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Accounting: Concepts and Applications, 9eChapter 2: Financial Statements ISBN: 0324187564 Author: W. Steve Albrecht, James D. Stice, Earl K. Stice, Monte R. Swain Citation Generator
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 $8000 A $3500
Case B 16,000 5,000 $5000 $2000
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.
Spreadsheet
Accounts payable
$ 62,500
Accounts receivable
123,000
Buildings
418,500
Owners' 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
Owners' equity, 12/31/06
?
Exercise 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)
?
Miscellaneous expense
4,400
Owners' equity
140,000
Salaries expense
61,000
Fees (revenues)
384,000
Prepare an income statement for the year ended December 31, 2006. (Assume that 7,500 shares of stock are outstanding.)
Exercise 2-9 Cash Flow Computations
From the following selected data, compute:
Net cash flow provided (used) by operating activities.
Net cash flow provided (used) by investing activities.
Net cash flow provided (used) by financing activities.
Net increase (decrease) in cash during the year.
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 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
Exercise 2-11 Retained Earnings 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 of $210,000. Edgemont paid a cash dividend of $25,000 in 2006. No additional stock was issued. Compute the retained earnings on December 31, 2005, and 2006.
Exercise 2-14 Cash Flow Classifications
For each of the following items, indicate whether it would be classified and reported under the operating activities (OA), investing activities (IA), or financing activities (FA) section of a statement of cash flows:
Cash receipts from selling merchandise
Cash payments for wages and salaries
Cash proceeds from sale of stock
Cash purchase of equipment
Cash dividends paid
Cash received from bank loan
Cash payments for inventory
Cash receipts from services rendered
Cash payments for taxes
Cash proceeds from sale of property no longer needed as expansion site
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