1. Given the following transactions for the year, prepare the income statement for WorldCo. For the year ended December 31, 2015.
•Rental revenue of $25,000
•Wages expense of $3,500
•Rental expense of $5,300
•Miscellaneous expense of $1,200

2. Prepare World Co.’s balance sheet if the company had the following balances:
•Accounts payable: $2,300 Owner’s Capital: $16,400
•Inventory: $5,000
•Accounts receivable: $1,400
•Cash: $1,500
•Property, plant, and equipment: $12,000
•Notes payable: $1,200

3. During the first year, Fox Supply has total assets of $16,000 and liabilities of $11,875.During the second year, assets increase by $1,375, and owner’s equity increases by$950. How much is total liabilities at year-end?

4. Given the following account balances, prepare an unadjusted trial balance for Bakeshop Corp. as of December 31, 2015. • Income Taxes Payable, credit balance $1,200
• Sales Revenue, credit balance $8,750
• PP&E, debit balance $7,500
• Cost of Sales, debit balance $5,500
• Accounts Payable, credit balance $1,240
• Interest Revenue, credit balance $1,500
• Cash, debit balance $2,000
• Rental Expense, debit balance $3,550
• Kim Akinson, Capital, credit balance $2,460
• Long-Term Debt, credit balance $7,400
• Accounts Receivable, debit balance $1,500
• Salaries Expense, debit balance $1,200
• Inventory, debit balance $1,300

5. Perform a horizontal analysis of the income statement below, showing changes in dollars and percentages (rounded to the nearest whole percentage). Determine if changes are favorable or unfavorable.
Jeffy’s Bike Store
Income Statements
For the Years Ended September 30
Year 2 Year 1
Rental revenue $150,000 $98,000
Operating expenses:
Rent expense $ 10,000 $11,500
Interest expense 1,500 1,600
Utilities expense 3,200 2,760
Wages expense 5,500 5,000
Total operating expenses $ 20,200 $20,860
Net income 129,800 $77,140

6. ________ = Cost – Accumulated depreciation
7. Beginning accumulated depreciation + __________ – Accumulated depreciation for retiring assets = Ending depreciation
8. Beginning supplies + Supplies bought – ________ = Ending supplies
9. Beginning prepaid expense + Additional payments – ______ = Ending prepaid expense

10. Determine if each of the following descriptions relate to a cash or an accrual basis of accounting.
a. Company A records income when the payment is received from the customer.
b. Company B records an accrued expense at year-end for any expenses incurred but not paid.
c. When the customer buys an item and charges it to his account, Company C records it as sales revenue.

11. Identify any favorable and unfavorable trends in the following income statement by preparing a vertical analysis. Please round percentages to two decimal places.
Becker Corporation
Income Statements
For the Years Ended December 31, 2015 and 2016
2016 2015
Sales $384,000 $202,500
Operating expenses:
Wages expense $ 89,000 $ 75,000
Rent expense 29,000 18,000
Utilities expense 21,000 24,200
Interest expense 7,500 7,800
Total operating expenses $146,500 $125,000
Net income $237,500 $77,500

12. Determine if each of the following accounts is a current asset, fixed asset, current liability, or long-term liability.
a. Accounts Payable
b. Machinery
c. Notes Receivable, maturity in 3 years

13. Determine if each of the following accounts is a as a current asset, fixed asset, current liability, or long-term liability.
a. Accounts Receivable
b. Accrued Expenses
c. Cash

14. Calculate working capital for the companies in each situation.
Company A Company B Company C
Current assets 16,080 12,000 17,850
Fixed assets 13,300 10,900 5,400
Current liabilities 15,000 14,500 19,800
Long-term liabilities 9,500 4,900 2,200

15. Using the balance sheet below, calculate working capital.
Sharp Sharks
Balance Sheet
For the Year Ended June 30, 2015
Assets Liabilities
Cash $ 1,800 Accounts payable $ 4,500
Marketable securities 1,750 Unearned revenue 3,400
Accounts receivable 5,400 Accrued expenses 1,600
Prepaid expenses 2,450 Current portion of long-term debt 1,300
Property, plant, and equipment 18,050 Long-term debt 8,900
Owner’s equity $ 9,750
Total assets $29,450 Total liabilities and owner’s equity $29,450