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Prepare corrected balance sheets and income statements

See attached file for clarity.

Question 1: Problem 1-4A (page 44 in the text)

Pete is the president of Island Enterprises. Island Enterprises began business on January 1, 2008. The company's controller is out of the country on business. Pete needs a copy of the company's balance sheet for a meeting tomorrow and asks his assistant to obtain the required information from the company's records. She presents Pete with the following balance sheet. He asks you to review it for accuracy.

Island Enterprises
Balance Sheet
For the year ended December 31, 2008

Assets Liabilities and Stockholder's Equity

Accounts payable $ 29,500 Accts. Receivables $ 23,200
Building and equipment $177,300 Supplies $ 12,200
Cash $ 14,750 Capital Stock $100,000
Cash Dividends paid $ 16,000 Net Income 2008 $113,850

1. Prepare a corrected balance sheet. (respond in excel, please)
2. Draft a memo explaining the major differences between the balance sheet Pete's assistant prepared and the one you prepared (Word Document)

Question 2: Problem 1-7A (pages 45-46 in the text)

Heidi's Bakery Inc. operates a small pastry business. The company has always maintained a complete and accurate set of records. Unfortunately, the c9ompany's accountant left in a dispute with the president and took the 2008 financial statements with her. The following balance sheet and income statement were prepared by the company's president:

Heidi's Bakery
Income Statement
For the year ended December 31, 2008

Revenues:
Accts. Receivable $15,500
Pastry Revenue $23,700 $39,200

Expenses:
Dividends $ 5,600
Accts. Payable $6,800
Utilities $ 9,500
Salary and Wages $18,200 $41,100

Net Loss $ (900)

Heidi's Bakery
Balance Sheet
For the year ended December 31, 2008

Assets Liabilities and Stockholder's Equity

Cash $ 3,700 Pastry Revenue
Building and Equip. $60,000 Credit sales $22,100
Less: Notes Payable (40,000) Capital Stocks $30,000
Land $50,000 Net Loss (900)

Total Liabilities and
Total Assets $73,700 Stockholder's Equity $73,700

1. Prepare a corrected income statement for the year ended December 31, 2008 (Please response in excel format).
2. Prepare a statement of retained earnings for the year ended December 31, 2008 (the actual amount retained earnings on January 1, 2008, was $39,000. The December 31, 2008 retained earn8ing balance shown is incorrect. The president simply "plugged in" this amount to make the Balance sheet balance.) (Please response in excel format).
3. Prepare corrected balance Sheet at December 31, 2008. (Please response in excel format).
4. Draft a memo to the president explaining the major differences between the income statement he prepared and the one you prepared. (Please respond in word document)

Question 3: Problem 2-7A (page 98 in the text)

Single step Income statement items, arranged in alphabetical order, are taken from the records of Corbin Enterprises for the year ended December 31, 2008

Advertising expense $ 9,000
Cost of goods $150,000
Depreciation expense/computer $ 4,500
Dividend Revenue $ 2,700
Income Tax expense $ 30,700
Interest expense $ 1,900
Rent expense Office $ 26,400
Rent expense Salesperson's car $ 18,000
Sales Revenue $350,000
Supplies Expense Office $ 1,300
Utilities Expense $ 6,750
Wages Expense Office $ 45,600

1. Prepare multi-step income statement for the year ended December 31, 2008. (Please response in excel format).

2. What advantages do you see in this form for the income statement? (Please respond in word document.)

3. Compute Corbin's profit margin. (Please response in excel format).

4. Comment on Corbin's profitability. What other Factors need to be taken into account top assess Corbin's profitability? (Please respond in word document.)

Attachments

Solution Summary

Problem 1-4A, Problem 17A, Problem 2-7A. Your response is in excel. Each problem is on a separate tab. The discussion portions are in word after the designated question.

$2.19