1. Assets total $100,000 and liabilities total $20,000. What is the equity of the business?  
   1. $800  
   2. $8,000  
   3. $80,000  
   4. $88,000
   5. None of the above
2. If during the accounting period the assets decreased by $10,000, and equity increased by $2,000, then how did liabilities change?  

1. Increased by $12,000  
2. Increased by $8,000  
3. Decreased by $12,000
4. Decreased by $8,000  
5. Decreased by $6,000

3. If during the accounting period the assets increased by $14,000, and equity increased by $4,000, then how did liabilities change?  

1. Increased by $10,000  
2. Increased by $4,000  
3. Decreased by $4,000
4. Decreased by $10,000  
5. Decreased by $18,000

4. Purchasing equipment on account will have what effect on the accounting equation?  

1. Increase in equipment and a decrease in equity  
2. Increase in equipment and an increase in equity  
3. Increase in equipment and an increase in liabilities  
4. Increase in equipment and a decrease in liabilities  
5. None of the above

5. Services rendered for which cash has not yet been received will have what effect on the components of the accounting equation?  

1. Increase in accounts receivable and a decrease in equity  
2. Increase in accounts receivable and an increase in equity  
3. Decrease in accounts receivable and an increase in equity  
4. Increase in fees earned and a decrease in equity  
5. Decrease in accounts receivable and a decrease in equity

6. Problem #1 Professor Quark opens his own company, Electronic Tutorial Services, and completes the following transactions in June:

• 6/1 Quark invests $12,000 into the business.
• 6/3 Purchased $1,800 of equipment on account.
• 6/4 Paid $360 for a two-year insurance policy.
• 6/6 Purchased office supplies for cash, $300.
• 6/9 Purchased a new computer for $7,500. Paid $1,500 cash agreed to pay the remainder in 30 days.
• 6/10 Billed student Fiona Smith $40 for tutorial services that were performed.
• 6/14 Paid for the equipment purchased on June 3rd.
• 6/25 Received $35 cash from student Bert Bantrum for tutorial services performed.
• 6/30 Student billed on June 10 pays the amount due to Quark.
• 6/30 Quark withdraws $500 for personal use.

Required: Prepare the journal entries to record these transactions. How much cash did Professor Quark have at the end of June?

7. Problem #2 Maria Sanchez started the Merry Mowers lawncare business. She began operations on May 1st and completed the following transactions, which included her initial investment of $8,000 cash. After these transactions, the ledger included the following accounts with normal balances.

• Cash $ 9,440     
• Office Supplies 500        
• Equipment 3,000     
• Accounts Payable 500        
• Notes Payable 2,000     
• Maria Sanchez, Capital 8,000     
• Lawncare Revenue 3,200     
• Gas and Oil Expense 210        

Required: Prepare a balance sheet and income statement for this business at the end of May.

8. Problem #3 Below are accounts listed for September for PC Partners, a company that installs/repairs home computers for customers. The business is owned by Ed Connor. The accounts are listed in alphabetical order. For the month of September, prepare an income statement and a balance sheet.

ACCOUNT BALANCE

Accounts Payable 4,200

Accounts Receivable 8,480

Advertising expense 420

Capital (Ed Connor) at 08/31/04 56,000

Cash 35,460

Entertainment Expense 600

Equipment 15,700

Installation Revenue 15,600

Miscellaneous Revenue 800

Photocopying Expense 150

Rent Expense 1,300

Repair Revenue 8,650

Supplies 8,400

Truck 8,500

Unearned Revenue 760

9. At the end of the accounting period, the business had $4,500 of office supplies on hand. At the beginning of the period, the amount of supplies on hand was $3,000. If the business purchased $12,000 of office supplies during the year, what amount of office supplies were used during year?

1. $16,500  
2. $14,250  
3. $10,500  
4. $ 9,750  
5. None of the above

10. Zach LLP wrote a check to pay an advertising bill for services for the next month. What is the entry?
    1. Debit – Loan Note Payable, Credit – Cash
    2. Debit – Cash, Credit – Account Payable
    3. Debit – Prepaid Advertising, Credit – Cash
    4. Debit – Cash, Credit – Advertising Expense

Wally’s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. WWC prepares adjusting entries and financial statements at the end of each month. Balances in the accounts at the end of January are as follows: Cash $ 21,470 Unearned Revenue (25 units) $ 5,300 Accounts Receivable $ 12,500 Accounts Payable (Jan Rent) $ 3,200 Allowance for Doubtful Accounts $ (1,850) Notes Payable $ 15,500 Inventory (30 units) $ 2,400 Contributed Capital $ 6,900 Retained Earnings – Feb 1, 2012 $ 3,620 • WWC establishes a policy that it will sell inventory at $165 per unit. • In January, WWC received a $5,300 advance for 25 units, as reflected in Unearned Revenue. • WWC’s February 1 inventory balance consisted of 30 units at a total cost of $2,400. • WWC’s note payable accrues interest at a 12% annual rate. • WWC will use the FIFO inventory method and record COGS on a perpetual basis. February Transactions 02/01 Included in WWC’s February 1 Accounts Receivable balance is a $1,700 account due from Kit Kat, a WWC customer. Kit Kat is having cash flow problems and cannot pay its balance at this time. WWC arranges with Kit Kat to convert the $1,700 balance to a note, and Kit Kat signs a 6-month note, at 9% annual interest. The principal and all interest will be due and payable to WWC on August 1, 2012. 02/02 WWC paid a $600 insurance premium covering the month of February. The amount paid is recorded directly as an expense. 02/05 An additional 170 units of inventory are purchased on account by WWC for $12,750 – terms 2/15, n30. 02/05 WWC paid Federal Express $510 to have the 170 units of inventory delivered overnight. Delivery occurred on 02/06. 02/10 Sales of 140 units of inventory occurred during the period of 02/07 – 02/10. The sales terms are 2/10, net 30. 02/15 The 25 units that were paid for in advance and recorded in January are delivered to the customer. 02/15 20 units of the inventory that had been sold on 2/10 are returned to WWC. The units are not damaged and can be resold. Therefore, they are returned to inventory. Assume the units returned are from the 2/05 purchase. 02/16 WWC pays the first 2 weeks wages to the employees. The total paid is $2,700. 02/17 Paid in full the amount owed for the 2/05 purchase of inventory. WWC records purchase discounts in the current period rather than as a reduction of inventory costs. 02/18 Wrote off a customer’s account in the amount of $1,950. 02/19 $6,400 of rent for January and February was paid. Because all of the rent will soon expire, the February portion of the payment is charged directly to expense. 02/19 Collected $9,900 of customers’ Accounts Receivable. Of the $9,900, the discount was taken by customers on $7,500 of account balances; therefore WWC received less than $9,900. 02/26 WWC recovered $590 cash from the customer whose account had previously been written off (see 02/18). 02/27 A $900 utility bill for February arrived. It is due on March 15 and will be paid then. 02/28 WWC declared and paid a $850 cash dividend. Adjusting Entries: 02/29 Record the $2,700 employee salary that is owed but will be paid March 1. 02/29 WWC decides to use the aging method to estimate uncollectible accounts. WWC determines 8% of the ending balance is the appropriate end of February estimate of uncollectible accounts. 02/29 Record February interest expense accrued on the note payable. 02/29 Record one month’s interest earned Kit Kat’s note (see 02/01).

Instructions:

Your two responses to other posts should each be approximately 250 words and cause the original writer (and other students) to think deeper about that scenario and the ethical and integrity issues discussed. You should, again, use the list of ethical dimensions below as focus areas for your responses. Responses are not comments on the author's writing ("Good post, it really made me think." or "I wouldn't have done that because it's not right.") The due date for these two responses (and hopefully your replies to other student responses to your posts) is March 1 (the Part 2 due date). This is the due date that will show in eCourseware’s calendar.

Responses to this:

I would report the shady, dangerous work. How I would go about doing it is making sure that I have all the evidence that I need to prove that the other company is doing some shady, dangerous work then report it to the proper authorities. The reason that I would want to report the problem is because of the possible legal trouble that all of the companies involved in the project could face and I wouldn’t want my company to be seen as responsible or a contributor to the problem. Even if you don’t report the problem and you were involved in the project where the issue came from, you could possibly face some or even the same penalties that the company doing wrong will face. Its more trouble than its worth to not report the problem and not prevent anything else bad from happening as soon as you can. To take care of the legal issues that come with being involved could, and possibly can, cost more than 20% of your revenue that you can lose by reporting the problem. Based off of that assumption it’s better to just report the issue as early as you can to minimize the negative affects it can have on the project or your company itself. Why that was my decision is because of the safety for the business, our customers, employees, and anyone else that can be affected by the dangerous work. Peoples safety, whether that be my own employees, our customers, etc., is a top priority.

The decision of reporting the problem is still a good decision in my opinion (regardless of people’s sex, race, skin color, native language, monetary outcome, etc.) because it stops a problem that can do more harm than good. I feel that when one person’s sense of correct ethical behavior overrules another person’s ethical behavior is when people’s safety, well-being, and company reputation is at risk. One person’s views are going to be very different (or even the opposite) of the next persons. In some cases, what may seem “correct” or “ethical” to some is actually harmful and dangerous to those that the issue affects. If you and your company are more worried about making sure that the products sell instead of the safety of said products and safety of your employees what does that say about your ethics and values? This can create a bad reputation for the company and result in loss of revenue among other issues. Above all human safety and doing the right thing should be a top priority for all companies. My personal sense of right and good for others can be an accurate yardstick. But as I mentioned earlier what you may think is right for everyone may not be the case or others may see it as the opposite of what you want it to be. When it can be an accurate yardstick is when the outcome of my views of right and good for others has a major positive impact or at least leads whatever the case may be in the right direction to create some good.

IBM
Target market and customers

IBM
Target market and customers

Impact of Social Media on Customers

Some accounting questions I have on Capital Assets:

1. Rocky Company trades equipment with a book value of $24,970 for new equipment with a list price of $103,850. $77,880 cash is paid and there is a $25,970 trade-in allowance. There is a well established market for the old equipment traded in. The fair market value of the old equipment is $23,970. What amount of gain or loss will be recorded by Rocky?

$1,000 gain

$1,000 loss

$0 gain or loss

None of the other alternatives are correct

$25,970

2.

Tiki Company has a building that cost $2,000,000 new and is 50% depreciated. The market value of the building is $3,000,000 at year end. Tiki will show on its year end balance sheet

The building at cost

The building at net book value

None of the above

The building at market

The building at both cost and net book value

3.

Answer the following questions with reference and citations:

1. Explain why consumer market testing might not always be beneficial.

2. Discuss the dilemma faced by all firms of trying to listen to customers’ needs and wants and, yet, also trying to develop new products for those customers that they do not yet serve.

3. Discuss the many reasons why so many new products fail. Are there additional reasons?

On January 1, 2017, Pronghorn Company purchased 10% bonds having a maturity value of $380,000, for $410,343.38. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Pronghorn Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

Prepare the journal entry at the date of the bond purchase.

Prepare a bond amortization schedule.

Prepare the journal entry to record the interest revenue and the amortization at December 31, 2017.

Prepare the journal entry to record the interest revenue and the amortization at December 31, 2018