1.
Identify the amounts for assets, liabilities, and
1.
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Explanation of Solution
Identify the amount:
Assets | = | Liabilities | + | Stockholders’ Equity |
3,200 | 2,400 | 800 | ||
8,000 | 5,600 | 4,000 | ||
6,400 | 1,600 | 3,200 | ||
$17,600 | = | $9,600 | + | $8,000 |
Table (1)
Note:
- Assets include cash,
accounts receivable , and long-term investments. - Liabilities include accounts payable, unearned revenue, and long-term note payable.
- Stockholders’ equity includes common stock, additional paid-in capital, and
retained earnings .
2.
Prepare the T- account and enter the amount for the given transaction in their respective accounts.
2.
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Explanation of Solution
Prepare the T-accounts:
Cash account:
Accounts receivable account:
Long-term investment account:
Accounts payable account:
Unearned revenue account:
Long-term note payable account:
Common stock account:
Additional paid-in capital account:
Retained earnings account:
Consulting fees revenue account:
Interest revenue account:
Wages expense account:
Travel expense account:
Utilities expense account:
Rent expense account:
Thus, the t-accounts are prepared and the ending balances are calculated.
3.
Ascertain the amount for the given equations at the end of the December.
3.
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Explanation of Solution
For the equation
For the equation
Working note (1):
Calculate the revenues:
Working note (2):
Calculate the expenses:
Calculate the net income:
Particulars | Amount ($) | Amount ($) |
Revenues |
| |
Less: Expenses |
| |
Net income | $2,00 |
Table (2)
Calculate the amount for the accounting equation:
Assets | = | Liabilities | + | Stockholders’ Equity |
$1,120 | $1,600 | $800 | ||
$12,400 | $7,200 | $4,000 | ||
$6,400 | $1,600 | $2,720 | ||
$2,000 | ||||
$19,920 | = | $10,400 | + | $9,250 |
Table (3)
4.
Calculate the net profit margin ratio for 2019.
4.
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Explanation of Solution
Net profit margin ratio can be calculated by using the following formula:
Calculate the net profit margin ratio for 2019:
Hence, the net profit margin ratio for the year 2019 is 3.45%.
- By computing the net profit margin ratio, Company KK net profit margin ratio is 3.45%. This indicates that there is an increase in the net profit margin ratio.
- Company KK has become effective in managing its sales and the expenses.
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Chapter 3 Solutions
INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
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