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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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