Professional Documents
Culture Documents
Class of 2019
Financials Problem Set
1. Record the impact of the transactions below from (a) – (d) in the tables provided.
Separately, record the transactions on the individual accounts affected. Be specific about
account names eg. Revenue. Be sure to label each account as Asset (A), Liability (L), or Equity
(E).
• Lohan’s Active Pest Deterrents (“LAPD”) was founded on January 1, 2017. The company’s
founder, Lindsey, provides two services: Pest Removal and Pest Prevention.
• The pest removal service eradicates ants, termites, rats, and other vermin (paparazzi) that
might infest your house or business.
• Pest prevention service is a service that she provides quarterly to customers, where she
treats the house with her patented Pest Prevention Elixirs that discourage ants and
termites from entering the customer’s residence (or business).
• During the first fiscal year of operations, Lindsey engaged in the transactions listed as
below.
Example: On January 1st 2017, LAPD used cash to purchase equipment costing $200,000. [A
bracket denotes a subtraction eg. (200,000) denotes that 200,000 has been taken out of that
particular category.]
Example 200,000
(200,000)
(a) On February 1st, LAPD purchased poison supplies for $20,000 on credit
(a)
(b) On April 10, LAPD performed pest prevention services and received $50,000 payment by
cash from Aces Hardware shop.
(b)
c) On April 21st, LAPD billed clients on account for Pest Removal Services performed during the
month of April totaling $75,000.
(c)
d) On July 1st, LAPD performed pest prevention services at a selling price of $100,000 and
received $50,000 immediately with the remainder on credit.
(d)
2. Complete the missing values from (a) to (i) in the chart below. Show your calculations for
each of the parts. No credit given if no calculations are shown. Note that the first year of
operations is 2011.
Also note that Balance Sheets for each year are for the last day of the year. The income
statement covers the entire calendar year. (Eg. for the year 2011, the balance sheet date is
31/12/2011, and the income statement is for the period from 01/01/2011 – 12/31/2011). The
retained earnings at the beginning of year 2011 are 0.