46PGA_2c Annette Pachelo recently opened ... [FREE SOLUTION]

Exeter is a building contractor on the Gulf Coast. After losing a number of big lawsuits, it was facing its first annual net loss as the end of the year approached. The owner, Hank Snow, was under intense pressure from the company’s creditors to report positive net income for the year. However, he knew that the controller, Alice Li, had arranged a short-term bank loan of $10,000 to cover a temporary shortfall of cash. He told Li to record the incoming cash as “construction revenue” instead of a loan. That would nudge the company’s income into positive territory for the year, and then, he said, the entry could be corrected in January when the loan was repaid. Requirements 1. How would this action affect the year-end income statement? How would it affect the year-end balance sheet? 2. If you were one of the company’s creditors, how would this fraudulent action affect you?

Michael McNamee is the proprietor of a property management company,Apartment Exchange, near the campus of Pensacola State College. The business has cash of $8,000 and furniture that cost $9,000 and has a marketvalue of $13,000. The business debts include accounts payable of $6,000. Michael's personal home is valued at $400,000, and his personal bank accounthas a balance of $1,200. Consider the accounting principles and assumptionsdiscussed in the chapter, and identify the principle or assumption that best matches the situation:

a. Michael's personal assets are not recorded on the Apartment Exchange's

balance sheet.

b. The Apartment Exchange records furniture at its cost of \(9,000, not its market

value of \)13,000.

c. The Apartment Exchange reports its financial statements in U.S. dollars.

d. Michael expects the Apartment Exchange to remain in operation for the

foreseeable future

Amos Sharp recently opened his own accounting firm on October 1, which he operates as a corporation. The name of the new entity is Amos Sharp, CPA. Sharp experienced the following events during the organizing phase of the new business and its first month of operations in 2018. Oct. 5 Sharp deposited $45,000 in a new business bank account titled Amos Sharp, CPA. The business issued common stock to Sharp. 6 Paid $300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, $6,500. 10 Consulted with tax client and received $3,300 for services rendered. 11 Paid utilities, $340. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, $16,000. 18 Paid office rent, $1,800. 25 Received amount due from client that was billed on October 12. 27 Paid full amount of Accounts Payable created on October 7. 31 Cash dividends of $3,800 were paid to stockholders. Requirements 1. Analyze the effects of the events on the accounting equation of Amos Sharp, CPA. Use a format similar to Exhibit 1-6. 2. Prepare the following financial statements: a. Income statement. b. Statement of retained earnings. c. Balance sheet

Annette Pachelo recently opened her own law office on March 1, which she operates as a corporation. The name of the new entity is Annette Pachelo, Attorney. Pachelo experienced the following events during the organizing phase of the new business and its first month of operation, March 2018. Some of the events were personal and did not affect the law practice. Others were business transactions and should be accounted for by the business. Mar. 1 Sold personal investment in Amazon stock, which she had owned for several years, receiving $35,000 cash. 2 Deposited the $35,000 cash from the sale of the Amazon stock in her personal bank account. 3 Deposited $73,000 cash in a new business bank account titled Annette Pachelo, Attorney. The business issued common stock to Pachelo. 5 Paid $700 cash for ink cartridges for the printer. 7 Purchased computer for the law office, agreeing to pay the account, $5,000, within three months. 9 Received $2,800 cash from customers for services rendered. 15 Received bill from The Lawyer for magazine subscription, $400. (Use Miscellaneous Expense account.) 23 Finished court hearings on behalf of a client and submitted a bill for legal services, $10,000, on account. 28 Paid bill from The Lawyer. 30 Paid utilities, $1,200. 31 Received $3,300 cash from clients billed on March 23. 31 Cash dividends of $5,500 were paid to stockholders. Requirements Prepare the following financial statements: a. Income statement.

What are two certifications available for accountants? Briefly explain each certification.

Annette Pachelo, Attorney
Balance Sheet
March 31, 2018
Assets	Liabilities
Cash	$71,300	Accounts Payable	$5,000
Accounts Receivable	6,700
Office Supplies	700
Office Equipment	5,000	Stockholders’ Equity
		Common Stock	73,000
		Retained Earnings	5,700
		Total Stockholders’ Equity	$78,700
Total Assets	$83,700	Total Liabilities and Stockholders’ Equity	$83,700

Short Answer

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Explanation on Balance Sheet

Details of balance sheet

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