Resources: Ch. 1, 2, & 7 of Financial Accounting
Chapter 1:
Exercise E1-1
Urlacher Company performs the following accounting tasks during the year.
___C___ Analyzing and interpreting information.
___R___ Classifying economic events.
___C___ Explaining uses, meaning, and limitations of data.
___R___ Keeping a systematic chronological diary of events.
___R___ Measuring events in dollars and cents.
___C___ Preparing accounting reports.
___C __ Reporting information in a standard format.
___I__ Selecting economic activities relevant to the company.
___R__ summarizing economic events.
Exercise E1-5
Meredith Cleaners has the following balance sheet items.
Accounts payable Incorrect Liabilities
Accounts receivable Correct Assets
Cash Correct Assets
Notes payable Incorrect Liabilities
Cleaning equipment Incorrect Asset
Salaries payable Incorrect Liabilities
Cleaning supplies Correct Assets
Common stock Incorrect Stockholders equity

Exercise E1-12
Income Statement
Advertising expense $ 1,800
Rent expense 10,400
Utilities expense 3,100
Salaries expense 30,000
Service revenue 62,500

Retained Earnings Statement
Retained earnings, January 1, 2008 $ 48,000
Dividends during 2008 6,000

Exercise E1-13
Mendez Company
Balance Sheet
December 31, 2008
Assets Liabilities
Cash $15,000 Accounts payable $20,000
Supplies 8,000 Common stock 50,000
Accounts receivable (8,500) Retained earnings 17,500
Equipment 46,000
Dividends 10,000

Total assets $87,500 Total liabilities and
Stockholders’ equity $87,500
Chapter 2:
Exercise E2-2
Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are as follows.

Jan 2 Invested $10,000 cash in the business in exchange for common stock.
3 Purchased used car for $4,000