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    Identify accounts by category and financial statement & understanding financial statement relationships

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    1. Identify accounts by category and financial statement(s). Listed here are a number of financial statement captions. Indicate in the spaces to the right of each caption the category of each item and the financial statement(s) on which the item can usually be found. Use the following abbreviations:

    Category Financial Statement

    Asset A Balance Sheet BS

    Liability L Income statement IS

    Owners' equity OE

    Revenue R

    Expense E

    Gain G

    Loss LS

    Cash _________ ___________

    Accounts Payable ______ _______

    Common Stock _______ ______

    Depreciation Expense _____ _____

    Net Sales _______ _______

    Income Tax Expense ______ ______

    Short-term Investments _____ _____

    Gain on sale of land _____ _____

    Retained earnings _____ _____

    Dividends payable _____ ______

    Accounts receivable _____ _____

    Short-term debt _____ _____

    2. Understanding financial statement relationships. The information presented here represents selected data from the December 31, 2007, balance sheets and income statements for the year then ended for three firms.

    Firm A Firm B Firm C

    Total assets, 12/31/07...................... $420,000 $540,000 $325,000
    Tota1 liabilities, 12/31/07.....................215,000 145,000 ?
    Paid-in capital, 12/31/07......................75,000 ? 40,000
    Retained earnings, 12/31/07................ ? 310,000 ?
    Net income for 2007............................ ? 83,000 113,000
    Dividends declared and paid during 2007...50,000 19,000 65,000
    Retained earnings, 1/1/07........................78,000 ? 42,000

    Calculate the missing amounts for each firm.

    3. Calculate retained earnings. From the following data, calculate the retained earnings balance as of December 31, 2006.

    Retained earnings, December 31,2006....................................$311,800
    Cost of equipment purchased during 2007............................... 32,400
    Net loss for the year ended December 31, 2007....................... 4,700
    Dividends declared and paid in 2007........................................ 18,500
    Decrease in cash balance from January 1, 2007, to December 31, 2007..... 13,600
    Decrease in long-term debt in 2007...................................... 14,800

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    https://brainmass.com/business/financial-statements/62512

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