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Chapter 1: Q 33E (page 41)

Preparing the balance sheet Requirements 1. Prepare the balance sheet for Wilson Towing Service as of June 30, 2018. 2. What does the balance sheet report?

Short Answer

Expert verified

Wilson Towing Service

Balance Sheet

December 31, 2018

Assets

Liabilities

Cash

$1,400

Accounts Payable

$8,000

Office Supplies

1,000

Notes Payable

6,800

Accounts Receivable

9,000

Total Liabilities

14,800

Equipment

25,850

Stockholders鈥� Equity

Common Stock

11,000

Retained Earnings

11,450

Total Stockholders鈥� Equity

22,450

Total Assets

$37,250

Total Liabilities and Stockholders鈥� Equity

$37,250

Step by step solution

01

Explanation on Balance Sheet

Balance sheet indicates the balances of assets, liabilities, and owners鈥� equity for the particular accounting period.

02

Details of balance sheet

In the balance sheet, total assets equals $37,250, total liabilities equals $14,800, and total stockholders鈥� equity equals $22,450.

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Most popular questions from this chapter

Amos Sharp recently opened his own accounting firm on October 1, which he operates as a corporation. The name of the new entity is Amos Sharp, CPA. Sharp experienced the following events during the organizing phase of the new business and its first month of operations in 2018. Oct. 5 Sharp deposited \(45,000 in a new business bank account titled Amos Sharp, CPA. The business issued common stock to Sharp. 6 Paid \)300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, \(6,500. 10 Consulted with tax client and received \)3,300 for services rendered. 11 Paid utilities, \(340. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, \)16,000. 18 Paid office rent, \(1,800. 25 Received amount due from client that was billed on October 12. 27 Paid full amount of Accounts Payable created on October 7. 31 Cash dividends of \)3,800 were paid to stockholders. Requirements 1. Analyze the effects of the events on the accounting equation of Amos Sharp, CPA. Use a format similar to Exhibit 1-6. 2. Prepare the following financial statements: a. Income statement. b. Statement of retained earnings. c. Balance sheet

What are two certifications available for accountants? Briefly explain each certification.

Identifying users of accounting information

For each of the users of accounting information, identify whether the user is an external decision maker (E) or an internal decision maker (I):

a. customer

b. company manager

c. Internal Revenue Service

d. lender

e. investor

f. controller

g. cost accountant

h. SEC

Michael McNamee is the proprietor of a property management company,Apartment Exchange, near the campus of Pensacola State College. The business has cash of \(8,000 and furniture that cost \)9,000 and has a marketvalue of \(13,000. The business debts include accounts payable of \)6,000. Michael's personal home is valued at \(400,000, and his personal bank accounthas a balance of \)1,200. Consider the accounting principles and assumptionsdiscussed in the chapter, and identify the principle or assumption that best matches the situation:

a. Michael's personal assets are not recorded on the Apartment Exchange's

balance sheet.

b. The Apartment Exchange records furniture at its cost of \(9,000, not its market

value of \)13,000.

c. The Apartment Exchange reports its financial statements in U.S. dollars.

d. Michael expects the Apartment Exchange to remain in operation for the

foreseeable future

Describe the various types of individuals who use accounting information and how they use that information to make crucial decisions
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