Chapter 2

Chapter 2

LO2-3EXERCISE 2.1The Nature of Assets and Liabilities | Assets and liabilities are important elements of a company's financial position. a. Define assets. Give three examples of assets other than cash that might appear in the balance sheet of (1) American Airlines and (2) a professional sports team, such as the Boston Red Sox. b. Define liabilities. Give three examples of liabilities that might appear in the balance sheet of (1) American Airlines and (2) a professional sports team, such as the Boston Red Sox. |

LO2-4EXERCISE 2.2Preparing a Balance Sheet | The night manager of Willis Transportation Service, who had no accounting background, prepared the following balance sheet for the company at February 28, 2015. The dollar amounts were taken directly from the company's accounting records and are correct. However, the balance sheet contains a number of errors in its headings, format, and the classification of assets, liabilities, and owners' equity.Prepare a corrected balance sheet. Include a proper heading. |

LO2-4EXERCISE 2.3Preparing a Balance Sheet | The balance sheet items of Kiner Company as of December 31, 2011, follow in random order. You are to prepare a balance sheet for the company, using a similar sequence for assets as illustrated in Exhibit 2–9. You must compute the amount for Retained Earnings. |

LO2-3EXERCISE 2.5Using the Accounting Equation | Compute the missing amounts in the following table: |

LO2-3EXERCISE 2.6The Accounting Equation | A number of business transactions carried out by Smalling Manufacturing Company are as follows: a. Borrowed money from a bank. b. Sold land for cash at a price equal to its cost. c. Paid a liability. d. Returned for credit some of the office equipment previously purchased on credit but not yet paid for. (Treat this the opposite of a transaction in which you purchased office equipment on credit.) e. Sold land for cash at a price in excess of cost. (Hint: The difference between...