1. Cost Concept
On February 22, Kountry Repair Service extended an offer of$200,000 for land that had been priced for sale at $250,000. OnApril 3, Kountry Repair Service accepted the seller’s counterofferof $230,000. On September 15, the land was assessed at a value of$185,000 for property tax purposes. On January 9 of the next year,Kountry Repair Service was offered $300,000 for the land by anational retail chain. At what value should the land be recorded inKountry Repair Service’s records?
2. On May 19, Obermayer Repair Service extended an offer of$85,000 for land that had been priced for sale at $97,000. On June4, Obermayer Repair Service accepted the seller’s counteroffer of$92,000. On October 10, the land was assessed at a value of$138,000 for property tax purposes. On February 5 of the next year,Obermayer Repair Service was offered $147,000 for the land by anational retail chain. At what value should the land be recorded inObermayer Repair Service’s records?
3.Accounting Equation
Brock Hahn is the owner and operator of Dream-It LLC, amotivational consulting business. At the end of its accountingperiod, December 31, 2015, Dream-It has assets of $780,000 andliabilities of $150,000. Using the accounting equation, determinethe following amounts:
a. Owner’s equity as of December 31, 2015.?b. Owner’s equity as of December 31, 2016,assuming that assets increased by $90,000 and liabilities increasedby $25,000 during 2016?
4. John Joos is the owner and operator of Our Idol LLC, amotivational consulting business. At the end of its accountingperiod, December 31, 2013, Our Idol has assets of $504,000 andliabilities of $121,000. Using the accounting equation, determinethe following amounts:
a. Owner’s equity as of December 31, 2013?b. Owner’s equity as of December 31, 2014,assuming that assets increased by $96,000 and liabilities increasedby $29,000 during 2014?
5 Accounts(revenue and expense items)
Fees earned
$1,475,000
Office expense
320,000
Miscellaneous expense
28,000
Wages expense
885,000
Prepare an income statement for the year ended November 30,2016. Refer to the lists of Accounts, Labels, and AmountDescriptions provided for the exact wording of the answer choicesfor text entries. Be sure to complete the statement heading. Acolon (:) will automatically appear if it is required. If a netloss is incurred, enter that amount as a negative number using aminus sign.
Labels
Expenses
For the Year Ended November 30,2016
AmountDescriptions
Fees earned
Office expense
Miscellaneous expense
Net income
Net loss
Total expenses
Wages expense
Prepare an income statement for the year ended November 30,2016. Refer to the lists of Accounts, Labels, and AmountDescriptions provided for the exact wording of the answer choicesfor text entries. Be sure to complete the statement heading. Acolon (:) will automatically appear if it is required. If a netloss is incurred, enter that amount as a negative number using aminus sign.
Ousel Travel Service
Income Statement
1
2
3
4
5
6
7
6. Ratio of Liabilities to Owner’s Equity
The following data were taken from Mesa Company’s balancesheet:
Dec. 31, 2016
Dec. 31, 2015
Total liabilities
$547,800
$518,000
Total owner’s equity
415,000
370,000
a. Compute the ratio of liabilities to owner’sequity. Round your answers to two decimal places.
Ratio of Liabilities to Owner’s Equity
Dec. 31, 2016
Dec. 31, 2015
b. Has the creditor’s risk increased ordecreased from December 31, 2015, to December 31, 2016?
7.
ndicate whether each of the following companies are primarily aservice, merchandise, or manufacturing business. If you areunfamiliar with the company, use the Internet to locate thecompany’s home page or use the finance Web site of Yahoo.
1. Alcoa Inc.
2. Boeing
3. Caterpillar
4. Citigroup Inc.
5. CVS
6. Dow Chemical Company
7. eBay Inc.
8. FedEx
9. Ford Motor Company
10. Gap Inc.
11. H&R Block
12. Hilton Hospitality, Inc.
13. Procter & Gamble
14. SunTrust
15. WalMart Stores, Inc
8.Professional Ethics
A fertilizer manufacturing company wants to relocate toYellowstone County. A report from a fired researcher at the companyindicates the company’s product is releasing toxic by-products. Thecompany suppressed that report. A later report commissioned by thecompany shows there is no problem with the fertilizer.
What should the company’s chief executive officer reveal aboutthe content of the unfavorable report in discussions withYellowstone County representatives?
a.Disclose only the second report with no comments.
b.Disclose both reports and point out deficiencies in the reportof the fired researcher.
c.Disclose both reports, omitting the deficiencies that thefired researcher reported.
d.Disclose nothing.
9.
Business Entity Concept
Ozark Sports sells hunting and fishing equipment and providesguided hunting and fishing trips. Ozark Sports is owned andoperated by Eric Griffith, a well-known sports enthusiast andhunter. Eric’s wife, Linda, owns and operates Lake Boutique, awomen’s clothing store. Eric and Linda have established a trustfund to finance their children’s college education. The trust fundis maintained by Missouri State Bank in the name of the children,Mark and Steffy.
For each of the following transactions, identify which of theentities listed below should record the transaction in itsrecords.Lake BoutiqueMissouri State BankOzark SportsNone of the entities
1. Linda authorized the trust fund to purchase mutual fundshares.
2. Linda purchased two dozen spring dresses from a St. Louisdesigner for a special spring sale.
3. Eric paid a breeder’s fee for an English springer spaniel tobe used as a hunting guide dog.
4. Linda deposited a $2,000 personal check in the trust fund atMissouri State Bank.
5. Eric paid a local doctor for his annual physical, which wasrequired by the workmen’s compensation insurance policy carried byOzark Sports.
6. Eric received a cash advance from customers for a guidedhunting trip.
7. Linda paid her dues to the YWCA.
8. Linda donated several dresses from inventory for a localcharity auction for the benefit of a women’s abuseshelter.
9. Eric paid for dinner and a movie to celebrate their twelfthwedding anniversary.
10. Eric paid for an advertisement in a hunters’ magazine.
10. Accounting Equation
The total assets and total liabilities (in millions) of GreenMountain Coffee Roasters, Inc. and Starbucks Corporationfollow:
Green Mountain
Starbucks
Assets
$3,616
$8,219
Liabilities
1,345
3,110
Determine the owners’ equity of each company.
Green Mountain Coffee Roasters’ owners’ equity
$ million
Starbucks’ owners’ equity
$ million
11. The total assets and total liabilities of Pat’s Coffee &Tea Inc. and Pam’s Corporation are shown below.
Pat’s Coffee & Tea Inc. (inmillions)
Pam’s Corporation (inmillions)
Assets
$61,351
$59,510
Liabilities
26,994
28,565
Determine the owners’ equity of each company.
Pat’s Coffee & Tea Inc. owners’ equity
$ million
Pam’s Corporation owners’ equity
$ million
12.
The total assets and total liabilities (in millions) of DollarTree Inc. and Target Corporation follow:
Dollar Tree
Target Corporation
Assets
$2,329
$46,630
Liabilities
984
30,809
Determine the owners’ equity of each company.
Dollar Tree’s owners’ equity
$ million
Target’s owners’ equity
$ million
13. The total assets and total liabilities of ThriftShop, Inc.and Bullseye Corporation are shown below.
ThriftShop, Inc.
Bullseye Corporation
Assets
$13,192
$18,073
Liabilities
2,506
1,446
Determine the owners’ equity of each company.
ThriftShop, Inc. owners’ equity
$
Bullseye Corporation owners’ equity
$
14. Accounting Equation
Determine the missing amount for each of the following:
Assets
=
Liabilities
+
Owner’s Equity
a.
$
=
$376,000
+
$895,000
b.
$1,375,000
=
$
+
$855,000
c.
$863,500
=
$211,000
+
$
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