Accounting Equation, Financial Statements, Journal Entries

Accounting Equation, Financial Statements, Journal Entries

Ramsey Corporation reported the following accounts and balances in its financial statements:

                        Cash                                      $35,000

                        Inventory                            $10,200

                        Equipment                          $19,500

                        Accounts Payable            $16,350

                        Contributed Capital         $30,000

                        Retained Earnings            $18,350

  Arrange the accounts and balances into the accounting equating using the following equation and then answer the following questions.

            Assets=liabilities + owner’s equity

1.      What is the total amount of assets? 

2.      What is the total amount of liabilities?

3.      What is the total amount of owner’s equity?

2.  After six months of operations, Right Way Lumber had the following revenues and expense balances:

Supplies expense 11,000

Service revenue 62,090

Utilities expense 6,200

Rent expense 14,700

Wages expense 13, 330.

Prepare an income statement in its proper format ending on june 30, 2009.

3.  Jim Smith had trouble finding a job, so he decided to start his own sole proprietyship by the name of Designers Inc.  Jim is a web site designer, and here are the results as of the end of the first year of his businesss



Accountypayabe $12,100

Cash 19,150

Service revenue 20,000

Contributed capital 21,000

Wage expense 4,100

Inventory 4,445

Rent expense 5,000

Equipment 16,325

Supplies 4,080

Retained earnings 6,820

4.  Utopia Dance Clubs, Inc., rented an old warehouse for its newest club on October 1, 2010. To receive a discount, Utopia paid $ 11,700 for 18 months of rent in advance. Assume no additional rent is paid in 2011 and 2012 and answer the following questions:

a. How much rent expense will be recognized for the year ended December 31, 2010

b. What will be the balance in the prepaid rent account at December 31, 2010?

c. How much rent expense will be recognized for the year ended December 31, 2011?

d. What will be the balance in the prepaid rent account of December 31, 2011?

e. How much rent expense will be recognized for the year ended December 31, 2012?

f. What will be the balance in the prepaid rent account at December 31,2012?