The following financial statement data is from five separate companies:

	Company A	Company B	Company C	Company D	Company E
December 31, 2010
Assets	$45,000	$35,000	$29,000	$80,000	$123,000
Liabilities	23,000	22,500	14,000	38,000	?
December 31, 2011
Assets	48,000	41,000	?	125,000	112,500
Liabilities	?	27,500	19,000	64,000	75,000
During year 2011
Owner investments	5,000	1,500	7,750	?	4,500
Net income (loss)	7,500	?	9,000	12,000	18,000
Owner cash withdrawals	2,500	3,000	3,875	0	9,000

Required
1. Answer the following questions about Company A:
a. What is the amount of equity on December 31, 2010?
b. What is the amount of equity on December 31, 2011?
c. What is the amount of liabilities on December 31, 2011?
2. Answer the following questions about Company B:
a. What is the amount of equity on December 31, 2010?
b. What is the amount of equity on December 31, 2011?
c. What is net income for year 2011?
3. Calculate the amount of assets for Company C on December 31, 2011.
4. Calculate the amount of owner investments for Company D during year 2011.
5. Calculate the amount of liabilities for Company E on December 31, 2010.

Sanyu Sony started a new business and completed these transactions during December.

Dec. 1 Sanyu Sony transferred $\$ 65,000$ cash from a personal savings account to a checking account in the name of Sony Electric. $~~~~$ 2 The company rented office space and paid $\$ 1,000$ cash for the December rent. $~~~~$ 3 The company purchased $\$ 13,000$ of electrical equipment by paying $\$ 4,800$ cash and agreeing to pay the $\$ 8,200$ balance in 30 days. $~~~~$ 5 The company purchased office supplies by paying $\$ 800$ cash. $~~~~$ 6 The company completed electrical work and immediately collected $\$ 1,200$ cash for these services. $~~~~$ 8 The company purchased $\$ 2,530$ of office equipment on credit. $~~~~$ 15 The company completed electrical work on credit in the amount of $\$ 5,000$. $~~~~$ 18 The company purchased $\$ 350$ of office supplies on credit. $~~~~$ 20 The company paid $\$ 2,530$ cash for the office equipment purchased on December 8. $~~~~$ 24 The company billed a client $\$ 900$ for electrical work completed; the balance is due in 30 days. 28 The company received $\$ 5,000$ cash for the work completed on December 15 . $~~~~$ 29 The company paid the assistant's salary of $\$ 1,400$ cash for this month. $~~~~$ 30 The company paid $\$ 540$ cash for this month's utility bill. $~~~~$ 31 Sanyu Sony withdrew $\$ 950$ cash from the company for personal use.

Required

1. Arrange the following asset, liability, and equity titles in a table like Exhibit 1.9: Cash; Accounts Receivable; Office Supplies; Office Equipment; Electrical Equipment; Accounts Payable; S. Sony, Capital; S. Sony, Withdrawals; Revenues; and Expenses.
2. Use additions and subtractions to show the effects of each transaction on the accounts in the accounting equation. Show new balances after each transaction.
3. Use the increases and decreases in the columns of the table from part 2 to prepare an income statement, a statement of owner's equity, and a statement of cash flows-each of these for the current month. Also prepare a balance sheet as of the end of the month.

Analysis Component 4. Assume that the owner investment transaction on December 1 was $\$ 49,000$ cash instead of $\$ 65,000$ and that Sony Electric obtained another $\$ 16,000$ in cash by borrowing it from a bank. Explain the effect of this change on total assets, total liabilities, and total equity.

An important responsibility of many accounting professionals is to design and implement internal control procedures for organizations. Discuss the purpose of internal control procedures. Provide two examples of internal controls applied by companies.

Technology is increasingly applied to process accounting data. Why then must we study and understand accounting?

Determine the section where each of the following would appear on the statement of cash flows.
A. Cash flows from operating activity
B. Cash flows from investing activity
C. Cash flows from financing activity

____1. Cash paid for wages
____2. Cash withdrawal by owner
____3. Cash purchase of equipment
____4. Cash paid for advertising
____5. Cash paid on an account payable
____6. Cash investment by owner
____7. Cash received from clients
____8. Cash paid for rent

List the two main categories of accounting principles.

Give events or transactions that change equity.

Geneva Group reports net income of $20,000 for 2011. At the beginning of 2011, Geneva Group had$100,000 in assets. By the end of 2011, assets had increased to $150,000. What is Geneva Group’s 2011 return on assets? How would you assess its performance if competitors average a 10% return on assets?

On October 1, Natalie King organized Real Solutions, a new consulting firm. On October 31, the company’s records show the following items and amounts. Use the data to prepare an October 31 statement of cash flows for Real Solutions.

Also assume the following:
a. The owner’s initial investment consists of $38,000 cash and$36,000 in land.
b. The company’s $28,000 equipment purchase is paid in cash.
c. The accounts payable balance of$7,500 consists of the $4,250 office supplies purchase and$3,250 in= employee salaries yet to be paid.
d. The company’s rent, telephone, and miscellaneous expenses are paid in cash.
e. $2,000 has been collected on the$15,000 consulting fees earned.

Explain (a) assets, (b) liabilities, (c) equity, and (d ) net assets.

Explain the three basic forms of business organization and their key attributes.

On October 1, Natalie King organized Real Solutions, a new consulting firm. On October 31, the company’s records show the following items and amounts. Use the data to prepare an October 31 balance sheet for Real Solutions.

On October 1, Natalie King organized Real Solutions, a new consulting firm. On October 31, the company’s records show the following items and amounts. Use the data to prepare an October statement of owner’s equity for Real Solutions.

Why is the revenue recognition principle required? What does it demand?