 3,127 9,276 Sales ………………………………………….. 15,453 44,612 For this exercise, perform a comparative analysis of these two companies that answers the following five questions: 1. What is the total amount of assets invested in each company? Total assets = Liabilities + Equity Alltech: SynergyXT: 2. What is the return on assets for each company? Alltech’s beginning-year assets equal $8,101 (in millions) and SynergyXT’s beginning-year assets equal $36,171 (in millions). Revenues – Expenses = Net income Alltech: SynergyXT: 3. How much are expenses for each company? Revenues – Expenses = Net income Alltech: SynergyXT: 1 4. Is return on assets satisfactory for each company? Assume competitors average an 18 percent return. [Write your answer here.] 5. What can you conclude about Alltech and SynergyXT from these computations? [Write your answer here.] 2 Exercise 1-2 The accounting records of Newtown Distributors show the following assets and liabilities as of December 31, 2011, and 2012. December 31 2011 2012 Cash ……………………………………………… $49,800 $22,600 Accounts receivable ………………………… 27,340 25,960 Office supplies ………………………………… 3,850 3,120 Office equipment …………………………….. 127,000 139,800 Trucks ……………………………………………. 48,000 48,000 Building ………………………………………….. 0 195,000 Land ………………………………………………. 0 45,000 Accounts payable ……………………………. 6,950 37,500 Notes payable …………………………………. 0 105,000 Late in December 2012, the business purchased a small office building and the land for $240,000. $135,000 cash was applied to the purchase with a $105,000 note payable for the balance. In exchange for stock, the owner of the company invested $40,000 cash to make the cash payment of $135,000. The business also pays $2,800 cash per month for dividends. Use this information to complete the exercise beginning on page 4. 3 For this exercise, complete the following three tasks: 1. Prepare balance sheets for Newtown Distributors as of December 31, 2011, and 2012. Report only total equity, which equals the difference between assets and liabilities. NEWTOWN DISTRIBUTORS Balance Sheet December 31, 2011 [Create the 2011 balance sheet here.] 4 NEWTOWN DISTRIBUTORS Balance Sheet December 31, 2012 [Create the 2012 balance sheet here.] 5 2. Compare the equity amounts and use the additional information provided in this problem to calculate the net income Newtown Distributors earned in 2012. [Show the computation of 2012 net income here.] 3. Compute the 2012 year-end debt ratio for the business. Debt Ratio = 6 Exercise 1-3 Use the following information and the table on page 8 to complete the exercise beginning on page 9. Digital Learning, Inc. provides computer training to individuals and to off-site groups. Tuition is paid directly to the school. The school’s unadjusted trial balance for the year ending December 31, 2012, is shown in the table below. Digital Learning, Inc. initially records their prepaid expenses and unearned revenues in balance sheet accounts. Adjusting entries must be made on December 31 for each of the following items (1–8). 1. A review of the school’s insurance policies found that $2,800 of coverage has expired. 2. A 2012 year-end inventory shows available teaching supplies costing $2,450 remaining in stock. 3. The annual depreciation on the school’s equipment is $11,000. 4. The annual depreciation on the school’s professional library is $6,250. 5. At the request of a client, the school conducted a special six-month course, starting November 1. The school charged the client a monthly fee of $1,800. The first five months were paid in advance. Upon receipt of the cash payment, the school credited the Unearned Training Fees account. The school will record the sixth month’s fee upon collection in 2013. 6. The school conducted a four-month course for one student, starting October 15, for a monthly fee of $2,500, payable upon course completion. As of December 31, no payments have been received. Accruals are applied to the nearest halfmonth. 7. The school pays its three employees weekly. As of December 31, two days’ salaries have accrued for each employee at a daily rate of $125. 8. The Prepaid Rent account balance represents December’s rent. 7 DIGITAL LEARNING, INC. Unadjusted Trial Balance December 31, 2012 Debit Cash Account receivable Credit $24,500 0 Teaching supplies 8,000 Prepaid insurance 16,000 Prepaid rent Professional library 2,200 28,000 Accumulated depreciation—Professional library Equipment $8,500 68,000 Accumulated depreciation—Equipment 16,500 Accounts payable 35,100 Salaries payable 0 Unearned training fees 10,500 Common stock 11,000 Retained earnings 52,900 Dividends 42,000 Tuition fees earned 103,900 Training fees earned 38,500 Depreciation expense—Professional library 0 Depreciation expense—Equipment 0 Salaries expense Insurance expense Rent expense Teaching supplies expense 52,000 0 24,800 0 Advertising expense 6,000 Utilities expense 5,400 _ $276,900 $276,900 Totals 8 For this exercise, complete the following four tasks: 1. Prepare T-accounts for Digital Learning, Inc. Use balances from the unadjusted trial balance. Cash Unadj. Bal. Equipment 24,500 Unadj. Bal. Accumulated Depreciation —Equipment Accounts Receivable Unadj. Bal. 68,000 0 Unadj. Bal. 16,500 Adj. Bal. Teaching Supplies Unadj. Bal. Accounts Payable 8,000 Unadj. Bal. 35,100 Salaries Payable Unadj. Bal. 0 Prepaid Insurance Unadj. Bal. 16,000 Adj. Bal. Unearned Training Fees Unadj. Bal. 10,500 Prepaid Rent Unadj. Bal. Adj. Bal. 2,200 Adj. Bal. 0 Common Stock Unadj. Bal. 11,000 Professional Library Unadj. Bal. Retained Earnings 28,000 Unadj. Bal. Accumulated Depreciation —Professional Library Unadj. Bal. 52,900 Dividends 8,500 Unadj. Bal. 42,000 Adj. Bal. 9 Tuition Fees Earned Unadj. Bal. Rent Expense 103,900 Adj. Bal. Adj. Bal. Teaching Supplies Expense 38,500 Unadj. Bal. 0 0 Adj. Bal. Depreciation Expense —Professional Library Unadj. Bal. 24,800 Adj. Bal. Training Fees Earned Unadj. Bal. Unadj. Bal. Advertising Expense Unadj. Bal. 6,000 Adj. Bal. Depreciation Expense —Equipment Unadj. Bal. 0 Utilities Expense Unadj. Bal. 5,400 Adj. Bal. Salaries Expense Unadj. Bal. 52,000 Adj. Bal. Insurance Expense Unadj. Bal. 0 Adj. Bal. 10 2. Prepare the adjusting journal entries for items 1–8 and post them to the T-accounts. Adjustment (1): Adjustment (2): Adjustment (3): Adjustment (4): Adjustment (5): Adjustment (6): Adjustment (7): Adjustment (8): 11 3. Update the T-accounts balances for the adjusting entries, and prepare an adjusted trial balance. DIGITAL LEARNING, INC. Adjusted Trial Balance December 31, 2012 Debit Credit [Create the adjusted trial balance here.] 12 4. Prepare Digital Learning’s income statement and statement of retained earnings for 2012. Prepare a balance sheet as of December 31, 2012. DIGITAL LEARNING, INC. Income Statement For Year Ended December 31, 2012 [Create the income statement here.] 13 DIGITAL LEARNING, INC. Statement of Retained Earnings For Year Ended December 31, 2012 [Create the statement of retained earnings here.] 14 DIGITAL LEARNING, INC. Balance Sheet December 31, 2012 [Create the balance sheet here.] 15 Purchase answer to see full attachment Tags: management style business management Financial Statements t accounts Trial Balance User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.

June 1, 2023/in Samples /by online_admin

Description

Complete three accounting exercises related to transaction analysis and financial statements using a provided worksheet.
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

This assessment consists of three accounting exercises. The exercises are provided in the Transaction Analysis and Financial Statements Worksheet, linked in the Resources under the Required Resources heading. Use this worksheet to record and submit your solutions for Exercises 1-1, 1-2, and 1-3.Competency 1: Analyze the relationship between business events and accounting.

Comparatively analyze two companies, including asset investments, return on assets, and company expenses.
Analyze company equity, including correct net income and debt ratio calculations.

Competency 2: Apply accounting principles as the language of business.

Prepare T-accounts, adjusting journal entries, and an adjusted trial balance.

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FINANCIAL ACCOUNTING PRINCIPLES
Assessment 1 Practice Problems Worksheet
The following practice problems are provided to help you prepare to complete the required
exercises for Assessment 1. These problems are optional; please do not submit them for
grading. You may use the answer key provided to check your answers to the practice problems.
Practice Problems to Prepare for Exercise 1-1
Practice Problem 1
Using the accounting equation (Assets = Liabilities + Equity), determine the missing amounts in
each row of the following table.
Assets
Liabilities
Equity
(1)
a. ?
$25,000
$70,000
(2)
86,000
19,000
b. ?
(3)
129,000
c. ?
18,000
a.
b.
c.
Practice Problem 2
Laura started an interior design business on April 21. The accounting equation showed the
following balances after her company’s initial five transactions. Using the accounting equation,
analyze and describe all five transactions, with their amounts.
Transaction
Cash
Accounts
Receivable
Office
Supplies
Office
Furniture
Accounts
Payable
Common
Stock
Revenues
(1)
$15,000
$0
$0
$0
$0
$15,000
$0
(2)
14,500
0
1,250
0
750
15,000
0
(3)
12,000
0
1,250
2,500
750
15,000
0
(4)
12,000
2,000
1,250
2,500
750
15,000
2,000
(5)
12,500
2,000
1,250
2,500
750
15,000
2,500
1.
2.
3.
4.
5.
1
Practice Problem to Prepare for Exercise 1-2
George Harris runs a consulting firm named Innovative Engineering, which began operations on
September 1. On September 31, the firm’s financial records show the following amounts for
September.
Cash …………………………………………..
Accounts receivable ……………………..
Office supplies ……………………………..
Land ……………………………………………
Office equipment ………………………….
Accounts payable …………………………
Common stock ……………………………..
1.
$7,896
17,500
3,000
44,000
16,000
9,826
78,000
Dividends …………………………………….
Consulting fees earned ………………….
Rent expense ……………………………….
Salaries expense ………………………….
Telephone expense ………………………
Miscellaneous expenses ………………..
$2,800
17,500
4,200
9,000
610
320
Prepare a September income statement for Innovative Engineering.
INNOVATIVE ENGINEERING
Income Statement
For Month Ended September 31
[Create the income statement here.]
2.
Prepare a September statement of retained earnings for Innovative Engineering. (Refer to
your work in Part 1.)
Note: On September 1, the owner invested $78,000 cash in the firm in exchange for
common stock.
INNOVATIVE ENGINEERING
Statement of Retained Earnings
For Month Ended September 31
[Create the statement of retained earnings here.]
3.
Prepare a September 31 balance sheet for Innovative Engineering. (Refer to your work in
Parts 1 and 2.)
INNOVATIVE ENGINEERING
Balance Sheet
September 31
[Create the balance sheet here.]
2
Practice Problems to Prepare for Exercise 1-3
Practice Problem 1
The following table shows two end-of-year income statements for Marsden Enterprises. The left
column shows unadjusted entries, and the right column shows the entries after adjustments
were applied. Marsden Enterprises records cash receipts and payments associated with prepaid
and unearned items in balance sheet accounts. Analyze the two income statements and
prepare the eight adjusting entries that were likely recorded.
Note: 35 percent of the $5,500 Fees Earned adjustment has been earned but not billed. The
remaining 65 percent has been earned by performing services paid in advance.
MARSDEN ENTERPRISES
Income Statements
For Year Ended December 31
Unadjusted
Adjusted
Revenues
Fees earned ……………………………………………………………………
Commissions earned ………………………………………………………..
Total revenues …………………………………………………………………
$26,000
45,000
71,000
$31,500
45,000
76,500
Expense
Depreciation expense—Computers …………………………………….
Depreciation expense—Office furniture ……………………………….
Salaries expense ………………………………………………………………
Insurance expense ……………………………………………………………
Rent expense …………………………………………………………………..
Office supplies expense …………………………………………………….
Advertising expense ………………………………………………………….
Utilities expense ……………………………………………………………….
Total expenses …………………………………………………………………
0
0
14,000
0
3,800
0
2,800
1,300
21,900
1,300
1,470
16,500
1,500
3,800
525
2,800
1,410
29,305
$49,100
$47,195
Net income
[Enter the adjusting entries here.]
3
Practice Problem 2
Shown below is the adjusted trial balance for Hirschfield Transportation for 2012. Use this
information to complete parts 1–3.
Account Title
Debit
Cash ………………………………………………………………………………..
Accounts receivable …………………………………………………………..
Office supplies …………………………………………………………………..
Trucks………………………………………………………………………………
Accumulated depreciation—Trucks ……………………………………..
Land ………………………………………………………………………………..
Accounts payable ………………………………………………………………
Interest payable …………………………………………………………………
Long-term notes payable ……………………………………………………
Common stock ………………………………………………………………….
Retained earnings ……………………………………………………………..
Dividends ………………………………………………………………………….
Trucking fees earned …………………………………………………………
Depreciation expense—Trucks ……………………………………………
Salaries expense ……………………………………………………………….
Office supplies expense ……………………………………………………..
Repairs expense—Trucks …………………………………………………..
Totals ……………………………………………………………………………….
$7,250
13,000
1,800
182,000
1.
Credit
$35,700
68,000
8,950
2,800
49,750
12,500
149,500
17,950
134,750
23,200
65,000
6,800
8,950
$393,950
______
$393,950
Prepare an income statement and statement of retained earnings. The retained earnings
account balance is $149,500 at December 31, 2011.
HIRSCHFIELD TRANSPORTATION
Income Statement
For Year Ended December 31, 2012
[Create the income statement here.]
HIRSCHFIELD TRANSPORTATION
Statement of Retained Earnings
For Year Ended December 31, 2012
[Create in statement of retained earnings here.]
4
2.
Prepare Hirschfield Transportation’s classified balance sheet as of December 31, 2012.
HIRSCHFIELD TRANSPORTATION
Balance Sheet
December 31, 2012
[Create the balance sheet here.]
3.
Compute and interpret the current ratio as of the balance sheet date (round the ratio to two
decimals). Assume that a ratio of 1.5 is the industry average.
Current assets
Cash………………………………………………………………………………….
Accounts receivable …………………………………………………………….
Office supplies ……………………………………………………………………
Total current assets …………………………………………………………….
$7,250
13,000
1,800
$22,050
Current liabilities
Accounts payable ……………………………………………………………….
Interest payable ………………………………………………………………….
Total current liabilities ………………………………………………………….
$8,950
2,800
$11,750
Current ratio:
Interpretation:
5
FINANCIAL ACCOUNTING PRINCIPLES
Assessment 1: Transaction Analysis and Financial Statements Worksheet
Use this worksheet to complete the following three exercises for Assessment 1. Refer to
the instructions in the course for submitting your assessment.
Exercise 1-1
Key comparative figures ($ millions) for two companies, Alltech and SynergyXT, are presented
in the following table.
Key Figures
Alltech
SynergyXT
Liabilities + owners’ equity …………….. $11,502
$48,823
Net income …………………………………..
3,127
9,276
Sales …………………………………………..
15,453
44,612
For this exercise, perform a comparative analysis of these two companies that answers the
following five questions:
1.
What is the total amount of assets invested in each company?
Total assets = Liabilities + Equity
Alltech:
SynergyXT:
2.
What is the return on assets for each company? Alltech’s beginning-year assets equal
$8,101 (in millions) and SynergyXT’s beginning-year assets equal $36,171 (in millions).
Revenues – Expenses = Net income
Alltech:
SynergyXT:
3.
How much are expenses for each company?
Revenues – Expenses = Net income
Alltech:
SynergyXT:
1
4.
Is return on assets satisfactory for each company? Assume competitors average an 18
percent return.
[Write your answer here.]
5.
What can you conclude about Alltech and SynergyXT from these computations?
[Write your answer here.]
2
Exercise 1-2
The accounting records of Newtown Distributors show the following assets and liabilities as of
December 31, 2011, and 2012.
December 31
2011
2012
Cash ………………………………………………
$49,800
$22,600
Accounts receivable …………………………
27,340
25,960
Office supplies …………………………………
3,850
3,120
Office equipment ……………………………..
127,000
139,800
Trucks …………………………………………….
48,000
48,000
Building …………………………………………..
0
195,000
Land ……………………………………………….
0
45,000
Accounts payable …………………………….
6,950
37,500
Notes payable ………………………………….
0
105,000
Late in December 2012, the business purchased a small office building and the land for
$240,000. $135,000 cash was applied to the purchase with a $105,000 note payable for the
balance. In exchange for stock, the owner of the company invested $40,000 cash to make the
cash payment of $135,000. The business also pays $2,800 cash per month for dividends.
Use this information to complete the exercise beginning on page 4.
3
For this exercise, complete the following three tasks:
1.
Prepare balance sheets for Newtown Distributors as of December 31, 2011, and 2012.
Report only total equity, which equals the difference between assets and liabilities.
NEWTOWN DISTRIBUTORS
Balance Sheet
December 31, 2011
[Create the 2011 balance sheet here.]
4
NEWTOWN DISTRIBUTORS
Balance Sheet
December 31, 2012
[Create the 2012 balance sheet here.]
5
2.
Compare the equity amounts and use the additional information provided in this problem to
calculate the net income Newtown Distributors earned in 2012.
[Show the computation of 2012 net income here.]
3.
Compute the 2012 year-end debt ratio for the business.
Debt Ratio =
6
Exercise 1-3
Use the following information and the table on page 8 to complete the exercise beginning on
page 9.
Digital Learning, Inc. provides computer training to individuals and to off-site groups. Tuition is
paid directly to the school. The school’s unadjusted trial balance for the year ending December
31, 2012, is shown in the table below. Digital Learning, Inc. initially records their prepaid
expenses and unearned revenues in balance sheet accounts. Adjusting entries must be made
on December 31 for each of the following items (1–8).
1. A review of the school’s insurance policies found that $2,800 of coverage has
expired.
2. A 2012 year-end inventory shows available teaching supplies costing $2,450
remaining in stock.
3. The annual depreciation on the school’s equipment is $11,000.
4. The annual depreciation on the school’s professional library is $6,250.
5. At the request of a client, the school conducted a special six-month course,
starting November 1. The school charged the client a monthly fee of $1,800. The
first five months were paid in advance. Upon receipt of the cash payment, the
school credited the Unearned Training Fees account. The school will record the
sixth month’s fee upon collection in 2013.
6. The school conducted a four-month course for one student, starting October 15,
for a monthly fee of $2,500, payable upon course completion. As of December
31, no payments have been received. Accruals are applied to the nearest halfmonth.
7. The school pays its three employees weekly. As of December 31, two days’
salaries have accrued for each employee at a daily rate of $125.
8. The Prepaid Rent account balance represents December’s rent.
7
DIGITAL LEARNING, INC.
Unadjusted Trial Balance
December 31, 2012
Debit
Cash
Account receivable
Credit
$24,500
0
Teaching supplies
8,000
Prepaid insurance
16,000
Prepaid rent
Professional library
2,200
28,000
Accumulated depreciation—Professional library
Equipment
$8,500
68,000
Accumulated depreciation—Equipment
16,500
Accounts payable
35,100
Salaries payable
0
Unearned training fees
10,500
Common stock
11,000
Retained earnings
52,900
Dividends
42,000
Tuition fees earned
103,900
Training fees earned
38,500
Depreciation expense—Professional library
0
Depreciation expense—Equipment
0
Salaries expense
Insurance expense
Rent expense
Teaching supplies expense
52,000
0
24,800
0
Advertising expense
6,000
Utilities expense
5,400
_______
$276,900
$276,900
Totals
8
For this exercise, complete the following four tasks:
1.
Prepare T-accounts for Digital Learning, Inc. Use balances from the unadjusted trial
balance.
Cash
Unadj. Bal.
Equipment
24,500
Unadj. Bal.
Accumulated Depreciation
—Equipment
Accounts Receivable
Unadj. Bal.
68,000
0
Unadj. Bal.
16,500
Adj. Bal.
Teaching Supplies
Unadj. Bal.
Accounts Payable
8,000
Unadj. Bal.
35,100
Salaries Payable
Unadj. Bal.
0
Prepaid Insurance
Unadj. Bal.
16,000
Adj. Bal.
Unearned Training Fees
Unadj. Bal.
10,500
Prepaid Rent
Unadj. Bal.
Adj. Bal.
2,200
Adj. Bal.
0
Common Stock
Unadj. Bal.
11,000
Professional Library
Unadj. Bal.
Retained Earnings
28,000
Unadj. Bal.
Accumulated Depreciation
—Professional Library
Unadj. Bal.
52,900
Dividends
8,500
Unadj. Bal.
42,000
Adj. Bal.
9
Tuition Fees Earned
Unadj. Bal.
Rent Expense
103,900
Adj. Bal.
Adj. Bal.
Teaching Supplies Expense
38,500
Unadj. Bal.
0
0
Adj. Bal.
Depreciation Expense
—Professional Library
Unadj. Bal.
24,800
Adj. Bal.
Training Fees Earned
Unadj. Bal.
Unadj. Bal.
Advertising Expense
Unadj. Bal.
6,000
Adj. Bal.
Depreciation Expense
—Equipment
Unadj. Bal.
0
Utilities Expense
Unadj. Bal.
5,400
Adj. Bal.
Salaries Expense
Unadj. Bal.
52,000
Adj. Bal.
Insurance Expense
Unadj. Bal.
0
Adj. Bal.
10
2.
Prepare the adjusting journal entries for items 1–8 and post them to the T-accounts.
Adjustment (1):
Adjustment (2):
Adjustment (3):
Adjustment (4):
Adjustment (5):
Adjustment (6):
Adjustment (7):
Adjustment (8):
11
3.
Update the T-accounts balances for the adjusting entries, and prepare an adjusted trial
balance.
DIGITAL LEARNING, INC.
Adjusted Trial Balance
December 31, 2012
Debit
Credit
[Create the adjusted trial balance here.]
12
4.
Prepare Digital Learning’s income statement and statement of retained earnings for 2012.
Prepare a balance sheet as of December 31, 2012.
DIGITAL LEARNING, INC.
Income Statement
For Year Ended December 31, 2012
[Create the income statement here.]
13
DIGITAL LEARNING, INC.
Statement of Retained Earnings
For Year Ended December 31, 2012
[Create the statement of retained earnings here.]
14
DIGITAL LEARNING, INC.
Balance Sheet
December 31, 2012
[Create the balance sheet here.]
15

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https://www.onlinefreelancersnetwork.com/wp-content/uploads/2020/08/logoOFN.png 0 0 online_admin https://www.onlinefreelancersnetwork.com/wp-content/uploads/2020/08/logoOFN.png online_admin2023-06-01 03:43:392023-06-01 03:43:39Description Complete three accounting exercises related to transaction analysis and financial statements using a provided worksheet. By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria: This assessment consists of three accounting exercises. The exercises are provided in the Transaction Analysis and Financial Statements Worksheet, linked in the Resources under the Required Resources heading. Use this worksheet to record and submit your solutions for Exercises 1-1, 1-2, and 1-3.Competency 1: Analyze the relationship between business events and accounting. Comparatively analyze two companies, including asset investments, return on assets, and company expenses. Analyze company equity, including correct net income and debt ratio calculations. Competency 2: Apply accounting principles as the language of business. Prepare T-accounts, adjusting journal entries, and an adjusted trial balance. 2 attachmentsSlide 1 of 2attachment_1attachment_1attachment_2attachment_2.slider-slide > img { width: 100%; display: block; } .slider-slide > img:focus { margin: auto; } Unformatted Attachment Preview FINANCIAL ACCOUNTING PRINCIPLES Assessment 1 Practice Problems Worksheet The following practice problems are provided to help you prepare to complete the required exercises for Assessment 1. These problems are optional; please do not submit them for grading. You may use the answer key provided to check your answers to the practice problems. Practice Problems to Prepare for Exercise 1-1 Practice Problem 1 Using the accounting equation (Assets = Liabilities + Equity), determine the missing amounts in each row of the following table. Assets Liabilities Equity (1) a. ? $25,000 $70,000 (2) 86,000 19,000 b. ? (3) 129,000 c. ? 18,000 a. b. c. Practice Problem 2 Laura started an interior design business on April 21. The accounting equation showed the following balances after her company’s initial five transactions. Using the accounting equation, analyze and describe all five transactions, with their amounts. Transaction Cash Accounts Receivable Office Supplies Office Furniture Accounts Payable Common Stock Revenues (1) $15,000 $0 $0 $0 $0 $15,000 $0 (2) 14,500 0 1,250 0 750 15,000 0 (3) 12,000 0 1,250 2,500 750 15,000 0 (4) 12,000 2,000 1,250 2,500 750 15,000 2,000 (5) 12,500 2,000 1,250 2,500 750 15,000 2,500 1. 2. 3. 4. 5. 1 Practice Problem to Prepare for Exercise 1-2 George Harris runs a consulting firm named Innovative Engineering, which began operations on September 1. On September 31, the firm’s financial records show the following amounts for September. Cash .................................................. Accounts receivable .......................... Office supplies ................................... Land ................................................... Office equipment ............................... Accounts payable .............................. Common stock ................................... 1. $7,896 17,500 3,000 44,000 16,000 9,826 78,000 Dividends ........................................... Consulting fees earned ...................... Rent expense ..................................... Salaries expense ............................... Telephone expense ........................... Miscellaneous expenses .................... $2,800 17,500 4,200 9,000 610 320 Prepare a September income statement for Innovative Engineering. INNOVATIVE ENGINEERING Income Statement For Month Ended September 31 [Create the income statement here.] 2. Prepare a September statement of retained earnings for Innovative Engineering. (Refer to your work in Part 1.) Note: On September 1, the owner invested $78,000 cash in the firm in exchange for common stock. INNOVATIVE ENGINEERING Statement of Retained Earnings For Month Ended September 31 [Create the statement of retained earnings here.] 3. Prepare a September 31 balance sheet for Innovative Engineering. (Refer to your work in Parts 1 and 2.) INNOVATIVE ENGINEERING Balance Sheet September 31 [Create the balance sheet here.] 2 Practice Problems to Prepare for Exercise 1-3 Practice Problem 1 The following table shows two end-of-year income statements for Marsden Enterprises. The left column shows unadjusted entries, and the right column shows the entries after adjustments were applied. Marsden Enterprises records cash receipts and payments associated with prepaid and unearned items in balance sheet accounts. Analyze the two income statements and prepare the eight adjusting entries that were likely recorded. Note: 35 percent of the $5,500 Fees Earned adjustment has been earned but not billed. The remaining 65 percent has been earned by performing services paid in advance. MARSDEN ENTERPRISES Income Statements For Year Ended December 31 Unadjusted Adjusted Revenues Fees earned .............................................................................. Commissions earned ................................................................. Total revenues ........................................................................... $26,000 45,000 71,000 $31,500 45,000 76,500 Expense Depreciation expense—Computers ........................................... Depreciation expense—Office furniture ..................................... Salaries expense ........................................................................ Insurance expense ..................................................................... Rent expense ............................................................................. Office supplies expense ............................................................. Advertising expense ................................................................... Utilities expense ......................................................................... Total expenses ........................................................................... 0 0 14,000 0 3,800 0 2,800 1,300 21,900 1,300 1,470 16,500 1,500 3,800 525 2,800 1,410 29,305 $49,100 $47,195 Net income [Enter the adjusting entries here.] 3 Practice Problem 2 Shown below is the adjusted trial balance for Hirschfield Transportation for 2012. Use this information to complete parts 1–3. Account Title Debit Cash ............................................................................................ Accounts receivable .................................................................... Office supplies ............................................................................. Trucks.......................................................................................... Accumulated depreciation—Trucks ............................................ Land ............................................................................................ Accounts payable ........................................................................ Interest payable ........................................................................... Long-term notes payable ............................................................ Common stock ............................................................................ Retained earnings ....................................................................... Dividends ..................................................................................... Trucking fees earned .................................................................. Depreciation expense—Trucks ................................................... Salaries expense ......................................................................... Office supplies expense .............................................................. Repairs expense—Trucks ........................................................... Totals ........................................................................................... $7,250 13,000 1,800 182,000 1. Credit $35,700 68,000 8,950 2,800 49,750 12,500 149,500 17,950 134,750 23,200 65,000 6,800 8,950 $393,950 ______ $393,950 Prepare an income statement and statement of retained earnings. The retained earnings account balance is $149,500 at December 31, 2011. HIRSCHFIELD TRANSPORTATION Income Statement For Year Ended December 31, 2012 [Create the income statement here.] HIRSCHFIELD TRANSPORTATION Statement of Retained Earnings For Year Ended December 31, 2012 [Create in statement of retained earnings here.] 4 2. Prepare Hirschfield Transportation’s classified balance sheet as of December 31, 2012. HIRSCHFIELD TRANSPORTATION Balance Sheet December 31, 2012 [Create the balance sheet here.] 3. Compute and interpret the current ratio as of the balance sheet date (round the ratio to two decimals). Assume that a ratio of 1.5 is the industry average. Current assets Cash.............................................................................................. Accounts receivable ...................................................................... Office supplies .............................................................................. Total current assets ...................................................................... $7,250 13,000 1,800 $22,050 Current liabilities Accounts payable ......................................................................... Interest payable ............................................................................ Total current liabilities ................................................................... $8,950 2,800 $11,750 Current ratio: Interpretation: 5 FINANCIAL ACCOUNTING PRINCIPLES Assessment 1: Transaction Analysis and Financial Statements Worksheet Use this worksheet to complete the following three exercises for Assessment 1. Refer to the instructions in the course for submitting your assessment. Exercise 1-1 Key comparative figures ($ millions) for two companies, Alltech and SynergyXT, are presented in the following table. Key Figures Alltech SynergyXT Liabilities + owners’ equity ................. $11,502 $48,823 Net income ......................................... 3,127 9,276 Sales .................................................. 15,453 44,612 For this exercise, perform a comparative analysis of these two companies that answers the following five questions: 1. What is the total amount of assets invested in each company? Total assets = Liabilities + Equity Alltech: SynergyXT: 2. What is the return on assets for each company? Alltech’s beginning-year assets equal $8,101 (in millions) and SynergyXT’s beginning-year assets equal $36,171 (in millions). Revenues – Expenses = Net income Alltech: SynergyXT: 3. How much are expenses for each company? Revenues – Expenses = Net income Alltech: SynergyXT: 1 4. Is return on assets satisfactory for each company? Assume competitors average an 18 percent return. [Write your answer here.] 5. What can you conclude about Alltech and SynergyXT from these computations? [Write your answer here.] 2 Exercise 1-2 The accounting records of Newtown Distributors show the following assets and liabilities as of December 31, 2011, and 2012. December 31 2011 2012 Cash ...................................................... $49,800 $22,600 Accounts receivable .............................. 27,340 25,960 Office supplies ....................................... 3,850 3,120 Office equipment ................................... 127,000 139,800 Trucks .................................................... 48,000 48,000 Building .................................................. 0 195,000 Land ....................................................... 0 45,000 Accounts payable .................................. 6,950 37,500 Notes payable ........................................ 0 105,000 Late in December 2012, the business purchased a small office building and the land for $240,000. $135,000 cash was applied to the purchase with a $105,000 note payable for the balance. In exchange for stock, the owner of the company invested $40,000 cash to make the cash payment of $135,000. The business also pays $2,800 cash per month for dividends. Use this information to complete the exercise beginning on page 4. 3 For this exercise, complete the following three tasks: 1. Prepare balance sheets for Newtown Distributors as of December 31, 2011, and 2012. Report only total equity, which equals the difference between assets and liabilities. NEWTOWN DISTRIBUTORS Balance Sheet December 31, 2011 [Create the 2011 balance sheet here.] 4 NEWTOWN DISTRIBUTORS Balance Sheet December 31, 2012 [Create the 2012 balance sheet here.] 5 2. Compare the equity amounts and use the additional information provided in this problem to calculate the net income Newtown Distributors earned in 2012. [Show the computation of 2012 net income here.] 3. Compute the 2012 year-end debt ratio for the business. Debt Ratio = 6 Exercise 1-3 Use the following information and the table on page 8 to complete the exercise beginning on page 9. Digital Learning, Inc. provides computer training to individuals and to off-site groups. Tuition is paid directly to the school. The school’s unadjusted trial balance for the year ending December 31, 2012, is shown in the table below. Digital Learning, Inc. initially records their prepaid expenses and unearned revenues in balance sheet accounts. Adjusting entries must be made on December 31 for each of the following items (1–8). 1. A review of the school’s insurance policies found that $2,800 of coverage has expired. 2. A 2012 year-end inventory shows available teaching supplies costing $2,450 remaining in stock. 3. The annual depreciation on the school’s equipment is $11,000. 4. The annual depreciation on the school’s professional library is $6,250. 5. At the request of a client, the school conducted a special six-month course, starting November 1. The school charged the client a monthly fee of $1,800. The first five months were paid in advance. Upon receipt of the cash payment, the school credited the Unearned Training Fees account. The school will record the sixth month’s fee upon collection in 2013. 6. The school conducted a four-month course for one student, starting October 15, for a monthly fee of $2,500, payable upon course completion. As of December 31, no payments have been received. Accruals are applied to the nearest halfmonth. 7. The school pays its three employees weekly. As of December 31, two days’ salaries have accrued for each employee at a daily rate of $125. 8. The Prepaid Rent account balance represents December’s rent. 7 DIGITAL LEARNING, INC. Unadjusted Trial Balance December 31, 2012 Debit Cash Account receivable Credit $24,500 0 Teaching supplies 8,000 Prepaid insurance 16,000 Prepaid rent Professional library 2,200 28,000 Accumulated depreciation—Professional library Equipment $8,500 68,000 Accumulated depreciation—Equipment 16,500 Accounts payable 35,100 Salaries payable 0 Unearned training fees 10,500 Common stock 11,000 Retained earnings 52,900 Dividends 42,000 Tuition fees earned 103,900 Training fees earned 38,500 Depreciation expense—Professional library 0 Depreciation expense—Equipment 0 Salaries expense Insurance expense Rent expense Teaching supplies expense 52,000 0 24,800 0 Advertising expense 6,000 Utilities expense 5,400 _______ $276,900 $276,900 Totals 8 For this exercise, complete the following four tasks: 1. Prepare T-accounts for Digital Learning, Inc. Use balances from the unadjusted trial balance. Cash Unadj. Bal. Equipment 24,500 Unadj. Bal. Accumulated Depreciation —Equipment Accounts Receivable Unadj. Bal. 68,000 0 Unadj. Bal. 16,500 Adj. Bal. Teaching Supplies Unadj. Bal. Accounts Payable 8,000 Unadj. Bal. 35,100 Salaries Payable Unadj. Bal. 0 Prepaid Insurance Unadj. Bal. 16,000 Adj. Bal. Unearned Training Fees Unadj. Bal. 10,500 Prepaid Rent Unadj. Bal. Adj. Bal. 2,200 Adj. Bal. 0 Common Stock Unadj. Bal. 11,000 Professional Library Unadj. Bal. Retained Earnings 28,000 Unadj. Bal. Accumulated Depreciation —Professional Library Unadj. Bal. 52,900 Dividends 8,500 Unadj. Bal. 42,000 Adj. Bal. 9 Tuition Fees Earned Unadj. Bal. Rent Expense 103,900 Adj. Bal. Adj. Bal. Teaching Supplies Expense 38,500 Unadj. Bal. 0 0 Adj. Bal. Depreciation Expense —Professional Library Unadj. Bal. 24,800 Adj. Bal. Training Fees Earned Unadj. Bal. Unadj. Bal. Advertising Expense Unadj. Bal. 6,000 Adj. Bal. Depreciation Expense —Equipment Unadj. Bal. 0 Utilities Expense Unadj. Bal. 5,400 Adj. Bal. Salaries Expense Unadj. Bal. 52,000 Adj. Bal. Insurance Expense Unadj. Bal. 0 Adj. Bal. 10 2. Prepare the adjusting journal entries for items 1–8 and post them to the T-accounts. Adjustment (1): Adjustment (2): Adjustment (3): Adjustment (4): Adjustment (5): Adjustment (6): Adjustment (7): Adjustment (8): 11 3. Update the T-accounts balances for the adjusting entries, and prepare an adjusted trial balance. DIGITAL LEARNING, INC. Adjusted Trial Balance December 31, 2012 Debit Credit [Create the adjusted trial balance here.] 12 4. Prepare Digital Learning’s income statement and statement of retained earnings for 2012. Prepare a balance sheet as of December 31, 2012. DIGITAL LEARNING, INC. Income Statement For Year Ended December 31, 2012 [Create the income statement here.] 13 DIGITAL LEARNING, INC. Statement of Retained Earnings For Year Ended December 31, 2012 [Create the statement of retained earnings here.] 14 DIGITAL LEARNING, INC. Balance Sheet December 31, 2012 [Create the balance sheet here.] 15 Purchase answer to see full attachment Tags: management style business management Financial Statements t accounts Trial Balance User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

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