25th of October, 2016
Chapter 1 – Libby Set B exercises
Nashwa Saad Human Resources Manager Ace Global Depository Mob : +20 (109) 35 58 064
Chapter 01 - Financial Statements a nd Business Decisions
Chapter 1 – Set B Exercises – Libby 8e E1-1B (similar to E 1-4) [LO 1] Preparing a Balance Sheet ABC Company has the following balance sheet. Solve for the missing amount. (Hint: Exhibit 1.2 in the chapter provides a good model for completing this exercise.) Cash and cash equivalents Common Stock Accounts payable and other current liabilities Inventories Investments Long-term debt Net property, plant, and equipment Other assets Other liabilities Retained earnings Total assets
$
Total liabilities and stockholders’ equity
Trade accounts, notes, and other receivables
377 1,984 3,322 635 179 2,061 7,626 816 3,393 1,135 11,895 ? 2,262
The Answer: ABC Company Balance Sheet Statement At : …. / …. / 20 …. Currency : USD $ Assets Cash & cash Equivalents Inventories Investments
Liabilities 377 635 179
Net property, plant, and equipment Other assets Total accounts notes & other receivables
7,626 816 2,262
Total Assets
11,895
Accounts payable & other current liabilities Long term dept Other liabilities
3,322 2,061 3,393
Stockholders' Equity Common Stock Retained earnings
Total Liabilities & Stockholders' Equity
1,984 1,135
11,895
E 1-2B (similar to E1-6) [LO 1] Analyzing Revenues and Expenses and Preparing an Income Statement Assume that you are the owner of University Market, which specializes in items that interest students. At the end of March 2014, you find (for March only) this information: a. Sales, per the cash register tapes, of $150,000, plus one sale on credit (a special situation) of $5,000. b. With the help of a friend (who majored in accounting), you determine that all of the goods sold during March cost $60,000 to purchase. c. During the month, according to the checkbook, you paid $32,000 for salaries, rent, supplies, advertising, and other expenses; however, you have not yet paid the $1,100 monthly utilities for March on the store and fixtures. Required:
On the basis of the data given (disregard income taxes), what was the amount of net income for March? Show computations. (Hint: A convenient form to use has the following major side captions: Revenue from Sales, Expenses, and the difference—Net Income.)
The Answer: University Market Income Statement 1 © 2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Financial Statements a nd Business Decisions
For the period from ( 1 / 3 / 20 14 ) to ( 31 / 3 / 20 14 ) Currency : USD $ Revenues Sales Revenue
155,000 155,000
Total Revenues
Expenses Cost of Goods sold
60,000
Salaries, rent, supplies, advertising, and other expenses
32,000
Incurred expenses
1,100
Total Expenses
93,100
Net Income
61,900
E1-3B (similar to E1-9) [LO 1] Inferring Values Using the Income Statement and B alance Sheet Equations Review the chapter explanations of the income statement and the balance sheet equations. Apply these equations in each independent case to compute the two missing amounts for each case. Assume that it is the end of 2014, the first full year of operations for the company. (Hint: Organize the listed items as they are presented in the balance sheet and income statement equations and then compute the missing amounts.) Independent Total Cases Revenues A $89,700 B C 66,260 D 68,680 E 88,840
Total Expenses $73,940 70,240 86,430
Net Income (Loss) $ 18,740
Total Assets $134,200 100,880 99,850
Total Liabilities $59,000
41,770 75,720
Stockholders’ Equity $ 90,010
60,850 27,890 35,520
88,680 77,580
The Answer: Independent Cases
Total Revenues
Total Expenses
Net Income (Loss)
Total Assets
Total Liabilities
Stockholders’ Equity
A
$89,700
$73,940
$15,760
$134,200
$59,000
$75,200
B
$88,980
$70,240
$18,740
$100,880
$10,870
$90,010
C
$66,260
$86,430
-$20,170
$99,850
$60,850
$39,000
D
$68,680
$26,910
$41,770
$116,570
$27,890
$88,680
E
$88,840
$75,720
$13,120
$113,100
$35,520
$77,580
E1-4B (similar to E1-10) [LO1] Inferring Values Using the Income Statement and Balance Sheet Equations Review the chapter explanations of the income statement and the balance sheet equations. Apply these equations in each independent case to compute the two missing amounts for each case. Assume that it is the end of 2014, the first full year of operations for the company. (Hint: Organize the listed items as they are presented in the balance sheet and income statement equations and then compute the missing amounts.) Stockholders’ Independent Total Total Net Income Total Total Cases Revenues Expenses (Loss) Assets Liabilities Equity 2 © 2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Financial Statements a nd Business Decisions $230,820
A B C D E
70,990
$176,700
$
$295,300
165,780
32,920
580,000
89,890
268,200
43,590
11,840
220,130
The Answer: Independent Cases
210,600
$95,000
$ 358,400
195,760 198,675
99,525
193,850
316,240
Total Revenues
Total Expenses
Net Income (Loss)
Total Assets
Total Liabilities
Stockholders’ Equity
A
$230,820
$176,700
$54,120
$295,300
$95,000
$200,300
B
$198,700
$165,780
$32,920
$580,000
$221,600
$358,400
C
$70,990
$89,890
-$18,900
$268,200
$195,760
$72,440
D
$43,590
$31,750
$11,840
$298,200
$198,675
$99,525
E
$220,130
$210,600
$9,530
$510,090
$193,850
$316,240
E1-5B (similar to E1-13) [LO 1] Preparing a Statement of Cash Flows The following items were taken from a recent cash flow statement. Mark each item in the list as a cash flow from operating activities (O), investing activities (I), financing activities (F), or (X) for none of the above. Also place parentheses around the letter only if it is a cash outflow. ____ (1) Borrowed cash from a bank. ____(2) Purchased stock in another company for cash. ____ (3) Paid the utility bill. ____ (4) Paid the property tax bill. ____ (5) Sold equipment for cash. ____ (6) Issued additional shares of stock for cash. ____ (7) Sales from customers received as cash. ____ (8) Sales from customers on credit (no cash).
E1-6B (similar to E1-12) [LO 1] Preparing a Statement of Retained Earnings Barbara’s Design Corporation was organized on January 1, 2013. For its first two years of operations, it reported the following: Net income for 2013 Net income for 2014 Dividends for 2013 Dividends for 2014 Total assets at the end of 2013 Total assets at the end of 2014
$ 39,000 40,000 15,200 19,700 150,000 320,000
Required:
On the basis of the data given, prepare a statement of retained earnings for 2014. Show computations.
The Answer: Barbara’s Design Corporation
Retained Earnings Statement For The Business First Year Ended Dec, 31, 2013 Currency : USD $ Net Income
39000 3
© 2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Financial Statements a nd Business Decisions
Dividends
15200
Retained Earnings
23800
Barbara’s Design Corporation Retained Earnings Statement For The Year Ended Dec, 31, 2014 Currency : USD $ Beginning Retained Earnings
23800
Net Income
40000
Dividends
19700
Retained Earnings
44100
E 1-7B (similar to E1-6) [LO 1] Analyzing Revenues and Expenses and Preparing an Income Statement Assume that you are the owner of Fabulous Styles, which specializes in clothing for teens. At the end of March 2013, you find (for March only) this information: a. Sales, per the cash register tapes, of $180,000, plus one sale on credit (a special situation) of $4,000. b. With the help of a friend (who majored in accounting), you determine that all of the goods sold during March cost $90,000 to purchase. c. During the month, according to the checkbook, you paid $22,000 for salaries, rent, supplies, advertising, and other expenses; however, you have not yet paid the $1,000 monthly utilities for March on the store and fixtures. Required:
On the basis of the data given (disregard income taxes), what was the amount of net income for March? Show computations. ( Hint: A convenient form to use has the following major side captions: Revenue from Sales, Expenses, and the difference—Net Income.)
The Answer: Fabulous Styles Income Statement For the period from ( 1 / 3 / 20 13 ) to ( 31 / 3 / 20 13 ) Currency : USD $ Revenues Sales Revenue Total Revenues
184,000 184,000
Expenses Cost of Goods sold Salaries, rent, supplies, advertising, and other expenses Incurred expenses Total Expenses
Net Income
90,000 22,000 1,000 113,000
71,000
E1-8B (similar to E1-9) [LO 1] Inferring Values Using the Income Statement and B alance Sheet Equations Review the chapter explanations of the income statement and the balance sheet equations. Apply these equations in each independent case to compute the two missing amounts for each case. Assume that it is the end of 2014, the first full year of operations for the company. (Hint: Organize the listed items as they are presented in the balance sheet and income statement equations and then compute the missing amounts.) 4 © 2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Financial Statements a nd Business Decisions
Independent Total Cases Revenues A $91,700 B C 33,260 D 81,680 E 81,840
Total Expenses $75,940 85,240 86,430
Net Income (Loss) $ 33,740
Total Assets $136,200 115,880 98,850
Total Liabilities $61,000
Stockholders’ Equity $ 105,010
62,850 27,800 35,500
41,770 75,720
88,680 77,500
The Answer: Independent Cases
Total Revenues
Total Expenses
Net Income (Loss)
Total Assets
Total Liabilities
Stockholders’ Equity
A
$91,700
$75,940
$15,760
$136,200
$61,000
$75,200
B
$118,980
$85,240
$33,740
$115,880
$10,870
$105,010
C
$33,260
$86,430
-$53,170
$98,850
$62,850
$36,000
D
$81,680
$39,910
$41,770
$116,480
$27,800
$88,680
E
$81,840
$75,720
$6,120
$113,000
$35,500
$77,500
E1-9B (similar to E1-10) [LO1] Inferring Values Using the Income Statement and Balance Sheet Equations Review the chapter explanations of the income statement and the balance sheet equations. Apply these equations in each independent case to compute the two missing amounts for each case. Assume that it is the end of 2014, the first full year of operations for the company. (Hint: Organize the listed items as they are presented in the balance sheet and income statement equations and then compute the missing amounts.) Stockholders’ Independent Total Total Net Income Total Total Cases Revenues Expenses (Loss) Assets Liabilities Equity $240,820 $176,700 $ $295,000 $95,000 $ A 165,700 32,020 585,000 365,400 B 67,990 89,890 288,200 195,760 C 43,590 15,840 218,675 99,525 D 225,130 210,600 195,800 316,200 E
The Answer: Independent Cases
Total Revenues
Total Expenses
Net Income (Loss)
Total Assets
Total Liabilities
Stockholders’ Equity
A
$240,820
$176,700
$64,120
$295,000
$95,000
$200,000
B
$197,720
$165,700
$32,020
$585,000
$219,600
$365,400
C
$67,990
$89,890
-$21,900
$288,200
$195,760
$92,440
D
$43,590
$27,750
$15,840
$318,200
$218,675
$99,525
E
$225,130
$210,600
$14,530
$512,000
$195,800
$316,200
E1-10B (similar to E1-11) [L O 1] Preparing an Income Statement and Balance Sheet Christopher Corporation was organized on January 1, 2014. At the end of January 2014, the following monthly financial data are available: Total revenues
$400,000 5
© 2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Financial Statements a nd Business Decisions
Total expenses (excluding income taxes) Income tax expense (all unpaid as of January 31) Cash balance, January 31, 2014 Receivables from customers (all considered collectible) Merchandise inventory (by inventory count at cost) Payables to suppliers for merchandise purchased from them (Will be paid during February 2014) Common stock (2,500 shares)
142,000 77,400 176,000 196,000 70,000 88,000 96,000
No dividends were declared or paid during 2014 Required:
Complete the following two statements. Christopher Corporation Income Statement For the Month of January 2014 Total revenues Less: Total expenses (excluding income tax) Pretax income Less: Income tax expense Net income
$400,000 $142,000 $258,000 $77,000 $181,000
Christopher Corporation Balance Sheet At January 31, 2014 Assets Cash Receivables from customers Merchandise inventory Total assets
$176,000 $196,000 $70,000 $449,000
Liabilities Payables to suppliers Income taxes payable Total liabilities
$88,000 $77,000 $165,000
Stockholders’ equity
Common stock Retained earnings Total stockholders’ equity Total liabilities and stockholders’ equity
$96,000 $188,000 $284,000 $449,000
Thank You Nashwa Saad 25 / 10 / 2016
6 © 2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
