The review will be held SUNDAY, February 23rd from 3 to 6 PM in Woodruff Auditorium of the Kansas Union. Complete this packet prior to attending the review!!! Short Answer1. State the fundamental accounting equation.2. What are the two components of stockholder’s equity?3. What is the formula for current ratio, quick ratio, debt ratio, and working capital?4. What is the group that presently creates accounting standards?5. What gives the board of directors the right to change a company’s CEO?6. What three things do you need to recognize revenue according to the revenue recognition concept?7. What is the purpose of adjusting entries?8. What is the revenue concept and the matching concept?19. When do you recognize revenues and expenses under cash and accrual accounting?10. When can you use reversing entries?11. Where do we close dividends to?12. What is double taxation?2Adjusting EntriesCaty started her own pet store, specializing in Siberian Huskies. Make the appropriate entries for the transactions described below. Caty closes her books on December 31.1. On Jan 1, Caty sold common stock in the amount of $100,000 cash.2. On March 31, Caty purchases a giant dog washing machine. The machine cost $250,000. Caty paid $100,000 cash and signed a note for the remaining amount. Interestof 10% is compounded annually and due in 1 year. The machine has a useful life of 10 years.3. On August 1, Caty paid cash for prepaid insurance in the amount of $9,000. This willcover Caty’s store for 3 years.4. On September 1, Alyx signed a contract with Caty to have her dog washed 5 times (on the last day of every month). Alyx paid Caty the entire contracted amount of $1,000 (it is a huge dog) upon signing the contract.5. On October 31, Caty received and paid her water bill of $1,500.36. On November 15, Caty bought dog biscuits on account for $200.7. Make the adjusting entry associated with the note.8. Make the adjusting entry associated with the machine.9. Make the adjusting entry associated with #4 above.10. Make the adjusting entry associated with #3.11. Reverse any of the entries above that can be reversed.4Adjusting and Closing EntriesA. Using the T-accounts on the following page, show the adjusting entries for the four situations described below. Be sure to label each entry according to its number designation below. 1. KM Company borrowed $1,000,000 on March 31 from a good friend of one ofthe owners . The interest rate is 12% annually with the first payment to be made next year. 2. KM Company started out this year with various supplies worth $150,000. It has $50,000 of those supplies left at the end of the year.3. KM Company has rented its corporate headquarters for the last seven months this year from the uncle of one of the owners. The uncle has told them that CT can pay the $60,000 annual rent after they have been in the building for one year. 4. KM Company earned $75,000 of its unearned revenue during the year. Additional Information: You only need to make the year-end adjusting entries for the above transactions. The original entries have already been made for you. Assume KM Company closes its books each December 31. B. After making the adjusting entries required in part A, use the T-accounts to find the ending balance in each account and close all temporary accounts. Label each closing entry c1, c2, c3, etc. 5Interest Payable Rent Payable Unearned RentRev.200,000Supplies Supplies Expense Interest Expense150,000Revenue Rent Expense Income Summary200,000RetainedEarnings6Adjusting Entries(Remember: No cash involved!!!)Using the information provided below, prepare year-end adjusting entries as of December 31, 2000 for Kaufman&Kaufman Prestige. 1. A three-year insurance policy was purchased on June 1, 2000 for $7,200. The policy was recorded as a debit to Prepaid Insurance. 2. A company building is rented to JESSIE, LLP for $2,000 per month. On October 1, 2000, JESSIE, LLP prepaid its rent in the amount of $8,000. The cash receipt was credited in full to Unearned Rent Revenue by Kaufman&Kaufman Prestige.3. Supplies on hand at December 31, 1999 were $1,200. During 2000, additional supplies of $2,500 were purchased. The purchase was debited to Supplies Inventory when made. At December 31, 2000, supplies on hand were $1,000.4. On September 1, 2000, Kaufman&Kaufman Prestige borrowed $30,000 from Nathan’s Corner Bank on a 3-year note payable. The note pays 12% annual interest, with all principal and interest due at the end of 3 years.5. Kaufman&Kaufman Prestige pays its employees on the first day of every month. On Dec. 31, 2000, the company owes its employees $12,075 for the month of December,to be paid on January 1, 2001.6. The company bought a building for $12,000 on July 1, 2000. The building has a useful life of 10 years.7. Use the adjusting entries above to prepare any reversing entries that may be needed.7Statement of Cash FlowsJenny’s Company's 2013 income statement and comparative balance sheets at December 31 of 2013 and 2012 are shown below.Jenny’s CompanyComparative Balance SheetsAssets: 2013 2012Cash 82,000 7,000Accounts Receivable (net) 18,000 15,000Inventory 39,000 28,000Prepaid Rent 2,000 4,000Plant Assets - Equip 60,000 75,000Accumulated Depreciation (10,000) (21,000)Total Assets 191,000 108,000Liabilities & Stockholders Equity:Accounts Payable 4,600 9,000Wages Payable 2,400 1,700Income Tax Payable 1,000 1,300Bonds Payable 20,000 ------Common Stock 60,000 60,000Retained Earnings 103,000 36,000Total Liabilities & Stockholder's Equity 191,000 108,000Jenny’s CompanyIncome StatementFor the Year Ended December 31, 2013Sales $ 280,000Supplies Expense 18,000Wages Expense 41,000Depreciation Expense 9,000Rent Expense 2,000Other Operating Expenses 14,000Income Tax Expense 68,000 152,000Net Income 128,000Other Information:- There was a sale of equipment made during the year. This equipment had originally been purchased for$40,000 and was sold for $20,000 cash. At the time of the sale the accumulated depreciation on the equipment was $20,000. (Hint: don’t worry about the value in the accumulated depreciation account until after you make the entry for this transaction. Also, make this entry before accounting for the purchase of new equipent.)- all sales are on account - all supplies are on account - equipment purchased during the year was for cash- all bonds are issued for