Preparation of Financial Statements

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Practice 2-14 Expanded Accounting Equation p. 60
For the following four cases, use the expanded accounting equation to compute the missing quantity.

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Exercise 2-6 Balance Sheet Preparation p. 63
From the following data, prepare a classified balance sheet for Simon Company at December
31, 2006.

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Exercise 2-8 Income Statement Preparation p. 63-64
The following selected information is taken from the records of Beckstrom Corporation.

1. Prepare an income statement for the year ended December 31, 2006. (Assume that 7,500 shares of stock are outstanding.)
2. Explain what the EPS ratio tells the reader about Beckstrom Corporation.

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Exercise 2-9 Cash Flow Computations p. 64
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.

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Exercise 2-11 Retained Earnings Computations p. 64
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.

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Exercise 2-14 Cash Flow Classifications p. 65
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