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Balance Sheet and Income Statement Preperation for Taylorsville Construction

Exercise 2-14

Expand 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 A 4,500
Case B 17,500 B $ 4,500 3,600
Case C C $14,000 11,000 27,000
Case D 45,000 $29,000 18,000 D

Exercises 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 . . . . . . . . . . . . . . . . ?

Exercise 2-27 (part 1 only)
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.)

Exercise 2-29
Retained Earnings Computations
During 2009, Edgemont Corporation had revenues of $230,000 and expenses, including income taxes, of $190,000. On December 31, 2008, 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 2009. No additional stock was issued. Compute the retained earnings on December 31, 2008, and 2009.

Exercise 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

Exercise 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

Solution Summary

The solution examines a balance sheet preparation for Taylorsville Construction. An income statement is prepared for the year ended December 31, 2009.

$2.19