Question

1）ABC Company entered into the following transactions during
May, its first month of operations:

May 1:   ABC Company sold common stock to owners in the
         amount of $200,000.

May 1:   ABC Company paid $36,000 cash for office rent
         for May, June, and July.

May 3:   ABC Company purchased a parcel of land costing
         $60,000 by paying $25,000 in cash and agreeing
         to pay the remainder within sixty days.

May 9:   ABC Company provided $23,000 of services to a
         customer. The customer didn't pay any cash on
         May 9, but agreed to pay the balance due by the
         end of the month.

May 15:  ABC Company received and paid utility bills in
         the amount of $14,000.

May 18:  ABC Company sold the land purchased on May 3 for
         $79,000 cash.

May 21:  A customer paid $20,000 cash to ABC Company for
         services to be provided in June and July.

May 27:  The customer from May 9 paid the amount owed to
         ABC Company.

May 31:  ABC Company received a $9,000 bill for advertising
         done during May. No payment was made at this time.

The immediate effects on the balance sheet of the May 15
transaction would be:

assets = decrease; liabilities = no effect; equity = decrease

assets = decrease; liabilities = no effect; equity = no effect

assets = no effect; liabilities = increase; equity = decrease

assets = no effect; liabilities = no effect; equity = no effect

assets = decrease; liabilities = increase; equity = decrease

assets = decrease; liabilities = decrease; equity = no effect

assets = decrease; liabilities = increase; equity = no effect

2）Jay Corporation reported the following account balances

at December 31, 2023:

Interest Revenue          $48,000
Notes Payable             $55,000
Depreciation Expense      $10,000
Common Stock              $82,000
Wage Expense              $16,000
Equipment                 $27,000
Patent                    $51,000
Income Tax Expense        $12,000
Accounts Receivable       $58,000
Cost of Goods Sold        $63,000
Loss on Sale of Land      $18,000 
Retained Earnings         $75,000  (at January 1, 2023)
Trademark                 $13,000
Accumulated Depreciation  $15,000
Cash                      $39,000
Accounts Payable          $45,000
Inventory                 $69,000
Dividends                 $11,000
Sales Revenue             $96,000
Supplies                  $29,000

The total long term assets reported by Jay Corporation
at December 31, 2023 was equal to:

Group of answer choices

$76,000

$69,000

$105,000

$12,000

$91,000

$106,000

none of the above are correct

3）

Jay Corporation reported the following account balances
at December 31, 2023:

Interest Revenue          $48,000
Notes Payable             $55,000
Depreciation Expense      $10,000
Common Stock              $82,000
Wage Expense              $16,000
Equipment                 $27,000
Patent                    $51,000
Income Tax Expense        $12,000
Accounts Receivable       $58,000
Cost of Goods Sold        $63,000
Loss on Sale of Land      $18,000 
Retained Earnings         $75,000  (at January 1, 2023)
Trademark                 $13,000
Accumulated Depreciation  $15,000
Cash                      $39,000
Accounts Payable          $45,000
Inventory                 $69,000
Dividends                 $11,000
Sales Revenue             $96,000
Supplies                  $29,000

The total stockholders' equity reported by Jay Corporation
at December 31, 2023 was equal to:

$189,000

$157,000

$82,000

$146,000

$171,000

$252,000

none of the above are correct

Answer 1

1. (a) assets = decrease; liabilities = no effect; equity = decrease

Explanation:

May 15: ABC Company received and paid utility bills in the amount of $14,000.

This transaction will result in payment of cash with a subsequent decrease in assets. However, no liability arise out of the above mentioned transaction. It will increase the expenses of the period resulting an decrease in the equity of the company. Hence the chosen option is justified.

2. (a) $76,000

Explanation:

Equipment	$ 27,000
Patents	$ 51,000
Trademarks	$ 13,000
Total	$ 91,000
Less: Accumulated Depreciation	$ 15,000
Total Long Term Assets	$ 76,000

3. (e) $171,000

Explanation:

Revenues:
Interest revenue	$ 48,000
Sales Revenue	$ 96,000
Total revenues		$ 144,000
Expenses:
Cost of goods Sold	$ 63,000
Depreciation Expense	$ 10,000
Wages Expense	$ 16,000
Income Tax Expense	$ 12,000
Loss on sale of land	$ 18,000
Total Expenses		$ 119,000
Net Profit		$ 25,000

Opening Balance of retained earnings	$ 75,000
Add: Net Profits	$ 25,000
	$ 100,000
Less: Dividends	$ 11,000
Closing Balance of Retained Earnings	$ 89,000

Total Stockholder's Equity = Common Stock + Retained Earnings

= $82,000 + $89,000

= $171,000