S
EXERCISES
T
Exercise 1-1 (LO 1-2)
U
1. a.
2. c.
V
3. a.
4. b.
I
5. c.
A
6. a.
7. b.
Exercise 1-2 (LO 1-2)
A
Transaction Financial Account Activity
Statement
1. Falcon purchases common stock of Balance sheet Asset Investing
Wildcat.
P
2. Falcon borrows from Wildcat by Balance sheet Liability Financing
signing a note.
3. Falcon provides services to Wildcat. Income statement Revenue Operating
P
4. Falcon pays interest to Wildcat on Income statement Expense Operating
borrowing.
R
Exercise 1-3 (LO 1-2)
Transaction Financial Account Activity
Statement
1. Wildcat issues common stock to Balance sheet Equity Financing
O
Falcon.
2. Wildcat lends to Falcon by accepting Balance sheet Asset Investing
a note.
3. Wildcat receives services from Income statement Expense Operating
V
Falcon.
4. Wildcat receives interest from Falcon Income statement Revenue Operating
on lending.
E
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permitted without the prior written consent of McGraw Hill Education.
Solutions Manual, Chapter 1 1-11
, S
Exercise 1-4 (LO 1-2)
T
Requirement 1
Revenues − Expenses = Net Income
U
$14,000 − $9,000 = $5,000
Requirement 2
Stockholders’
V
Assets = Liabilities + equity
$50,000 = $27,000 + $X
$50,000 − $27,000 = $23,000
Exercise 1-5 (LO 1-2)
Requirement 1 IA A
Revenues − Expenses = Net Loss
$28,000 − $33,000 = ($5,000)
P
Requirement 2
Stockholders’
Assets = Liabilities + equity
P
$19,000 = $15,000 + $X
$19,000 − $15,000 = $4,000
R O
V E
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distribution permitted without the prior written consent of McGraw Hill Education
1-12 Financial Accounting, 6e
, T S
Exercise 1-6 (LO 1-3)
Cowboy Law Firm
Income Statement
U
For the period ended December 31
Service revenue $9,300
Expenses:
V
Salaries 2,200
Utilities 1,200
I
Total expenses 3,400
A
Net income $5,900
Exercise 1-7 (LO 1-3)
A
Buffalo Drilling
Statement of Stockholders’ Equity
For the year ended December 31
P
Total
Common Retained Stockholders’
Stock Earnings Equity
P
Beginning balance, Jan. 1 $11,000 $ 8,200 $19,200
Issuance of common stock 8,000 8,000
R
Add: Net income 8,500 8,500
Less: Dividends (3,200) (3,200)
Ending balance, Dec. 31 $19,000 $13,500 $32,500
V O
E
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permitted without the prior written consent of McGraw Hill Education.
Solutions Manual, Chapter 1 1-13
, T S
Exercise 1-8 (LO 1-3)
Wolfpack Construction
Balance Sheet
U
December 31
Assets Liabilities
Cash $ 6,000 Accounts payable $ 3,000
V
Land 18,000 Notes payable 20,000
Equipment 26,000 Total liabilities 23,000
I
Stockholders’ Equity
Common stock 11,000
Total assets $50,000
A
Retained earnings
Total stockholders’ equity
Total liabilities and
stockholders’ equity
A 16,000 *
27,000
$50,000
* Assets = Liabilities + Stockholders’ equity
$50,000 = $23,000 + ($11,000 + Retained earnings)
P
$50,000 − $23,000 − $11,000 = Retained earnings
$16,000 = Retained earnings
R P
V O
E
©2022 McGraw Hill Education. All rights reserved .Authorized only for instructor use in the classroom. No reproduction or further
distribution permitted without the prior written consent of McGraw Hill Education
1-14 Financial Accounting, 6e
EXERCISES
T
Exercise 1-1 (LO 1-2)
U
1. a.
2. c.
V
3. a.
4. b.
I
5. c.
A
6. a.
7. b.
Exercise 1-2 (LO 1-2)
A
Transaction Financial Account Activity
Statement
1. Falcon purchases common stock of Balance sheet Asset Investing
Wildcat.
P
2. Falcon borrows from Wildcat by Balance sheet Liability Financing
signing a note.
3. Falcon provides services to Wildcat. Income statement Revenue Operating
P
4. Falcon pays interest to Wildcat on Income statement Expense Operating
borrowing.
R
Exercise 1-3 (LO 1-2)
Transaction Financial Account Activity
Statement
1. Wildcat issues common stock to Balance sheet Equity Financing
O
Falcon.
2. Wildcat lends to Falcon by accepting Balance sheet Asset Investing
a note.
3. Wildcat receives services from Income statement Expense Operating
V
Falcon.
4. Wildcat receives interest from Falcon Income statement Revenue Operating
on lending.
E
©2022 McGraw Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution
permitted without the prior written consent of McGraw Hill Education.
Solutions Manual, Chapter 1 1-11
, S
Exercise 1-4 (LO 1-2)
T
Requirement 1
Revenues − Expenses = Net Income
U
$14,000 − $9,000 = $5,000
Requirement 2
Stockholders’
V
Assets = Liabilities + equity
$50,000 = $27,000 + $X
$50,000 − $27,000 = $23,000
Exercise 1-5 (LO 1-2)
Requirement 1 IA A
Revenues − Expenses = Net Loss
$28,000 − $33,000 = ($5,000)
P
Requirement 2
Stockholders’
Assets = Liabilities + equity
P
$19,000 = $15,000 + $X
$19,000 − $15,000 = $4,000
R O
V E
©2022 McGraw Hill Education. All rights reserved .Authorized only for instructor use in the classroom. No reproduction or further
distribution permitted without the prior written consent of McGraw Hill Education
1-12 Financial Accounting, 6e
, T S
Exercise 1-6 (LO 1-3)
Cowboy Law Firm
Income Statement
U
For the period ended December 31
Service revenue $9,300
Expenses:
V
Salaries 2,200
Utilities 1,200
I
Total expenses 3,400
A
Net income $5,900
Exercise 1-7 (LO 1-3)
A
Buffalo Drilling
Statement of Stockholders’ Equity
For the year ended December 31
P
Total
Common Retained Stockholders’
Stock Earnings Equity
P
Beginning balance, Jan. 1 $11,000 $ 8,200 $19,200
Issuance of common stock 8,000 8,000
R
Add: Net income 8,500 8,500
Less: Dividends (3,200) (3,200)
Ending balance, Dec. 31 $19,000 $13,500 $32,500
V O
E
©2022 McGraw Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution
permitted without the prior written consent of McGraw Hill Education.
Solutions Manual, Chapter 1 1-13
, T S
Exercise 1-8 (LO 1-3)
Wolfpack Construction
Balance Sheet
U
December 31
Assets Liabilities
Cash $ 6,000 Accounts payable $ 3,000
V
Land 18,000 Notes payable 20,000
Equipment 26,000 Total liabilities 23,000
I
Stockholders’ Equity
Common stock 11,000
Total assets $50,000
A
Retained earnings
Total stockholders’ equity
Total liabilities and
stockholders’ equity
A 16,000 *
27,000
$50,000
* Assets = Liabilities + Stockholders’ equity
$50,000 = $23,000 + ($11,000 + Retained earnings)
P
$50,000 − $23,000 − $11,000 = Retained earnings
$16,000 = Retained earnings
R P
V O
E
©2022 McGraw Hill Education. All rights reserved .Authorized only for instructor use in the classroom. No reproduction or further
distribution permitted without the prior written consent of McGraw Hill Education
1-14 Financial Accounting, 6e
