Math (Balance Sheet)

Question 1

Max Smith runs a small grocery store. The balance sheet as of March 31, 20xx shows land of $180,000 and building of $72,000 under the ASSET column. He bought the land and building exactly three years prior to this statement’s date. Each year Max claimed 5% depreciation expense. What was the purchase price of the land?

(1) $208,373
(2) $180,000
(3) $209,943
(4) Impossible to calculate with the information provided

Answer 1

2

Question 2

Ambleside Productions Ltd.
as at March 31, 20xx

Assets

Current Assets Liabilities

Current Liabilities
Cash in bank $3,000 Accounts Payable $4,500
Term Deposits 25,000 Property Taxes Payable 2,200
Rent Receivable 7,500 Income Tax Payable 19,500
Inventory 22,200 Current Portion of Mortgage Payable 28,300
Prepaid Expenses 13,500
Total Current Assets 71,200 Total Current Liabilities 54,500
Fixed Assets Long Term Liabilities
Land Buildings
(net of accumulated
depreciation) 280,000

145,000 Mortgage Payable (net of current portion) 294,000
Equipment
(net of accumulated depreciation)
27,000 Shareholders’ Equity

Common Stock
100,000
Total Fixed Assets 452,000 Retained Earnings 74,700

Total Assets:
$523,200 Total Liabilities and Shareholders’ Equity:
$523,200

This financial statement of Ambleside Productions Ltd. is known as:

(1) a statement of profit and loss.
(2) an income statement.
(3) a balance sheet.
(4) a corporate statement of holdings.

Answer 2

3

Question 3

RE/LAX Realty Inc. has ended the current year with a net income of $234,000. During the year, RE/LAX issued $14,000 in dividends, incurred $112,000 of operating expenses, and paid $15,000 in taxes. Which of the following most likely occurred on RE/LAX’s balance sheet?

(1) Owners’ equity increased by $234,000.
(2) Revenue decreased by $14,000.
(3) Net income increased by $234,000.
(4) Retained earnings increased by $220,000.

Answer 3

4

$234,000-$14,000 dividends = $220,000

Question 4

Yuppie is the sole proprietor of The Mountain Bike Emporium. On her BALANCE SHEET as at December 31, 20xx, TOTAL ASSETS were $185,900. If the only LIABILITIES were Accounts Payable of $2,900 and Long-term Debt of $89,450, what is the amount of Owner’s Equity: Ms. Yuppie, Capital account?

(1) $93,550
(2) $92,350
(3) $185,900
(4) impossible to calculate with the information provided

Answer 4

1

185,000 total assets
- $2,900 accounts payable
-long term debt
=$93,550

Question 5

Freddy May Ltd. purchased a small commercial building for $225,000 of which $100,000 was the value of the land. Freddy, the company president, felt this was an excellent deal because he would have been willing to pay as much as $250,000. One year later Freddy sold the property for $300,000.

According to generally accepted accounting principles, at the time of purchase, the value of the building in the question above should be recorded on Freddy May Ltd.’s Balance Sheet as:

(1) $125,000
(2) $225,000
(3) $250,000
(4) a value determined by an objective appraiser.

Answer 5

1