1. Fill in the missing amounts for the each of the independent cases:You will find the following relationship helpful:
Retained earnings, Jan 1 + Net Income - Dividends = Retained earnings, Dec 31
Case A Case B Case C Case D Revenue $100,000 $200,000 ? ? Expenses ? ? $50,000 $70,000 Net income 40,000 ? 60,000 ? Retained earnings, Jan 1 ? 300,000 180,000 120,000 Dividends 50,000 70,000 ? 30,000 Retained earnings, Dec 31 120,000 310,000 ? ? Current assets ? 60,000 100,000 ? Noncurrent assets 420,000 ? 580,000 300,000 Total assets 500,000 ? ? 410,000 Current liabilities ? 30,000 ? 20,000 Noncurrent liabilities 270,000 ? 170,000 ? Total liabilities ? 140,000 ? ? Paid-in capital ? 520,000 210,000 100,000 Total equity 200,000 ? 410,000 210,000 2. Prepare an Income Statement from the following information:
Use the Cost of Sales equation below to calculate the expense for the cost of the merchandise sold during this period. This expense is directly subtracted from net sales revenue to get gross profit. Other operating expenses will follow like salaries and supplies expenses. Then nonoperating revenue and expenses will be listed (interest revenue and interest expense) to be followed by gains and losses. Income tax expense is listed last before net income is calculated.
Cost of sales =
Merchandise Inventory, Jan 1 + Purchases - Purchases returns - Merchandise Inventory, Dec 31
Advertising expense $19,000 Gain on sale of equipment $15,000 Interest expense $8,000 Interest revenue $9,000 Loss on sale of building $7,000 Merchandise inventory, Dec 31 $80,000 Merchandise inventory, Jan 1 $62,000 Miscellaneous operating expenses $10,000 Office salaries expense $20,000 Office supplies expense $4,000 Purchases $455,000 Purchase returns $10,000 Sales revenue $910,000 Sales discounts $20,000 Utilities expense $10,000 NOTE: Assume the company's tax rate is 40%.
3. Prepare a Balance Sheet from the information in the table below. The accumulated depreciation accounts are subtracted from the asset accounts to which they are identified. The total of all the asset accounts must equal the total of the liabilities and equity accounts.
Accounts payable $45,000 Accounts receivable $40,000 Accumulated depreciation - buildings $70,000 Accumulated depreciation - equipment $20,000 Bonds payable $200,000 Buildings $210,000 Cash $20,000 Equipment $100,000 Interest payable $5,000 Land $210,000 Merchandise inventory $60,000 Note payable (3 year) $25,000 Paid-in capital $200,000 Patent $20,000 Prepaid insurance $4,000 Retained Earnings $89,000 Salaries payable $10,000
