mba 560 test 1

Question
Problem 1.At the beginning of 2010, Gonzales Company’s accounting records had the general ledger accounts and balances shown in the table below. During 2010, the following transactions occurred:
1. received $80,000 cash for providing services to customers
2. paid rent expense, $10,000
3. purchased land for $9,000 cash
4. paid $5,000 on note payable
5. paid operating expenses, $52,000
6. paid cash dividend, $6,000

Required:
1) Record the transactions in the appropriate general ledger accounts. Record the amounts of revenue, expense, and dividends in the Retained Earnings column, providing appropriate titles for these accounts in the last column of the table.

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Gonzales Company

Accounting Equation

Event

Assets

=

Liabilities

+

Stockholders’ Equity

Acct. Titles for RE

Cash

Land

Notes Payable

Common Stock

Retained Earnings

Balance 1/1/10

$16,000

$40,000

$10,000

$32,000

$14,000

1

2

3

4

5

6

2) What is the amount of total assets as of December 31, 2010?
3) What is the amount of total stockholders’ equity as of December 31, 2010?

Problem 2.Given are the amounts of assets, liabilities, owner’s equity, revenues, and expenses of AQUA Inc. at 12/31/10. The beginning amount of Retained Earnings at 1/1/10 was $20,000, and during the year Dividends of $60,000 were taken out by the owners of Aqua Inc. Prepare the yearend Balance Sheet and Income Statement for AQUA LLP at the end of the year.

(Include Correct Headings)

Accounts Payable $59,000 Land $78,000

Accounts Receivable 15,000 Unearned Revenue 45,000

Advertising Expense 13,000 Utilities Expense 5,000

Building 160,000 Rent Expense 13,000

Cash 140,000 Operating Expenses 23,000

Supplies 10,000 Common Stock 240,000

Salary payable 2,000 Accumulated Depreciation 10,000

Prepaid Insurance Expense 20,000 Service Revenue 170,000

Interest Expense 9,000 Retained Earnings ?

Income Statement

__________________

$

Balance Sheet

___________________

$

$

ASSETS

LIABILITIES

OWNERS EQUITY

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