Exercise 1-4 Key definitions and missing information in the accounting equation

1. Exercise 1-4 Key definitions and missing information in the accounting equation LO
1-3
Required
a. Match the terms (identified as a through g) with the definitions and phrases. For example
the term “a. Assets” matches with definition, Economic resources that will be used by a
business to produce revenue.
b. Calculate the missing amounts in the following table:
 Required A
 Required b
Match the terms (identified as a through g) with the definitions and phrases. For example the term “a. Assets” matches with
definition, Economic resources that will be used by a business to produce revenue.
Term Definitions and Phrases
a. Assets Economic resources that will be used by a business to produce revenue.
b. Common Stock Certificates that evidence ownership in a company.
c. Creditors Individuals or institutions that have loaned goods or services to a business.
d. Liability An obligation to pay cash in the future.
e. Retained Earnings Assets – Liabilities – Common Stock.
f. Stockholders Individuals or institutions that have contributed assets or services to a
business in exchange for an ownership interest in the business.
g. Stockholders’ Equity Common Stock + Retained Earnings.
Choices
 An obligation to pay cash in the future.

 Assets – Liabilities – Common Stock.
 Certificates that evidence ownership in a company.
 Common Stock + Retained Earnings.
 Individuals or institutions that have contributed assets or services to a business in exchange for an ownership
interest in the business.
 Individuals or institutions that have loaned goods or services to a business.
2.
Complete this question by entering your answers in the tabs below.
 Required A
 Required b
Calculate the missing amounts in the following table:
Stockholders’ Equity
Company Assets = Liabilities + Common
Stock + Retained
Earnings
A $123,000 = $25,000 + $48,000 + $50,000
B 40,000 = 3,000 + 7,000 + 30,000
C 75,000 = 15,000 + 18,000 + 42,000
D 125,000 = 45,000 + 60,000 + 20000

2.Exercise 1-6 Effect of transactions on general ledger accounts LO 1-4
At the beginning of 2018, Better Corp.’s accounting records had the following general ledger accounts and balances:
BETTER CORP.
Accounting Equation
Event Assets = Liabilities + Stockholders’ Equity
Accounting Titles
for Retained Earnings
Cash Land
Notes
Payable
Common
Stock
Retained
Earnings
Balance
1/1/2018 10,000 20,000 12,000 7,000 11,000
Better Corp. completed the following transactions during 2018:
1. Purchased land for $5,000 cash.
2. Acquired $25,000 cash from the issue of common stock.
3. Received $75,000 cash for providing services to customers.
4. Paid cash operating expenses of $42,000.
5. Borrowed $10,000 cash from the bank.
6. Paid a $5,000 cash dividend to the stockholders.
7. Determined that the market value of the land purchased in event 1 is $35,000.
Required
a. Record the transactions in the appropriate general ledger accounts. Record the amounts of revenue,
expense, and dividends in the Retained Earnings column. Provide the appropriate titles for these
accounts in the last column of the table.
b. As of December 31, 2018, determine the total amount of assets, liabilities, and stockholders’ equity
and present this information in the form of an accounting equation.
c. What is the amount of total assets, liabilities, and stockholders’ equity as of January 1, 2019?

Complete this question by entering your answers in the tabs below.
 Req A
 Req B and C
Record the transactions in the appropriate general ledger accounts. Record the amounts of revenue, expense, and dividends in the
Retained Earnings column. Provide the appropriate titles for these accounts in the last column of the table. (Enter any decreases to
account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank.)
BETTER CORPORATION
Accounting Equation for 2018
Event Assets = Liabilities + Stockholders’ Equity Accounts Titles for
Retained EarningsCash + Land = Notes
Payable + Common
Stock + Retained
Earnings
Balance
1/1/2018 10,000 + 20,000 = 12,000 + 7,000 + 11,000
1. -5,000 + 5,000 = + +
2. 25,000 + = + 25,000 +
3. 75,000 + = + + 75,000 Service Revenue
4. -42,000 + = + + -42,000 Operating Expenses
5 10,000 + = 10,000 + +
6. -5,000 + = + + -5,000 Dividend
7. + 30,000 = + + 30,000 Fair Value Gain
Totals 68,000 + 55,000 = 22,000 + 32,000 + 69,000
Complete this question by entering your answers in the tabs below.

 Req A
 Req B and C
As of December 31, 2018, determine the total amount of assets, liabilities, and stockholders’ equity and present this information
in the form of an accounting equation. What is the amount of total assets, liabilities, and stockholders’ equity as of January 1,
2019?
Assets = Liabilities + Stockholders’
Equity
b. $123,000 = $22,000 + $101,000
c. $123,000 = $22,000 + $101,000

3.Exercise 1-9 Interpreting the accounting equation LO 1-5
Jones Enterprises was started when it acquired $6,000 cash from creditors and $10,000 from owners. The
company immediately purchased land that cost $12,000.
Required
a. Record the events under an accounting equation.
b. After all events have been recorded, Jones’s obligations to creditors represent what
percent of total assets?
c. After all events have been recorded, Jones’s stockholders’ equity represents what
percentage of total assets?
d. Assume the debt is due. Given that Jones has $10,000 in stockholders’ equity, can the
company repay the creditors at this point?
Complete this question by entering your answers in the tabs below.
 Req A
 Req B to D
Record the events under an accounting equation. (Enter any decreases to account balances with a minus sign.)
JONES ENTERPRISES
Accounting Equation
Cash + Land = Creditors + Stockholders’ Equity
$16,000 + = $6,000 + $10,000
-$12,000 + $12,000 = +

Bal. $4,000 + $12,000 = $6,000 + $10,000
Complete this question by entering your answers in the tabs below.
 Req A
 Req B to D
After all events have been recorded, Jones’s obligations to creditors represent what percent of total assets? After all events have
been recorded, Jones’s stockholders’ equity represents what percentage of total assets? Assume the debt is due. Given that
Jones has $10,000 in stockholders’ equity, can the company repay the creditors at this point? (Round your answers to 1 decimal
place.)
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b. Percentage of total assets 37.5 %
c. Percentage of total assets 62.5 %
d. Can the company repay the creditors at this point? No

4.Exercise 1-15 Preparing an income statement and a balance sheet LO 1-7
Mijka Company was started on January 1, 2018. During 2018, the company experienced the following three
accounting events: (1) earned cash revenues of $28,600, (2) paid cash expenses of $13,200, and (3) paid a
$1,500 cash dividend to its stockholders. These were the only events that affected the company during
2018.
Required
a. Record the effects of each accounting event under the appropriate general ledger
account headings.
b. Prepare an income statement, statement of changes in stockholders’ equity, and a
balance sheet dated December 31, 2018, for Mijka Company.
Complete this question by entering your answers in the tabs below.
 Req A
 Req B IncStmt
 Req B Chg SE
 Req B Bal Sheet
Record the effects of each accounting event under the appropriate general ledger account headings. (Enter any decreases to
account balances with a minus sign.)