Accounting Practice Exercise
Cash flow classifications, retained earnings computation, and balance sheet. See attached file for full problem description.
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Practice 2-14 Expanded Accounting Equation
For the following four cases, use the expanded accounting equation to compute the
missing quantity.
Assets Liabilities/Capital Stock/ Retained Earnings/
Case A $20,000 $8,000/ A/ 3,500
Case B 16,000 B / 5,000 / 2,000
Case C C 11,000 / 14,000 / 32,000
Case D 46,000 30,000/ 20,000 / D
Balance Sheet Preparation:
From the following data, prepare a classified balance sheet for Simon Company at
December 31, 2006.
Spreadsheet
Accounts payable 62, 500
Accounts receivable 123,000
Buildings 418,500
Owner’s equity, 1/1/06 210,000
Cash 179,750
Distributions to owners during 2006 21,750
Supplies 3,750
Land 130,000
Mortgage payable 479,500
Net income for 2006 124,750
Owner’s equity ?
Income Statement preparation
The following selected information is taken from the records of Beckstrom Corpartion.
Prepare an income statement for the year ended December 31, 2006. Assume that 7,500
shares of stock are outstanding.)
Accounts payable 35,000
Accounts receivable 65,000
Advertising expense 15,000
Cash 19,500
Supplies expense 46,000
Rent expense 10,000
Utilities expense 3,000
Income taxes (30% of income before taxes) ?
Miscellaneous expense 4,400
Owner’s equity 140,000
Salaries expense 61,000
Fee (revenues) 384,000
Cash Flow Computation
From the following selected data, compute:
1. Net cash flow provided (used) by operating activities.
2. Net cash flow provided (used) by investing actitivities.
3 Net cash flow provided (used) by financing activities.
4. Net increase (decrease) in cash during the year.
5. The cash balance at the end of the year.
Cash receipts from:
Customers 270,000
Investments by owners 54,000
Sale of building 90, 000
Proceeds from the bank 60,000
Cash payments for:
Wages 82,000
Utilities 3,000
Advertising 4,000
Rent 36,000
Taxes 67,000
Dividends 20,000
Repayment of principal on loan 40,000
Purchase of land 106,000
Cash balance at the beginning of yr. 386,000
Retained Earnings Computations:
Compute the retained earnings on December 31, 2005, and 2006.
During 2006, Edgemont Corporation had revenues of $230,000 and expenses, including
income taxes, of $190,000. On December 31, 2005, Edgemont had assets of $350,000,
liabilities of $80,000, and capital stock of $210,000. Edgemont paid a cash dividend of
$25,000 in 2006. No additional stock was issued.
"How are the cash sales computed in step 1? The credit is 60% of the actual and budgeted sales but the cash is not 40% of the actual and budgeted sales."
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