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
$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
Owners' equity, 1/1/06
Distributions to owners during 2006
Net income for 2006
Owners' equity, 12/31/06
Exercise 2-8 Income Statement Preparation
The following selected information is taken from the records of Beckstrom Corporation.
Income taxes (30% of income before taxes)
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:
Investments by owners
Sale of building
Proceeds from bank loan
Cash payments for:
Repayment of principal on loan
Purchase of land
Cash balance at beginning of year
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
The solution explains various accounting questions