1.
SymCorp was established in January 20xx and has been in operation for one year. Assume
assets, liabilities, and owner equity were zero when the company was launched one year
ago. Construct a balance sheet for SymCorp from the following transactions during the
year the company has been in existence. \
a.
b.
c.
d.
e.
f.
g.
Katie MacKenzie, a 2000 IE graduate of SDSMT, invests $400,000 to launch the
business
$50,000 was paid for a building site
A plant was erected on the site at a cost of $500,000. Katie invested $100,000 for the
building and borrowed $400,000 from the First Cayman Bank.
$25,000 was used to purchase office furniture from Merillat.
$25,000 was used to purchase computers, office equipment, and supplies.
CNC equipment and tooling was purchased from Applied Engineering for $150,000.
$40,000 of raw material inventory was purchased; $30,000 half has been paid and the
remaining will come due in 30 days.
a. $400,000 to launch: post $400,000 to cash and $400,000 to Capital Invest
b. $50,000 for site: post $50,000 debit to cash and $50,000 credit to land
c. Building: post $500,000 credit to building, $100,000 debit to cash, and $400,000 debit to loan
d. $25,000 for Office Furn.: $25,000 credit to bldg; $25,000 debit to cash
e. $25,000 office stuff: same as d
f. CNC Equip: $150,000 credit to Equip; $150,000 debit cash
g. Inventory: $40,000 credit inventory, $30,000 debit cash, $10,000 debt Accts Payable
Cash
400,000
50,000
100,000
25,000
25,000
150,000
30,000
Office Supplies
25,000
25,000
50,000
400,000
20,000
Inventory
40,000
Accounts Payable
10,000
40,000
Land/Bldg/Equip
50,000
500,000
150,000
700,000
Capital Investment
400,000
10,000
Loan
400,000
400,000
Balance Sheet
Current Assets
Cash
20,000
Inventory
40,000
Accts Receivable
0
Total Current
60,000
Other Assets
Land/Bldg/Eqp.
700,000
Office Furn/Spls
50,000
Total Assets
810,000
Liabilities
Accts Payable
Loan
Total Liabilities
Equity
Capital Investment
Total Liab. & O.E.
10,000
400,000
410,000
400,000
810,000
2.
KB Sales is a family owned engineering consulting firm. KB records show the following
amounts on hand At the end of the current year. For each account, indicate whether the
account is an asset, a liability, owner equity, income, or an expense. Then prepare an
income statement and balance sheet for the year end.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
Cash on hand
$ 3,000 Asset
Fees received
73,000 Income
Bonds owned
12,000 Asset
Salary expense
28,000 Expense
Equipment lease
6,000 Expense
Utilities paid
5,000 Expense
Capital Stock
25,000 Equity
Interest from securities
3,000 Income
Royalties on patents
40,000 Income
Equipment (book value) 60,000 Asset
Office rent
5,000 Expense
Travel
4,000 Expense
Supplies expense
9,000 Expense
Accounts payable
20,000 Liability
Accounts receivable
2,000 Asset
Retained earnings
32,000 Equity
Taxes
8,000 Expense
Balance Sheet
Current Assets
Cash
Acts. Recievable
Total Current
Bonds
Equip
Total Assets
Liabilities
Accounts Payable
Equity
Stock
Retained Earnings
Total Liab & Equity
Income Statement
$ 3,000
2,000
$ 5,000
12,000
60,000
$77,000
$ 20,000
$ 25,000
32,000
$ 77,000
Fees Received
Royalties
Income from Ops
Expenses
Salaries
Equip
Utilities
Rent
Travel
Supplies
Net From Ops
Interest Income
Less Taxes
Net Income
$ 73,000
40,000
$113,000
$ 28,000
6,000
5,000
5,000
4,000
9,000
$ 56,000
$ 3,000
8,000
$ 51,000
3.
The following data are the assets, liabilities, income, expenses, and taxes for KT Designs.
Prepare an income and statement and a balance sheet for the current fiscal year.
a.
Securities owned
$200,000 Current Asset
b. Accounts payable
70,000 Current Liability
c.
Interest from Securities
5,000 Revenue
d. CAD/SW supplies/license
5,000 Asset (could be interpreted as expense)
e.
Real estate owned
250,000 LT Asset
f.
Interest expense on bank loan
3,000 Expense
g.
Receivables from clients
80,000 Current Asset
h. Office equipment/furniture
50,000 LT Asset
i.
Bank Loan
150,000 LT Liability
j.
Travel expense
8,000 Expense
k. Automobile fleet
80,000 LT Asset
l.
Capital stock
400,000 Owner Equity
m. Cash on hand
50,000 Current Asset
n. Salary expense
240,000 Expense
o. Income from clients
360,000 Revenue
p. Taxes
25,000 Expense
Balance Sheet
Assets
Current Assets
Cash
Securities
Accts Receive
Total Current
Long Term
Real Estate
Office
Fleet
CAD License
Total Assets
Current Liab
Accounts Pay
Long Term Liab
Loan
Total Liabilities
Owner Equity
Capital Stock
Retained
$ 50,000
200,000
80,000
$330,000
$250,000
50,000
80,000
5,000
$715,000
Income Statement
Income from Clients
Less Expenses
Salaries
Travel
Income from operations
Income from financing
Interest Securities
Less Bank Loan
Income
Less taxes
Net Income
$360,000
240,000
8,000
$112,000
$
5,000
3,000
$114,000
25,000
$ 89,000
$ 70,000
150,000
$220,000
$400,000
95,000
Total Liab & OE $715,000
Since the balance sheet must balance, the difference between assets and liabilities must lie with
owner equity. Since capital is given, this difference must be in retained earnings and must equal
$95,000.