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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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