BAT 4MI
As I Recall 1 … Let’s see if I know now what I knew then…
1. Sketch the “Accounting Cycle” below…
Fundamental Accounting Equation
Expanded Accounting Equation
2. Assets = $320,000 and Owner’s Equity = $180,000 then Liabilities = $...
3. In 2015 assets decreased by $9,000 and equity increased by $7,000 then liabilities …
4. Current Assets = $150,000  Fixed Assets (net) = $524,000  Current Liabilities = $90,000 
Long-Term Liabilities = $210,000  G. Rease, Capital ???  G. Rease, Drawings $75,000 
Net Sales $970,000  COGS $400,000  Total Operating Expenses $325,000.
Show some work (rough but WLC’s) to support your answers.
A) Find the ‘profit’ for the year
 Gross Profit
 Net Profit
B) What does ‘net’ mean in terms of …
 Fixed Assets (net)
 Net Sales
C) What will the balancing figure be on the balance sheet?
D) What is the missing capital balance from the above list – that is the pre-closing capital
balance – the balance that will be in the ledger prior to closing?
E) What will the year-end capital balance be on the financial statements – the balance on the
Statement of OE – the after closing capital balance?
5. The following is an alphabetical list of 2015 “pre-closing” ledger balances for Acme Services.
(“pre-closing” refers to balances after all day-to-day, _______________ and ________________
have been completed)
Accounts Payable
Accounts Receivable
Accumulated Amortization - Equip.
Amortization Expense – Equip.
Bank Loan
Cash
Equipment
Equipment Rental Expense
15,000
64,000
127,200
54,000
70,000
27,000
300,000
34,500
Interest Expense
Owen Nerr, Capital
Owen Nerr, Drawings
Rent Expense
Sales
Supplies
Utilities Expense
Wages
3,375
84,000
29,000
580,000
6,000
5,000
275,000
A) Calculate the missing capital account balance. Show some rough work above and/or below.
B) Would the capital balance on January 1, 2015 have likely been higher, lower or the same?
Explain.
C) Complete a set of financial statements for 2015. For the statements, assume the owner
made an investment of $12,000 on February 19, 2015. Start with the Income Statement
below and use a separate sheet for the Statement of OE and Balance Sheet if necessary.