A group of individuals formed a new company with an investment of $500,000. Th e most likely eff ect of this transaction on the company’s accounting equation at the time of the formation is an increase in cash and: A . an increase in revenue.

Moon Corporation and Star Corporation are in the same line of business and both were recently organized, so it may be assumed that the recorded costs for assets are close to current market values. The balance sheets for the two companies are as follows at July 31, 2011: CASE 2.2 Using Financial Statements C U LO4 through S LO6 CASE 2.3 Using a Balance Sheet C U LO4 MOON CORPORATION BALANCE SHEET JULY 31, 2011 Assets Liabilities & Owners’ Equity Cash . . . . . . . . . . . . . . . . $ 18,000 Liabilities: Accounts Receivable . . . 26,000 Notes Payable Land . . . . . . . . . . . . . . . . 37,200 (due in 60 days) . . . . . . . . . . . . . $ 12,400 Building. . . . . . . . . . . . . . 38,000 Accounts Payable . . . . . . . . . . . . . 9,600 Office Equipment . . . . . . 1,200 Total liabilities . . . . . . . . . . . . . . $ 22,000 Stockholders’ equity: Capital Stock . . . . . . . . . $60,000 Retained Earnings. . . . . 38,400 98,400 Total . . . . . . . . . . . . . . . . $120,400 Total . . . .…

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a. a. Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts (including + or -) for each transaction. b. C. Required information [The following information applies to the questions displayed below.] C. a. On March 22, purchased 880 shares of RPI Company stock at $24 per share. Duke's stock investment results in it having an insignificant influence over RPI. b. On July 1, received a $3 per share cash dividend on the RPI stock purchased in part a. c. On October 8, sold 440 shares of RPI stock for $34 per share. Assets = = = = = = Liabilities + + + + + + Equity

Saddleback Company paid off $46,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation? Multiple Choice O O Assets decrease $46,000; equity decreases $46,000. Assets decrease $46,000; liabilities decrease $46,000. Assets decrease $46,000; liabilities increase $46,000. Liabilities decrease $46,000; equity increases $46,000. Assets increase $46,000; equity increases $46,000. 11

A group of individuals formed a new company with an investment of $500,000. Th e most likely eff ect of this transaction on the company’s accounting equation at the time of the formation is an increase in cash and: C . an increase in contributed capital

PART I. The Scope and Environment of Financial Management 3-9. (Work a. Prepare a common-sized income statement and a common-sized bal sheet. Interpret your findings. income statement for Kronlokken Company from the following scrambled and a statemer Increase in a Ancrease in a $66,000 225,000 Depreciation expense. Operating in Cash Interest exp 334,000 Increase in Long-term debt 573,000 Sales Dividends 102,000 Accounts payable Increase in 79,000 General and administrative expense Increase in 895,000 Buildings and equipment Depreciatie 75,000 Notes payable Income tax Accounts receivable 153,000 Beginning Interest expense 4,750 Accrued expenses 7,900 3-10. (A 289,000 ing Wes Common stock Cost of goods sold 297,000 Net incom Inventory 99,300 Deprecia Taxes Profits be 50,500 Accumulated depreciation 263,000 Increase Prepaid expenses 14,500 Increase Increase Taxes payable Retained earnings 53,000 Increase 262,900 Cash flo 3-8. (Working with an income statement and balance sheet) Prepare an…

Milo Clothing experienced the following events during Year 1, its first year of operation: Acquired $19,500 cash from the issue of common stock. Purchased inventory for $6,300 cash. Sold inventory costing $3,780 for $6,426 cash. Paid $600 for advertising expense.     Record the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. (Not every cell will require entry. Enter any decreases to account balances and cash outflows with a minus sign.)