The four friends who organized Healthcare Services (HS) on January

The four friends who organized Healthcare Services (HS) on January 1, 2017, each invested $10,000 in the company and were issued 8,000 common shares. To date, they are the only shareholders. During the first month (January 2017), the company had the following five events: 

a. Collected a total of $40,000 from the organizers and issued the shares

b. Purchased a building for $65,000, equipment for $16,000, and three hectares of land for $12,000; paid $13,000 in cash and signed a note for the balance, which is due to be paid in 15 years

c. One shareholder reported to the company that 500 shares of his HS shares had been sold and transferred to another shareholder for $5,000 cash

d. Purchased supplies for $3,000 cash

e. Sold one hectare of land for $4,000 cash to another company 

Required: 

1. Was Healthcare Services organized as a or corporation? Explain the basis for your answer. 

2. During the first month, the records of the company were inadequate. You were asked to prepare a summary of the preceding transactions. To develop a quick assessment of their economic effects on Healthcare Services, you have decided to complete the spreadsheet that follows and to use plus (+) for increases and minus (−) for decreases for each account. 

3. Did you include the transaction between the two shareholders—event (c)—in the spreadsheet? Why? 

4. Based only on the completed spreadsheet, provide the following amounts (show computations): 

a. Total assets at the end of the month

b. Total liabilities at the end of the month

c. Total shareholders’ equity at the end of the month

d. Cash balance at the end of the month

e. Total current assets at the end of the month 

5. As of January 31, 2017, has the financing for HS’s investment in assets primarily come from liabilities or from shareholders’ equity?

Fruity  Farms was incorporated as a private company on January

Fruity  Farms was incorporated as a private company on January 1, 2017. The company’s accounts included the following at January 31, 2017: 

During the month of February, the company had the following activities: 

a. Paid a to shareholders of $15,000 

b. Repaid $10,000 cash to a local bank

c. Issued 500 shares for $50,000 cash 

d. Purchased equipment for $30,000, paying $3,000 in cash and signing a note due in six months for the balance 

e. Purchased supplies for $3,000 on account 

Required: 

1. Analyze transactions (a) through (e) to determine their effects on the accounting equation. 

2. Record the transaction effects determined in requirement 1 using a journal entry format. 

3. Summarize the journal entry effects from requirement 2 using T-accounts. 

4. Prepare a classified at February 28, 2017. 

5. As of February 28, 2017, has the financing for Fruity Farm’s investment in assets primarily come from liabilities or from shareholders’ equity?

Three individuals organized Pest B-Gone Professionals on January 1 to

Three individuals organized Pest B-Gone Professionals on January 1 to provide insect extermination services. The company paid dividends of $10,000 during the year. At the end of the first year of operations, the following income statement was prepared: 

Required: 

1. What was the amount of average monthly revenue? 

2. What was the average amount of monthly salaries and wages expense? 

3. Explain why advertising is reported as an expense. 

4. Explain why the dividends are not reported as an expense. 

5. Can you determine how much cash the company had on December 31? Answer yes or no, and explain your reasoning.

Electronic Arts is the world’s leading developer and publisher of

Electronic Arts is the world’s leading developer and publisher of interactive entertainment software for personal computers and advanced entertainment systems made by Sony, Nintendo, and Microsoft. 

Assume that the company is revising its methods for displaying its financial statements, and the controller in the accounting department has asked you to create electronic worksheets that the department can use as its standard format for financial statement reporting. The controller has provided you with an alphabetical list of statement categories and account names (below), with corresponding balances (in millions) as of September 30. She has asked you to use a spreadsheet program to create two worksheets that organize the accounts into a properly formatted and income statement, and that use formulas to compute the amounts represented by question marks below. 

Not knowing where to start, you emailed your friend Owen for advice on using a spreadsheet. Owen’s detailed reply follows. 

Hey, pal. Long time, no chat. Here’s the scoop on creating those worksheets, with a screenshot too. If you need more help, let me know and I’ll submit an application for your position there. 

1. Start up Excel to open a new spreadsheet file. You’ll need only two worksheets for this assignment, so delete the third worksheet by right-clicking on the Sheet3 tab at the bottom of the worksheet and selecting Delete. While you’re at it, rename Sheet1 and Sheet2 to and Income Statement by double-clicking on the worksheet tabs and typing in the new names. 

2. Plan the layout for your reports. Use the first column as a blank margin, the second column for account names and their headings, and the third column for the numbers corresponding to each account name or total. If you want to apply the same format to all worksheets, begin by right-clicking on the tab at the bottom of a worksheet and choosing Select All Sheets. Next, resize the first column by clicking on the A at the top of that column, then from the Home tab, in the Cells group, click on Format then Column Width . . . , and enter a width of 2. Using this same procedure, resize columns B and C to 50 and 15, respectively. 

3. Starting with cell B1, enter the company’s name. Enter the report name and date in cells B2 and B3. To merge cells so these headings span more than one column, select the cells to be merged and then click on Format in the Cells group, select Format Cells . . . and click the Merge Cells box in the Text Control section of the Alignment tab. Continue with the body of the report in cell B5, entering any necessary amounts in column C. 

4. To use formulas to compute subtotals and totals, the equals sign = is entered first into the cell and is followed immediately by the formula. So, to add a series of amounts, say C7 through C11, use a formula like = SUM(C7:C11), as shown in the screenshot below. 

5. After you enter all the data and calculate totals, be sure to save the file. To do this, just click on the Office button in the top left and choose Save As . . . . 

6. If you need to print the worksheets, it might be best to highlight what you want printed, then click on the Office button, choose Print. . . , and choose Selection in the Print What box. 

7. Go to it, you accounting guru! 

Required: 

Follow Owen’s advice to create a and income statement, with each statement saved on a separate worksheet in a file called meEA.xls where the me part of the file name uniquely identifies you.

Refer to PB1-3. Data From PB1-3.Assume that you are the president

Refer to PB1-3. 

Data From PB1-3.

Assume that you are the president of Rock Point Adventures Inc. At the end of the second year of operations (June 30, 2017), the following financial data for the company are available: 

Required: 

1. Evaluate whether the company was profitable. 

2. Evaluate whether the company could have paid a greater amount for dividends. 

3. Evaluate whether the company is financed mainly by creditors or shareholders. 

4. Is it possible to determine the amount of cash increase or decrease that would be shown in the statement of cash flows from the information presented? If not, why not.

Refer to PA1-3. Data From PA1-3.Assume that you are the owner/operator

Refer to PA1-3. 

Data From PA1-3.

Assume that you are the owner/operator of the College Park Veterinary Clinic. At the end of the second year of operations (June 30, 2017), the following financial data for the company are available: 

 

Required: 

1. Evaluate whether the company was profitable. 

2. Evaluate whether the company could have paid a greater amount in dividends. 

3. Evaluate whether the company is financed mainly by creditors or shareholders. 

4. Is it possible to determine the amount of cash increase or decrease that would be shown in the statement of cash flows from the information presented? If not, why not?

Assume that Fitness and Fun, Inc. reported the following information

Assume that Fitness and Fun, Inc. reported the following information for the nine-month period ended September 30, 2017. Items are listed alphabetically and are in thousands of dollars. 

Required: 

Prepare the four basic for the nine months ended September 30, 2017. 

a. Income statement 

Net Income = $58,806,000

b. Statement of retained earnings 

Closing Retained Earnings = $258,696,000

c. Balance sheet 

Total Assets = $1,595,925,000

d. Statement of cash flows

Cash Provided by Operating Activities = $102,559,000 

Cash Used in Investing Activities = $192,370,000 

Cash Provided by Financing Activities = $91,576,000

Refer to PA1-1.Data From  PA1-1You are the president of High

Refer to PA1-1.

Data From  PA1-1

You are the president of High Power Corporation. At the end of the first year of operations (December 31, 2017), the following financial data for the company are available: 

Required: 

1. Evaluate whether the company was profitable. 

2. Evaluate whether the company could have paid a greater amount for dividends. 

3. Evaluate whether the company is financed mainly by creditors or shareholders. 

4. Determine the amount of cash increase or decrease that would be shown in the statement of cash flows.

Starbucks is a coffee company—a big coffee company. During a

Starbucks is a coffee company—a big coffee company. During a ten-year period, the number of Starbucks locations grew from 165 to over 8,800 stores in fifty countries. Assume the following is from Starbucks’ annual report for the year ended September 30, 2017, and dollars are reported in thousands. 

Assume that the following events occurred in the following quarter, which ended December 31, 2017. Dollars are in thousands. 

a. Paid $10,000 cash for additional other long-term assets 

b. Issued additional shares for $5,100 in cash

c. Purchased property, plant, and equipment; paid $11,200 in cash and signed additional long-term loans for $9,500

d. Sold, at cost, other long-term assets for $6,000 cash

e. Conducted negotiations to purchase a coffee farm, which is expected to cost $8,400 

Required: 

1. Analyze transactions (a) through (e) to determine their effects on the accounting equation. Use the format shown in the demonstration case. 

2. Record the transaction effects determined in requirement 1 using journal entries. 

3. Summarize the journal entry effects from requirement 2 using T-accounts. Use the September 2017 ending balances (reported above) as the beginning balances for the October–December 2017 quarter. 

4. Explain your response to the event (e). 

5. Prepare a classified at December 31, 2017. 

6. As of December 31, 2017, has the financing for the investment in assets made by Starbucks primarily come from liabilities or from shareholders’ equity?

Alezandray’s Interiors, Inc., is a leading international manufacturer and retailer

Alezandray’s Interiors, Inc., is a leading international manufacturer and retailer of home furnishings. The following is from Alezandray’s as of September 30, 2017. (Dollars are in millions.) 

Assume that the following events occurred in the quarter ended December 31 (dollars are in millions): 

a. Paid $2,000,000 cash for an additional “other asset”

b. Issued additional shares for $2,000,000 in cash

c. Purchased property, plant, and equipment; paid $2,000,000 in cash and signed a note to pay the remaining $9,000,000 in two years

d. Sold, at cost, other assets for $1,000,000 cash

e. Conducted negotiations to purchase a sawmill, which is expected to cost $36,000,000

Required: 

1. Analyze transactions (a) through (e) to determine their effects on the accounting equation. Use the format shown in the demonstration case. 

2. Record the transaction effects determined in requirement 1 using journal entries. 

3. Summarize the journal entry effects from requirement 2 using T-accounts. Use the September 2017 ending balances as the beginning balances for the October to December 2017 quarter. 

4. Explain your response to event (e). 

5. Prepare a classified at December 31, 2017. 

6. As of December 31, 2017, has the financing for Alezandray’s investment in assets primarily come from liabilities or from shareholders’ equity?