56

Les Stanley established an insurance agency on July 1, 20Y5, and completed the following transactions during July: Opened a busi

crimeas [40]

Answer:

A. Net Income = $22,790

B. Shareholders' equity balance is = $69,490

Explanation:

Requirement A:

Les Stanley

Income Statement

For the year ended, July 31, 2015

Revenues:

Fees Earned $28,500 (1)

Expenses:

Rent expenses $2,600 (3)

Automobile Expense $2,000 (4)

Office Salaries $4,200 (5)

Miscellaneous expense$ 800 (6)

Interest Expense $ 110 (7)

Total Expenses $5,710

Net Income $22,790

Note - 1: Fees earned = $28,500 (Journal 3)

2. Common stock = $50,500 (Journal 1)

3. Rent expense (Journal 4)

4. Automobile expense (Journal 5)

5. Office salaries (Journal 7)

6. Miscellaneous expense (Journal 6)

7. Interest on payable (Journal 8)

8. Dividends (Journal 10)

Requirement B:

Les Stanley

Statement of shareholders equity

For the year ended, July 31, 2015

Particulars Share R. E* Total

Balances, July 1, 2015 $0 0 $0

Add: Issued Capital $50,500 (2) 0 $50,500

Add: Net Income $0 $22,790 $22,790

Less: Dividends (8) $0 $(3,800) $(3,800)

Balances, July 31, 2015 $50,500 $18,990 $69,490

Therefore, shareholders' equity balance is = $69,490

5 0

3 years ago

A purchase of a new issue of stock takes place Group of answer choices in the primary market. in the secondary and primary marke

mash [69]

Answer:

in the primary market and usually with the assistance of an investment banker.

Explanation:

Primary markets are ones where newly issues securities are sold. When companies seek to gain capital from investors, they issue securities that can be bought buy investors in exchange for capital.

Investment bankers are usually involved in the sale of securities in the primary markets. They obtain the securities on behalf of the investors.

Primary markets are also called new issues market

7 0

3 years ago

Identify the impact on the accounting equation of the following transactions. 1. Purchased 36-month insurance policy for cash. 2

Y_Kistochka [10]

Answer:

Insurance reduces one asset and increases another

Purchase of supplies on account increases liabilities and increases asset

Receipt of unpaid utility bill increases liability and reduces capital

Payment of accrued utility bill reduces asset as well as liability

Explanation:

The purchase of 36-month insurance brings about increase in asset,insurance prepayment and reduction in another asset,cash.

The purchase of supplies on account brings about increase in liability,accrued liabilities or other accounts payable as well as increase in asset,inventory of supplies.

The receipt of utility bill yet to be paid,increases liability,accrued expenses and reduces capital,since an increase in expenses reduces retained earnings which is an integral part of capital

Payment of utility reduces asset,cash and at the same time reduces liability,accrued expenses

7 0

3 years ago

Suppose you are advising a bank on the management of its balance sheet. In light of the financial crisis of 2007-2009, what argu

STatiana [176]

Answer:

Holding additional capital will help avoid failure in the future by reducing solvency risk. During the 2007-2009 crisis, the market value of many assets held by banks was downgraded to garbage and became practically worthless. At the point the government had to intervene (with TARP) to save banks from collapsing.

Instead of cash, banks had huge reserves of financial assets that were worthless, which meant that they had very little to pay their clients when they would try get their money out. The only way to reduce the solvency risk (bank not being able to meet cash obligations) is to hold more cash and increase capital.

8 0

3 years ago

Varto Company has 7,000 units of its sole product in inventory that it produced last year at a cost of $22 each. This year’s mod

sp2606 [1]

Answer:

Sell

Explanation:

The computation is shown below:

In case of proceed further $175,000 (7,000 units × $25)

Less: In case of sold $56,000 (7,000 units × $8)

Revenue increment $119,000

Less: Cost of processing further -$125,000

Incremental net loss -$6,000

As we can see that there is an incremental loss of $6,000 which reflects to sell off the product not proceed further plus

5 0

3 years ago