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Accounting problems

Chapter 2
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

Exercise 2-6
Balance Sheet preparation
From the following data, prepare a classified balance sheet for Simon Company at December 31, 2006

Accounts payable.................................................$62,500
Accounts receivable............................................... 123,000
Buildings............................................................418,000
Owner's equity 01/01/06............................................210,000
Cash...................................................................179,750
Distribution to owners during 2006................................21,750
Supplies................................................................3,750
Land.................................................................... 130,000
Mortgage payable......................................................479,500
Net income for 2006.................................................. 124,750
Owner equity 12/31/06................................................. ...?

2-8 Income Statement preparation
The following selected information is taken from the records of Beckstrom Corporation

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)............................?
Misc. expense..............................................................4,400
Owners equity..............................................................140,000
Salaries expense............................................................61,000
Fees (revenue)........................................................ 384,000

Prepare an income statement for the year ended December 31, 2006. (Assume that 7,500 shares of stock are outstanding)

2-9 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 activities
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
Investment by owners.........54,000
Sale of building................90,000
Proceeds from bank loan......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 beginning of year ...............$386,000

2-11 Retained earning computations

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 $210,000. Edgemont paid a cash dividend of $25,000 in 2006. No additional stock was issued compute the retained earnings for December 31, 2005.

2-14 Cash flow classifications

For each of the following items indicate whether it would be classified and reported the operating activities (OA), investing activities (IA), or financing activities (FA) section of statement cash flows:

a Cash receipts from selling merchandise
b Cash payments for wages and salaries
c Cash proceeds from sale of stock
d Cash purchase of equipment
e Cash dividends paid
f Cash received from bank loan
g Cash payments for inventory
h Cash receipts from services rendered
i Cash payments for taxes
j Cash proceeds from sale of property no longer needed as expansion site

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Chapter 2
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

Assets = Liabilities + Equity + Retained Earnings

Case A 20,000 = 8,000 + A + 3,500
A = 8,500

Case B 16,000 = B + 5,000 + 2,000
B = 9,000

Case C C = 11,000 + 14,000 + 32,000
C = 57,000

Case D 46,000 = 30,000 + 20,000 + D
D = -4,000

Exercise 2-6
Balance Sheet preparation
From the following data, prepare a classified balance sheet for Simon Company at December 31, 2006

Accounts payable.................................................$62,500
Accounts receivable............................................... 123,000
Buildings............................................................418,000
Owner's equity 01/01/06............................................210,000
Cash...................................................................179,750
Distribution to owners during 2006................................21,750
Supplies................................................................3,750
Land.................................................................... 130,000
Mortgage payable......................................................479,500
Net income for 2006.................................................. 124,750
Owner equity 12/31/06................................................. ...?
Simon Company
Statement of Retained Earnings
For the year ended December 31, 2006

Owners' equity, 1/1/06 210,000
Add: Net income for 2006 124,750
Less: Distributions to owners during 2006 21,750
Owners' ...

Solution Summary

This solution is to answer how to use the expanded accounting equation to compute the missing quantity, prepare a classified balance sheet for Simon Company, Income Statement preparation of Beckstrom Corporation, Cash flow computation, retained earning computations of Edgemont Corporation, and Cash flow classifications.

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