1)

Items A, D, and E should be recorded at the end of the year because the amounts can easily be estimated and com 2)

For the Infringement case in Item B it should not be disclosed or recorded until the gain actually occurs. For the la item C it is hard to estimate the costs and there for can not be recorded but can be disclosed at the year end fin statements

n easily be estimated and computed.

gain actually occurs. For the law suit in e disclosed at the year end financial

1) Column 1 Date Lease Payment Column 2 Column 3 Reduction of Interst Expense Obligation 8% Col 1 - Col 2 Column 4 Lease Obligation

1/1/2008 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012

$ $ $ $ $

28,300.00 28,300.00 28,300.00 28,300.00 28,300.00

$ $ $ $ $

9,040 7,499 5,835 4,038 2,088

$ $ $ $ $

19,260 20,801 22,465 24,262 26,212

$ $ $ $ $ $

113,000.00 93,740 72,939 50,474 26,212 0

2) Activity Accounts Statements(s) Investing & Financing Leased Truck Increased, Leased Obligation Increased Balance Sheet

Balance Sheet Liabilities + Assets = Stockholders' Equity + Leased Truck Lease Obligation $113,000.00 $113,000.00

3) Activity Accounts Statements(s) Operating Interest Expense Increase, Leased Obligation Decrease, Cash Decrease Balance Sheet & Income Statement

Balance Sheet Liabilities + Assets = Stockholders' Equity + Cash Lease Obligation ($28,300.00) ($20,801.00)

Activity Accounts Statements(s)

Operating Depreciation Expense Increase, Accumulated Depreciation - Leased Truck Increas Balance Sheet & Income Statement Straight Line Dep: $113,000.00/5 years Balance Sheet Liabilities +

Assets = Accum. Drp. ($22,600.00)

Stockholders' Equity +

4) Assets: Leased Assets Less: Accumulated Depreciation $113,000.00 $45,200.00 $67,800.00

Current Liabilities: Lease Obligation Long-term Liabilities: Lease Obligation

$22,464.86 $50,474.34

Income Statement Revenue Expenses

ion Decrease, Cash Decrease

Income Statement Revenue Expenses Interest Expense ($7,499.00)

ted Depreciation - Leased Truck Increase

$22,600.00 Income Statement Revenue Expenses Dep. Expense ($22,600.00)

<---- $113,000/5 years = $22,600 * 2 years = $45,200

1) A) Activity Accounts Statements(s)

Financing Cash Increase, Common Stock Increase, Addiional Paid-in Capital - Common Incr Balance Sheet

Assets = Cash $500,000.00

Balance Sheet Liabilities +

Stockholders' Equity + Common Stock $100,000.00 Paid-in Capital $400,000.00

Income Statement Revenue -

B) Activity Accounts Statements(s)

Financing & Investing Building Increase, Land Increase, Common Stock Increase, Addiional Paid-in Capi Balance Sheet

Assets = Building $20,000.00 Land $80,000.00 C) Activity Accounts Statements(s)

Balance Sheet Liabilities +

Stockholders' Equity + Common Stock $10,000.00 Paid-in Capital $90,000.00

Income Statement Revenue -

Financing Cash Decrease, Treasury Stock Increase causing Stockholders' Equity decrease Balance Sheet

Assets = Cash ($16,000.00)

Balance Sheet Liabilities +

Stockholders' Equity + Treasury Stock ($16,000.00)

Income Statement Revenue -

D)

Activity Accounts Statements(s)

Financing Cash Dividend Payable Increase, Retained Earnings Decrease Balance Sheet

Assets =

Balance Sheet Income Statement Liabilities + Stockholders' Equity + Revenue Cash Div. Pay Retained Earnings $10,900.00 $10,900.00 <------ $100,000 + $10,000 - $1,000 = 109,000 sh

E) No transaction recorded for stock splits F) Activity Accounts Statements(s) Operating (Asset Increase. Lease Decrease) Additional Paid -in Capital - Common Increase Balance Sheet

Assets =

Stockholders' Equity + Retained Earnings $180,000.00 (or $180,000.00) $180,000.00

Balance Sheet Liabilities +

Income Statement Revenue -

2) Common Stock, $0.05 par value, 220,000 issued, 218,000 outstanding Additional Paid-in Capital Retained Earnings Less: Treasury Stock Total Stockholders' Equity $110,000.00 $490,000.00 $169,100.00 ($16,000.00) $753,100.00

l Paid-in Capital - Common Increase

come Statement Expenses

ncrease, Addiional Paid-in Capital - Common Increase

come Statement Expenses

tockholders' Equity decrease

come Statement Expenses

gs Decrease

come Statement Expenses

+ $10,000 - $1,000 = 109,000 shares outstanding common stock. 109,000*$0.10 per share = $10,900

in Capital - Common Increase

come Statement Expenses