Financial Analysis Manager I

For PE 3-1 through 3-5, do the following for each transaction:
a. List the accounts impacted by the transaction.
b. For each account, indicate whether the transaction increased or decreased the account.
c. For each account, indicate how much the transaction increased or decreased the account.
d. Compute the impact of the transaction on total assets, total liabilities, and total owners' equity.

3-1 Impact of a Transaction
The company borrowed $85,000 in cash from Eastern Bank.
3-2 Impact of a Transaction
The company used $45,000 in cash to purchase land on the west side of Hatu Lake.
Journal Entries
3-11 Refer to PE 3-1. Make the journal entry necessary to record the transaction.
3-12 Journal Entries
Refer to PE 3-2. Make the journal entry necessary to record the transaction.

Week 3
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 $23,000 $11,000 $4,500

Case B $17,500 $4,500 $3,600

Case C $14,000 $11,000 $27,000

Case D $45,000 $29,000 $18,000

2-25
Balance Sheet Preparation
From the following data, prepare a classified balance sheet for Taylorsville Construction
Company at December 31, 2009.

Accounts payable . . . . . . . . . . . . . . . . . . . . . . $ 74,300
Accounts receivable . . . . . . . . . . . . . . . . . . . . . 113,500
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512,000
Owners' equity, 1/1/09 . . . . . . . . . . . . . . . . . . 314,300
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,600
Distributions to owners during 2009 . . . . . . . . 48,100
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,250
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Mortgage payable . . . . . . . . . . . . . . . . . . . . . . 423,400
Net income for 2009 . . . . . . . . . . . . . . . . . . . . 109,450
Owners' equity, 12/31/09 . . . . . . . . . . . . . . . . ?

2-27 Income Statement Preparation
The following selected information is taken from the records of Pickard and Associates.
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 143,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . 95,000
Advertising expense . . . . . . . . . . . . . . . . . . . . . . 14,500
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,000
Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . 31,500
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
Income taxes (30% of income before taxes) . . . . ?
Miscellaneous expense . . . . . . . . . . . . . . . . . . . . 5,100
Owners' equity . . . . . . . . . . . . . . . . . . . . . . . . . . 215,000
Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . 78,000
Fees (revenues) . . . . . . . . . . . . . . . . . . . . . . . . . 476,000
1. Prepare an income statement for the year ended December 31, 2009. (Assume that 11,000 shares of stock are outstanding.)

2. Explain what the EPS ratio tells the reader about Pickard and Associates.

2-32 Cash Flow Computations
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
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

2-33 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:
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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