Question #1 – 6 marks
Below are three lists of accounting information with missing amounts. Each list is independent of the others.
Cash
|
$ 2,100
|
$ 550
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$ 1,800
|
Accounts receivable
|
a)
|
100
|
1,200
|
Equipment
|
5,000
|
2,500
|
10,000
|
Bank loan payable
|
2,000
|
0
|
e)
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Accounts payable
|
750
|
c)
|
1,500
|
J. Rodriguez, Capital, beginning of year
|
3,000
|
900
|
5,000
|
J. Rodriguez, Drawings
|
1,200
|
350
|
3,500
|
Revenues
|
10,000
|
6,000
|
15,000
|
Expenses
|
7,000
|
4,000
|
f)
|
J. Rodriguez, Capital, end of year
|
b)
|
d)
|
2,500
|
Required:
Use the accounting equation to determine the missing amounts.
Question #2 – 6 marks
The following are six questions that users of accounting information might ask about Augusta Auto Towing (Augusta).
Required:
For each question, determine which part of the financial statements (Income statement, balance sheet, or cash flow statement) would provide the information required.
|
Decision
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Financial statement used
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1.
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Can Augusta’s operations generate sufficient cash to make payments on a term loan?
|
|
2.
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Does Augusta have sufficient assets to provide security for a mortgage loan?
|
|
3.
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Should Augusta continue its current business, or look for more profitable opportunities in a different line of business?
|
|
4.
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Were the profit-sharing bonuses paid to unionized employees equal to the percentage of profit stated in the employment contract?
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|
5.
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Was the amount of harmonized sales taxes (HST) that Augusta remitted to the tax department equal to 13% of its revenue, as required by law?
|
|
6.
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Does Augusta have enough money in the bank to pay out drawings to the owner?
|
|
Question #3 – 6 marks
One item is omitted in each of the following summaries of balance sheet and income statement data for three different sole proprietorships, A, B, and C.
Proprietorship
A B C
Beginning of the Year:
Assets $ 400,000 $ 150,000 $ 199,000
Liabilities 250,000 105,000 168,000
End of the Year:
Assets 450,000 195,000 195,000
Liabilities 280,000 95,000 169,000
During the Year:
Additional investment by the owner ? 79,000 80,000
Withdrawals by the owner 90,000 83,000 ?
Revenue 195,000 ? 187,000
Expenses 170,000 113,000 185,000
Required:
Determine the amounts of the missing items, identifying each proprietorship by letter.