Problem 1
For the following accounts, classify as a current asset (CA), noncurrent asset (NCA), current liability (CL), noncurrent liability (NCL), or stockholders’ equity (SE). Indicate whether each account usually has a debit or credit balance.
Accounts Receivable –
Retained Earnings –
Taxes Payable –
Prepaid Expenses –
Contributed Capital –
Long-Term Investments –
Plant, Property, and Equipment –
Accounts Payable – CL
Short-Term Investments –
Long-Term Debt –

Problem 2
Suppose a company performs the following activities within a year. For each activity, perform transaction analysis and indicate the account, amount, and direction of the effect on the account equation. Use the following headings:
Assets = Liabilities + Stockholders’ Equity
The activities are shown below.
Purchased new equipment costing \$20,000, paying \$14,000 in cash and signing a note for the rest

Declared \$11,000 in dividends to be paid the following year
Sold \$2,312 in short-term investments for cash
Investors sold their own stock to other investors on the stock exchange for \$121,000
Issued \$1,000 of additional common stock shares, and received cash from investors

Problem 3
Shown below are several transactions for a corporation and what accounts are affected. Using the given dollar amounts, explain in words the transaction that took place. Use the transactions to create a balance sheet.
Cash = +\$8,000, Contributed Capital = +\$8,000
Cash = +\$42,000, Note payable (short-term) = + \$42,000
Cash = −\$2,000, Equipment +\$5,000, Note payable (short-term) = +\$3,000
Cash = −\$6,000, Note receivable (short-term) = +6,000
Cash = −\$1,800,  Supplies = +\$1,800

Problem 4
Given below is the balance sheet for a company.

Balance Sheet (Millions of Dollars)
Assets
Current Assets
Cash     \$5,846
Short-term investments 518
Receivables and other assets        4,510
Inventories         607
Other   2,624
\$14,105
Noncurrent Assets
Property, plant, and equipment   \$1,594
Long-term investments   318
Other non-current assets               2,533
Total assets         \$18,550

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable             \$5,816
Other short-term obligations        4,585
\$10,401
Long-term Liabilities         \$5,159
Stockholders’ equity
Contributed Capital         \$7,832
Retained Earnings            14,690
Other stockholders’ equity items −19,532
Total stockholders’ equity and liabilities   \$18,550

Assume the following transactions (in millions) during the remainder of the initial year.
Borrowed \$20 from banks due in two years
Lent \$170 to affiliates, who signed a six-month note
Purchased additional investments for \$6,000 cash; one-third were long term and the rest were short-term
Purchased \$1820 worth of property, plant, and equipment; paid \$600 in cash and the remainder with additional long-term bank loans
Issued additional shares of stock for \$400 in cash
Sold short-term investments costing \$3,000 for \$3,000 cash
Declared and paid \$13 in dividends during Year 1

Prepare a journal entry for each transaction. Then create T-accounts for each balance sheet account and include the new transactions. Post each journey entry to the appropriate T-accounts. Finally, create an updated balance sheet.

Question 5

A landlord received \$5,000 cash for December 2011’s rent but the tenant’s rent for December is \$8,000. Which of the following is true for year ended 2011?

A.         \$8,000 would be reported on the statement of cash flows
B.         \$8,000 would appear on the balance sheet as rent receivable
C.        \$8,000 would appear on the income statement as rent revenue earned
D.        \$5,000 would appear on the balance sheet as prepaid rent

Question 10
Assume a company’s January 1, 2009, financial position was: Assets, \$150,000 and Liabilities, \$60,000. During January 2009, the company completed the following transactions: (A) paid on a note payable \$10,000 (no interest was paid); (B) collected an accounts receivable, \$9,000; (C) paid an accounts payable, \$5,000; and (D) purchased a truck, \$5,000 cash, and a \$20,000 note payable from a bank.

a. What is the company’s January 1, 2009 stockholders’ equity?
b. What are the company’s January 31, 2009 assets, liabilities and stockholders’ equity?