Chapter Four Questions
1. State the accounting equation.
Assets = Liabilities + Stockholders’ Equity.
2. What are the two points you must remember in order to be able to convert most business events into debits and credits?
Assets increase with debits.
Debits = Credits
3. What is a chart of accounts?
A chart of accounts is the list of all accounts in
which a company’s data can be stored.
4. What does a general ledger contain?
A general ledger contains the detail in each account
in a company’s accounting system. The information in all journal entries is
posted to the general ledger.
5. What is a journal entry?
A journal entry is the result of a business event or
transaction. It shows the effects of the transaction on the company’s
accounts, through the debits = credits process.
6. Why are adjusting entries needed?
Adjusting entries are needed in order to assure that
the information in the general ledger, trial balance, and financial statements
is reasonable. Without reasonable information, the financial statements cannot
be relied upon for decision making.
7. What is the name given to a trial balance prepared after adjusting entries have been posted to the general ledger?
Adjusted trial balance.
8. Why is unearned fees revenue a liability?
Unearned fees revenue is created when a customer
pays for services in advance. Thus, the company owes the customer the services
until the services are provided. Dollar amounts owed are liabilities.
9. Why does income taxes expense appear as a separate line on the income statement?
Income taxes appear as a separate line on the income
statement because they are not controlled by management (taxes are imposed by
governments) and they are often large dollar amounts.
10. What is interest expense?
Interest expense is the cost of borrowing money.
11. State the formula for calculating interest.
Interest = Principal x Interest Rate x Time.
12. Why is the time component of the interest formula usually stated as a fraction?
For interest calculations, interest rates are
usually stated in annual terms. Thus, if money is borrowed for less than 365
days, the time component is needed to convert the annual interest rate to the
rate appropriate for the time for which the money is borrowed.
Chapter Four Exercises
Exercise 4.1: Supplies
The Pappaconstantino Corporation's January 31 unadjusted trial balance included
many accounts, only four of which are shown below.
|
Account Name |
Debits |
Credits |
|
Cash |
$4,679 |
|
|
Supplies |
593 |
|
|
Fees Revenue |
|
$8,577 |
|
Supplies Expense |
0 |
|
During January, the company used up a total of $376 of supplies.
1. Determine the company's supplies expense for January.
$376. Expenses are resources used up. Since
$376 of supplies were used up, the supplies expense is $376.
2. Determine the adjusted balance in the company's supplies account on January 31.
$217. $376 of the $593 of supplies were used
up. Thus $217 of supplies are still on hand ($593 - $376 = $217).
3. Determine the dollar amount and direction (+ or -) by which the company must change its supplies resource at the end of January.
- $376. The company must reduce its $593 supplies
resource by $376, the amount of supplies used up in January, in order to bring
the supplies balance to $217, the amount of supplies on hand at the end of
January..
4. Prepare the adjusting journal entry required on January 31. Before
you prepare the journal entry, determine the transaction's effects on the
company's resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
- $376 |
= |
|
|
|
|
- $376 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
Jan. 31 |
Supplies Expense |
|
376 |
|
|
|
|
Supplies |
|
|
376 |
|
|
|
January supplies used |
|
|
|
|
5. Determine the dollar amount of supplies the company would report as an asset
on its January 31 balance sheet.
$217. Assets are resources. Since $217 of
supplies are on hand on January 31, the supplies asset on the January 31
balance sheet should be $217.
Exercise 4.2: Supplies
The Tejada Corporation's January 31 unadjusted trial balance included many
accounts, only four of which are shown below.
|
Account Name |
Debits |
Credits |
|
Cash |
$6,794 |
|
|
Supplies |
135 |
|
|
Fees Revenue |
|
$5,778 |
|
Supplies Expense |
800 |
|
During January, the company used up a total of $763 of supplies.
1. Determine the company's supplies expense for January.
$763. Expenses are resources used up. Since $763
of supplies were used up, the supplies expense is $763.
2. Determine the adjusted balance in the company's supplies account on January
31.
$763 of supplies were used up in January.
Thus, the supplies expense should be $763, not $800 as reported on the
unadjusted trial balance. This means $37 ($800 - $763 = $37) of supplies
included in the $800 supplies expense are still on hand on January 31.
Thus, the total supplies on hand on January 31 should be $172 ($135 + $37 =
$172).
3. Determine the dollar amount and direction (+ or -) by which the company must
change its supplies resource at the end of January.
+ $37. The company must increase its supplies
resource by $37 to bring its balance to $172, the amount of supplies on hand at
the end of January. Supplies expense must be reduced by $37 to bring its
balance to $763, the amount of supplies used up in January.
4. Prepare the adjusting journal entry required on January 31. Before you
prepare the journal entry, determine the transaction's effects on the company's
resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
+ $37 |
= |
|
|
|
|
+ $37 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
Jan. 31 |
Supplies |
|
37 |
|
|
|
|
Supplies Expense |
|
|
37 |
|
|
|
January supplies not used |
|
|
|
|
5. Determine the dollar amount of supplies the company would report as an asset
on its January 31 balance sheet.
$172. Assets are resources. Since $172 of supplies
are on hand on January 31, the supplies asset on the January 31 balance sheet
should be $172.
Exercise 4.3: Rent
The Tremblay Corporation's February 28 unadjusted trial balance included
many accounts, only four of which are shown below.
|
Account Name |
Debits |
Credits |
|
Supplies |
$946 |
|
|
Prepaid Rent |
4,800 |
|
|
Common Stock |
|
$12,000 |
|
Rent Expense |
0 |
|
During February, the company paid $4,800 to rent office space to use for the six-month period February through July.
1. Determine the company's rent expense for February.
$800. The rent expense is the dollar amount of rent
used up. $4,800 rent for six months means the rent expense for each month is
$800 ($4,800 / 6 = $800).
2. Determine the adjusted balance in the company's prepaid rent account on
February 28.
$4,000. On February 28, the company has five months’
rent still available. Five months’ rent at $800 per month is $4,000.
3. Determine the dollar amount and direction (+ or -) by which the company must
change its prepaid rent resource at the end of February.
- $800. The company must reduce its prepaid rent
resource by $800 to bring its balance to $4,000, the amount of prepaid rent
available on February 28. Rent expense must be increased by $800 to bring
its balance to $800. the amount of rent used up in February.
4. Prepare the adjusting journal entry required on February 28. Before
you prepare the journal entry, determine the transaction's effects on the
company's resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
- $800 |
= |
|
|
|
|
- $800 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
Feb. 28 |
Rent Expense |
|
800 |
|
|
|
|
Prepaid Rent |
|
|
800 |
|
|
|
February rent |
|
|
|
|
5. Determine the dollar amount of prepaid rent the company would report as an
asset on its February 28 balance sheet.
$4,000. Assets are resources. Since $4,000 of prepaid
rent is still available on February 28, the prepaid rent asset on the February
28 balance sheet should be $4,000.
Exercise 4.4: Rent
The Sinclair Corporation's February 28 unadjusted trial balance included
many accounts, only four of which are shown below.
|
Account Name |
Debits |
Credits |
|
Supplies |
$469 |
|
|
Prepaid Rent |
0 |
|
|
Common Stock |
|
$21,000 |
|
Rent Expense |
3,600 |
|
During February, the company paid $3,600 to rent its office space for the four-month period February through May.
1. Determine the company's rent expense for February.
$900. The rent expense is the dollar amount of rent
used up. $3,600 rent for four months means the rent expense for each month is
$900 ($3,600 / 4 = $900).
2. Determine the adjusted balance in the company's prepaid rent account on
February 28.
$2,700. On February 28, the company has three months’
rent available. Three months’ rent at $900 per month is $2,700.
3. Determine the dollar amount and direction (+ or -) by which the company must
change its prepaid rent resource at the end of February.
+ $2,700. The company must increase its prepaid rent
resource by $2,700 to bring it to $2,700, the amount of prepaid rent available
on February 28. Rent expense must be reduced by $2,700 to bring its balance to
$900, the amount of rent used up in February..
4. Prepare the adjusting entry required on February 28. Before you
prepare the journal entry, determine the transaction's effects on the company's
resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
+ $2,700 |
= |
|
|
|
|
+ $2,700 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
Feb. 28 |
Prepaid Rent |
|
2,700 |
|
|
|
|
Rent Expense |
|
|
2,700 |
|
|
|
February rent adjustment |
|
|
|
|
5. Determine the dollar amount of prepaid rent the company would report as an
asset on its February 28 balance sheet.
$2,700. Assets are resources. Since $2,700 of
prepaid rent is still available on February 28, the prepaid rent asset on the
February 28 balance sheet should be $2,700.
Exercise 4.5: Insurance
The Finn Corporation's March 31 unadjusted trial balance included many
accounts, only four of which are shown below.
|
Account Name |
Debits |
Credits |
|
Prepaid Rent |
$400 |
|
|
Prepaid Insurance |
2,400 |
|
|
Accounts Payable |
|
$1,000 |
|
Insurance Expense |
0 |
|
During March, the company paid $2,400 to insure the company for the twelve-month period March 1 through February 28.
1. Determine the company's insurance expense for March.
$200. The insurance expense is the dollar amount of
insurance used. $2,400 insurance for 12 months means the insurance expense for
each month is $200 ($2,400 / 12 = $200).
2. Determine the adjusted balance in the company's prepaid insurance account on
March 31.
$2,200. On March 31, the company has eleven months’ insurance
protection available. Eleven months’ insurance at $200 per month is $2,200.
3. Determine the dollar amount and direction (+ or -) by which the company must
change its prepaid insurance resource at the end of March.
- $200. The company must reduce its prepaid
insurance resource by $200 to bring its balance to $2,200, the amount of
prepaid insurance available on March 31. Insurance expense must be
increased by $200 to bring its balance to $200, the dollar amount of insurance
used up in March.
4. Prepare the adjusting journal entry required on March 31. Before you
prepare the journal entry, determine the transaction's effects on the company's
resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
- $200 |
= |
|
|
|
|
- $200 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
Mar. 31 |
Insurance Expense |
|
200 |
|
|
|
|
Prepaid Insurance |
|
|
200 |
|
|
|
March insurance used |
|
|
|
|
5. Determine the dollar amount of prepaid insurance the company would report as
an asset on its March 31 balance sheet.
$2,200. Assets are resources. Since $2,200 of
prepaid insurance is still available on March 31, the prepaid insurance asset
on the March 31 balance sheet should be $2,200.
Exercise 4.6: Insurance
The Salamone Corporation's March 31 unadjusted trial balance included many
accounts, only four of which are shown below.
|
Account Name |
Debits |
Credits |
|
Prepaid Rent |
$700 |
|
|
Prepaid Insurance |
0 |
|
|
Accounts Payable |
|
$1,500 |
|
Insurance Expense |
1,800 |
|
During March, the company paid $1,800 to insure the company for the four-month period March 1 through June 30 .
1. Determine the company's insurance expense for March.
$450. The insurance expense is the dollar amount of
insurance used. $1,800 insurance for four months means the insurance expense
for each month is $450 ($1,800 / 4 = $450).
2. Determine the adjusted balance in the company's prepaid insurance account on
March 31.
$1,350. On March 31, the company has three months’ insurance
protection available. Three months’ insurance at $450 per month is $1,350.
3. Determine the dollar amount and direction (+ or -) by which the company must
change its prepaid insurance resource at the end of March.
+ $1,350. The company must increase its prepaid
insurance resource by $1,350 to bring its balance to $1,350, the amount of
prepaid insurance available on March 31. Insurance expense must be reduced by
$1,350 to bring its balance to $450, the amount of insurance used up in March.
4. Prepare the adjusting journal entry required on March 31. Before you
prepare the journal entry, determine the transaction's effects on the company's
resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
+ $1,350 |
= |
|
|
|
|
+ $1,350 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
Mar. 31 |
Prepaid Insurance |
|
1,350 |
|
|
|
|
Insurance Expense |
|
|
1,350 |
|
|
|
March insurance adjustment |
|
|
|
|
5. Determine the dollar amount of prepaid insurance the company would report as
an asset on its March 31 balance sheet.
$1,350. Assets are resources. Since $1,350 of
prepaid insurance is still available on March 31, the prepaid insurance asset
on the March 31 balance sheet should be $1,350.
Exercise 4.7: Unearned Fees
The Moore Corporation provides consulting services to many clients. One client paid the company $12,000 in April in advance for services to be provided by the company over the next six months. The $12,000 was correctly recorded as a debit to cash and a credit to unearned fees revenue. By the end of May, the Moore Corporation had provided the client with services of $5,500. $3,000 of services were provided in April and $2,500 in May.
1. Determine the dollar amount of fees revenue the Moore Corporation should recognize for services provided in April to the client.
$3,000. Services provided in April were $3,000.
Thus, fees revenue in April should be $3,000.
2. Determine the dollar amount of the unearned fees revenue liability the Moore
Corporation should report on its April 30 adjusted trial balance.
$9,000. The unearned fees revenue liability
represents services still owed to the client on April 30. Of the $12,000
received from the client in April, $3,000 of services were provided, leaving
$9,000 still owed to the client at the end of April.
3. Determine the dollar amount and direction (+ or -) by which the company must
change its unearned fees revenue liability at the end of April.
- $3,000. The company must reduce its unearned fees
revenue liability by $3,000 to bring its balance to $9,000, the amount of
services still owed to the client on April 30. Fees revenue must be increased
by $3,000, the amount of services provided to the client in April.
4. Prepare the adjusting journal entry required on April 30. Before you
prepare the journal entry, determine the transaction's effects on the company's
resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
|
|
- $3,000 |
|
|
+ |
+ $3,000 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
Apr. 30 |
Unearned Fees Revenue |
|
3,000 |
|
|
|
|
Fees Revenue |
|
|
3,000 |
|
|
|
Services provided in April |
|
|
|
|
5. Determine the dollar amount of fees revenue the Moore Corporation should
recognize for services provided in May to the client.
$2,500. Services provided in May were $2,500. Thus,
fees revenue in May should be $2,500.
6. Determine the dollar amount of the unearned fees revenue liability that the
Moore Corporation should report on its May 31 adjusted trial balance.
$6,500. The unearned fees revenue liability
represents the services still owed to the client on May 31. Of the $12,000
received from the client in April, $5,500 of services were provided ($3,000 in
April and $2,500 in May), leaving $6,500 still owed on May 31.
7. Determine the dollar amount and direction (+ or -) by which the company must
change its unearned fees revenue liability at the end of May.
- $2,500. The company must reduce its unearned fees
revenue liability by $2,500 to bring its balance to $6,500, the amount of
services still owed to the client on May 31. Fees revenue must be increased by
$2,500, the amount of services provided to the client in May.
8. Prepare the adjusting journal entry required on May 31. Before you
prepare the journal entry, determine the transaction's effects on the company's
resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
|
|
- $2,500 |
|
|
+ |
+ $2,500 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
May 31 |
Unearned Fees Revenue |
|
2,500 |
|
|
|
|
Fees Revenue |
|
|
2,500 |
|
|
|
Services provided in May |
|
|
|
|
Exercise 4.8: Income Taxes
The Parker Corporation estimates it will have to pay income taxes at the rate of 35% of its income before taxes. The company expects to have to pay the government in July. During May, the company's income before taxes was $140,000.
1. Determine the company's income taxes expense for May.
$49,000. Income before taxes x income taxes rate =
$140,000 x .35 = $49,000
2. Prepare the adjusting journal entry required on May 31. Before you
prepare the journal entry, determine the transaction's effects on the company's
resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
|
|
+ $49,000 |
|
|
+ |
- $49,000 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
May 31 |
Income Taxes Expense |
|
49,000 |
|
|
|
|
Income Taxes Payable |
|
|
49,000 |
|
|
|
Income taxes for May |
|
|
|
|
3. Determine the dollar amount of cash the Parker Corporation actually paid to
the government in May.
$0. Tax payments are to be made in July.
Exercise 4.9: Wages
The Lamprey Corporation's employees earn a total of $5,000 per day. During July, employees worked 23 days. The company pays its employees every Friday. July 31 was a Wednesday.
1. Determine the company's total wages expense for July.
$115,000. $5,000 per day times 23 July work days
equals $115,000.
2. Determine the dollar amount of cash the company actually paid for employees'
wages in July.
$100,000. $5,000 per day times 20 July days equals
$100,000. Only 20 days wages were paid in July because the last three days
(7/29, 7/30, 7/31) were Monday, Tuesday, and Wednesday. Since wages are paid on
Friday, Monday's, Tuesday's, and Wednesday's wages were unpaid until Friday
August 2.
3. Determine the adjusted balance in the company's wages payable account on
July 31.
$15,000. $5,000 per day times three days equals
$15,000. The balance in the wages payable account on July 31 should be the
wages of the last three days in July, which were unpaid on July 31.
4. Prepare the adjusting journal entry required on July 31. Before you
prepare the journal entry, determine the transaction's effects on the company's
resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
|
|
+ $15,000 |
|
|
+ |
- $15,000 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
July 31 |
Wages Expense |
|
15,000 |
|
|
|
|
Wages Payable |
|
|
15,000 |
|
|
|
July 29-31 wages |
|
|
|
|
5. Determine the dollar amount of wages payable the company would report as a
liability on its July 31 balance sheet.
$15,000. $5,000 per day times three days equals
$15,000. The balance in the wages payable account on July 31 should be the
wages of the last three days in July, which were unpaid on July 31.
Exercise 4.10: Interest
The McAndrew Corporation borrowed $25,000 from a bank on September 1. The loan required the McAndrew Corporation to repay the $25,000 on November 29, which is 90 days after the money was borrowed. The annual interest rate on the loan was 15%.
1. Determine the company's total interest expense for borrowing the $25,000 for three months.
$924.66. Interest = principal x interest rate
x time = $25,000 x .15 x 90/365 = $924.66.
2. Determine the dollar amount of cash the company will have to pay to the bank
at the end of November 1996.
$25,924.66. The company will have to pay
$25,000 of principal plus $924.66 of interest.
3. Determine the dollar amount of the company's interest expense for September.
$308.22. $25,000 x .15 x 30/365 = $3308.22.
The money was borrowed for 30 days in September.
4. Prepare the adjusting journal entry required on September 30. Before
you prepare the journal entry, determine the transaction's effects on the
company's resources and sources of resources.
|
Total |
= |
Sources of |
+ |
Sources of |
+ |
Sources of |
|
Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
||
|
|
|
+ $308.22 |
|
|
+ |
- $308.22 |
|
General Journal |
Page 1 |
||||
|
Date |
Description |
Post. |
Debits |
Credits |
|
|
Sept. 30 |
Interest Expense |
|
308.22 |
|
|
|
|
Interest Payable |
|
|
308.22 |
|
|
|
Interest for September |
|
|
|
|
5. Determine the dollar amount of interest payable the company would report as
a liability on its September 30 balance sheet.
$308.22. The interest payable liability on September
30 should be the amount of interest owed to the bank on September 30.
6. Determine the dollar amount of interest payable the company would report as
a liability on its October 31 balance sheet, which is 61 days after the $25,000
was borrowed.
$626.71. The interest payable liability on
October 31 should be the amount of interest owed to the bank on October
31. This should be the $308.22 interest expense for September plus the
$318.49 interest expense for October ($25,000 x .15 x 31/365 = $318.49). $308.22
+ $318.49 = $626.71.
Exercise 4.11: Financial Statements
The Auger Corporation's December 31 adjusted trial balance is shown below.
|
Auger Corporation
Adjusted Trial Balance |
|
Account Name |
Debits |
Credits |
|
Cash |
$8,270 |
|
|
Accounts Receivable |
6,100 |
|
|
Supplies |
540 |
|
|
Prepaid Rent |
590 |
|
|
Prepaid Insurance |
600 |
|
|
Accounts Payable |
|
$2,100 |
|
Unearned Fees Revenue |
|
400 |
|
Wages Payable |
|
800 |
|
Income Taxes Payable |
|
1,700 |
|
Common Stock |
|
4,000 |
|
Retained Earnings |
|
1,800 |
|
Dividends |
300 |
|
|
Fees Revenue |
|
34,600 |
|
Utilities Expense |
2,700 |
|
|
Telephone Expense |
1,200 |
|
|
Wages Expense |
12,400 |
|
|
Supplies Expense |
4,300 |
|
|
Rent Expense |
3,600 |
|
|
Insurance Expense |
1,800 |
|
|
Income Taxes Expense |
3,000 |
_____ |
|
Totals |
$45,400 |
$45,400 |
1. Determine the dollar amount of resources obtained from customers for
services provided to them in the period ended December 31.
$34,600. The dollar amount of resources obtained
from customers for services provided to them in the period is reported in fees
revenue.
2. Determine the dollar amount of resources used up in providing service to
customers in the period ended December 31.
$29,000. The dollar amount of resources used up in
providing service to customers in the period is reported in expenses.
3. Determine the net dollar amount by which the company's resources increased
through management operations in the period ended December 31.
$5,600. Net income is the dollar amount of resources
generated through management operations. Net income = revenues less expenses =
$34.600 - $29,000 = $5,600.
4. Determine the dollar amount of resources paid to owners.
$300. Dividends are the dollar amount of resources
paid to owners from income.
5. Determine the dollar amount of resources generated through management
operations and retained in the company by December 31.
$7,100. Retained earnings is the dollar amount of
resources generated by management and kept in the company.
|
Retained earnings, 1/1 balance |
$1,800 |
|
Plus: Net income |
5,600 |
|
Subtotal |
$7,400 |
|
Less: Dividends |
300 |
|
Retained earnings 12/31 balance |
$7,100 |
6. Determine the dollar amount of resources on December 31.
$16,100. Resources are assets = $8,270 (cash) +
$6,100 (accounts receivable) + $540 (supplies) + $590 (prepaid rent) + $600
(prepaid insurance) = $16,100.
7. Determine the dollar amount of borrowed resources.
$5,000. Liabilities are the dollar amount of
borrowed resources = $2,100 (accounts payable) + $400 (unearned fees revenue) +
$800 (wages payable) + $1,700 (income taxes payable) = $5,000..
8. Determine the dollar amount of resources invested by owners.
$4,000. Common stock is the dollar amount of owner
invested resources.