1. Prepare an income statement, a retained earnings statement, and a
balance sheet for the dental practice of Bob Brown, DDS, from the
items listed below for the month of September.
Retained earnings (September 1) $12,000
Common stock 30,000
Accounts payable 7,000
Equipment 30,000
Service revenue 25,000
Dividends 6,000
Dental supplies expense 3,500
Cash 8,000
Utilities expense 700
Dental supplies 2,800
Salaries expense 7,000
Accounts receivable 14,000
Rent expense 2,000
2. Listed below in alphabetical order are the balance sheet items of
Long Company at December 31, 1999. Prepare a balance sheet and
include a complete heading.
Accounts payable $ 9,000
Accounts receivable 15,000
Building 46,000
Cash 12,000
Common stock 80,000
Land 52,000
Office equipment 4,000
Retained earnings 40,000
3. INSTRUCTIONS
State the missing items identified by ?.
1. Gross profit - Operating expenses = ?
2. ? + ? = Operating expenses
3. Sales - (? + ?) = Net sales
4. Income from operations + ? - ? = Net income
5. Net sales - Cost of goods sold = ?
6. Cost of goods sold + Gross profit on sales = ?
4. The Henry Company gathered the following condensed data for the
year ended December 31, 1999:
Cost of goods sold $ 684,000
Net sales 1,250,000
Administrative expenses 239,000
Interest expense 58,000
Dividend revenue 38,000
Loss from employee strike 233,000
Selling expenses 45,000
INSTRUCTIONS
1. Prepare a single-step income statement for the year ended
December 31, 1999.
2. Prepare a multiple-step income statement for the year ended
December 31, 1999.
5. The following items are taken from the financial statements of Walsh
Company for 1999:
Accounts Payable $ 14,000
Accounts Receivable 11,000
Accumulated Depreciation——Video Equipment 29,000
Advertising Expense 21,000
Cash 15,000
Common Stock 90,000
Depreciation Expense 12,000
Dividends 14,000
Insurance Expense 3,000
Note Payable 70,000
Prepaid Insurance 6,000
Rent Expense 17,000
Retained Earnings 12,000
Salaries Expense 32,000
Salaries Payable 3,000
Service Revenue 133,000
Supplies 4,000
Supplies Expense 6,000
Video Equipment 210,000
INSTRUCTIONS
(a) Calculate the balance of Retained Earnings that would appear on
a balance sheet at December 31, 1999.
(b) Prepare a classified balance sheet for Walsh Company at
December 31, 1999 assuming the note payable is a long-term
liability.
(c) Compute the current ratio, debt to total assets ratio, and
return on assets ratio. Assets at the beginning of 1999 totaled
$183,000.
6. Selected transactions for the Barkley Company are listed below.
List the number of the transaction and then describe the effect of
each transaction on assets, liabilities, and stockholders' equity.
Sample: Made initial cash investment in the business.
The answer would be——Increase in assets and increase in
stockholders' equity.
1. Paid monthly utility bill.
2. Purchased new display case for cash.
3. Paid cash for repair work on security system.
4. Billed customers for services performed.
5. Received cash from customers billed in 4.
6. Dividends paid to owners.
7. Incurred advertising expenses on account.
8. Paid monthly rent.
9. Received cash from customers when service was rendered.
7. Under a double-entry system, show how the entry in each statement is
entered in the ledger by using debit or credit to indicate the
increase or decrease in the affected account.
Debit or Credit
1. An increase in Salary Expense. ___________________
2. A decrease in Accounts Payable. ___________________
3. An increase in Prepaid Insurance. ___________________
4. An increase in Common Stock. ___________________
5. A decrease in Office Supplies. ___________________
6. An increase in Dividends. ___________________
7. An increase in Service Revenue. ___________________
8. A decrease in Accounts Receivable. ___________________
9. An increase in Rent Expense. ___________________
10. A decrease in Store Equipment. ___________________
8. Before month-end adjustments are made, the February 28 trial
balance of Joe's Enterprise contains revenue of $9,000 and expenses
of $4,400. Adjustments are necessary for the following items:
- Depreciation for February is $1,300.
- Revenue earned but not yet billed is $2,800.
- Accrued interest expense is $700.
- Revenue collected in advance that is now earned is $3,500.
- Portion of prepaid insurance expired during February is $400.
INSTRUCTIONS
Calculate the correct net income for Joe's Income Statement for
February.
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