4. EL DERECHO CONCURSAL ESPAÑOL
4.4 ADMINISTRADOR CONCURSAL
Be. 175
Indicate in the space by letter whether each statement below applies to a sole proprietorship (S), partnership (P), or corporation (C). More than one answer may be appropriate.
_____ a. Simple to establish.
_____ b. Shared control.
_____ c. Easy to transfer ownership.
_____ d. No personal liability.
_____ e. Tax advantage.
_____ f. Easier to raise funds.
Ans: N/A, SO: 1, Bloom: C, Difficulty: Medium, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics
Solution 175 (5 min.) a.
S & P d. C b.
P e. S & P c.
C f. C
Be. 176
Indicate in the space provided by each item whether it would appear on the statement of cash flows as a(n): (O) operating activity, (I) investing activity, or (F) financing activity.
_____ a. Cash receipts from customers.
_____ b. Issuance of common stock for cash.
_____ c. Payment of cash dividends.
_____ d. Cash purchase of equipment.
_____ e. Cash payments to suppliers.
_____ f. Sale of old machine for cash.
Ans: N/A, SO: 3, Bloom: C, Difficulty: Medium, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
Solution 176 (5 min.) a.
O d. I b.
F e. O c.
F f. I
Be. 177
Use the following information to calculate for the year ended December 31, 2010 (a) net income (net loss), (b) ending retained earnings, and (c) total assets.
Supplies $ 500 Revenues $16,000
Operating expenses 10,000 Cash 15,000
Accounts payable 11,000 Dividends 6,000
Accounts receivable 4,000 Notes payable 1,000
Common stock 10,000 Equipment 7,500
Retained earnings (beginning) 5,000
Ans: N/A, SO: 4, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 177 (5 min.)
(a) $6,000 (b) $5,000 (c) $27,000 Be. 178
Use the following information to calculate for the year ended December 31, 2010 (a) net income (net loss), (b) ending retained earnings, and (c) total assets.
Supplies $ 1,000 Revenues $11,000
Operating expenses 12,000 Cash 15,000
Accounts payable 9,000 Dividends 1,000
Accounts receivable 3,000 Notes payable 1,000
Common stock 9,000 Equipment 6,000
Retained earnings (beginning) 5,000
Ans: N/A, SO: 4, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 178 (5 min.)
(a) ($1,000) (b) $3,000 (c) $25,000
Be. 179
Listed below in alphabetical order are the balance sheet items of Nolan Company at December 31, 2010. Prepare a balance sheet and include a complete heading.
Accounts payable $ 6,000
Accounts receivable 15,000
Building 65,000
Cash 11,000
Common stock 80,000
Land 31,000
Office equipment 5,000
Retained earnings 41,000
Ans: N/A, SO: 4, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 179 (5 min.)
NOLAN COMPANY Balance Sheet December 31, 2010
ASSETS
Cash $ 11,000 Accounts receivable 15,000 Office equipment 5,000 Building 65,000 Land 31,000
Total assets $127,000
LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities
Accounts payable $ 6,000
Stockholders’ Equity
Common stock $80,000
Retained earnings 41,000 121,000
Total liabilities and stockholders’ equity $127,000
Be. 180
Indicate in the space provided by each item whether it would appear on the Income Statement (IS), Balance Sheet (BS), or Retained Earnings Statement (RE):
a. ______ Service Revenue g. ______ Accounts Receivable b. ______ Utilities Expense h. ______ Common Stock
c. ______ Cash i. ______ Equipment
d. ______ Accounts Payable j. ______ Advertising Expense e. ______ Office Supplies k. ______ Dividends
f. ______ Wage Expense l. ______ Notes Payable
Ans: N/A, SO: 4, Bloom: C, Difficulty: Medium, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
Solution 180 (5 min.)
a. IS g. BS
b. IS h. BS
c. BS i. BS
d. BS j. IS
e. BS k. RE
f. IS l. BS
Be. 181
Cesar Ruiz was reviewing his business activities at the end of the year (2010) and decided to prepare a Retained Earnings Statement. At the beginning of the year his assets were $550,000, liabilities were $140,000, and common stock was $120,000. The net income for the year was
$350,000. Dividends of $220,000 were paid during the year.
Prepare a Retained Earnings Statement in good form.
Ans: N/A, SO: 4, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 181 (5 min.)
CESAR RUIZ
Retained Earnings Statement For the Year Ended 2010
Retained Earnings, Beginning $290,000
Add: Net Income 350,000
640,000
Less: Dividends 220,000
Retained Earnings, Ending $420,000
Be. 182
From the following list of selected accounts taken from the records of Schmidt Clinic, identify those that would appear on the balance sheet.
a. Common Stock f. Accounts Payable
b. Patient Revenue g. Cash
c. Land h. Medical Supplies Expense
d. Wages Expense i. Medical Supplies
e. Notes Payable j. Utilities Expense
Ans: N/A, SO: 4, Bloom: K, Difficulty: Easy, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
Solution 182 (5 min.) a, c, e, f, g, i
Be. 183
Determine the missing items.
Assets = Liabilities + Stockholders’ Equity
$75,000 $52,000 (a)
(b) $28,000 $34,000
$84,000 (c) $55,000
Ans: N/A, SO: 5, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 183 (5 min.)
a. $23,000 b. $62,000 c. $29,000
Be. 184
Determine the missing items.
Assets = Liabilities + Stockholders’ Equity
$61,000 $52,000 (a)
(b) $18,000 $30,000
$54,000 (c) $40,000
Ans: N/A, SO: 5, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 184 (5 min.)
b. $9,000 b. $48,000 c. $14,000
Be. 185
Identify which of the following accounts appear on a balance sheet.
(a) Service revenue (b) Cash
(c) Common stock (d) Accounts payable (e) Rent expense (f) Supplies (g) Land
Ans: N/A, SO: 5, Bloom: K, Difficulty: Easy, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
Solution 185 (5 min.) (b), (c), (d), (f), (g)
Be. 186
For the items listed below, fill in the appropriate code letter to indicate whether the item is an asset, liability, or stockholders’ equity item.
Code
Asset A
Liability L
Stockholders’ Equity SE
______ 1. Rent Expense ______ 6. Cash
______ 2. Office Equipment ______ 7. Accounts Receivable ______ 3. Accounts Payable ______ 8. Retained Earnings
______ 4. Common Stock ______ 9. Service Revenue
______ 5. Insurance Expense ______10. Notes Payable
Ans: N/A, SO: 5, Bloom: C, Difficulty: Easy, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
Solution 186 (5 min.)
1. SE 6. A
2. A 7. A
3. L 8. SE
4. SE 9. SE
5. SE 10. L
Be. 187
Classify each of these items as an asset (A), liability (L), or stockholders’ equity (SE).
_____ 1. Accounts receivable _____ 2. Accounts payable _____ 3. Common stock _____ 4. Office supplies _____ 5. Retained earnings _____ 6. Cash
_____ 7. Note payable _____ 8. Equipment
Ans: N/A, SO: 5, Bloom: C, Difficulty: Easy, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
Solution 187 (5 min.)
1. A 5. SE
2. L 6. A
3. SE 7. L
4. A 8. A
Be. 188
At the beginning of the year, Gant Company had total assets of $730,000 and total liabilities of
$300,000. Answer the following questions viewing each situation as being independent of the others.
(1) If total assets increased $225,000 during the year, and total liabilities decreased $100,000, what is the amount of stockholders’ equity at the end of the year?
(2) During the year, total liabilities increased $215,000 and stockholders’ equity decreased
$130,000. What is the amount of total assets at the end of the year?
(3) If total assets decreased $60,000 and stockholders’ equity increased $170,000 during the year, what is the amount of total liabilities at the end of the year?
Ans: N/A, SO: 5, Bloom: AN, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 188 (5 min.)
Total Assets Total Liabilities Stockholders’ Equity
Beginning $730,000 $300,000
Change 225,000 (100,000)
Ending $955,000 - $200,000 = $755,000 (1)
Total Assets Total Liabilities Stockholders’ Equity
Beginning $730,000 $300,000 $430,000
Change 215,000 (130,000)
Ending $815,000 (2) = $515,000 + $300,000
Total Assets Total Liabilities Stockholders’ Equity
Beginning $730,000 $300,000 $430,000
Change (60,000) 170,000
Ending $670,000 = $ 70,000 (3) + $600,000
Be. 189
Reinhardt’s Carpet Cleaning has the following balance sheet items:
Auto Notes Payable
Accounts Payable Common Stock
Cash Retained Earnings
Cleaning Supplies Equipment
Accounts Receivable
Identify which items are (1) Assets (2) Liabilities
(3) Stockholders’ Equity
Ans: N/A, SO: 5, Bloom: C, Difficulty: Medium, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
Solution 189 (5 min.)
(1) Assets—Auto, Cash, Cleaning Supplies, Accounts Receivable, Equipment (2) Liabilities—Accounts Payable, Notes Payable
(3) Stockholders’ Equity—Common Stock, Retained Earnings Be. 190
On June 1, 2010, Shaw Company prepared a balance sheet that shows the following:
Assets (no cash) ... $125,000 Liabilities ... 75,000 Stockholders’ Equity... 50,000 Shortly thereafter, all of the assets were sold for cash.
How would the balance sheet appear immediately after the sale of the assets for cash for each of the following cases?
Cash Received for Balances Immediately After Sale the Assets Assets - Liabilities = Stockholders’ Equity
Cash A $135,000 $________ $________ $________
Cash B 120,000 ________ ________ ________
Cash C 105,000 ________ ________ ________
Ans: N/A, SO: 5, Bloom: AN, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Business Economics
Solution 190 (5 min.)
Cash Received for Balances Immediately After Sale the Assets Assets - Liabilities = Stockholders’ Equity
Cash A $135,000 $135,000 $75,000 $60,000
Cash B 120,000 120,000 75,000 45,000
Cash C 105,000 105,000 75,000 30,000
Be. 191
Compute the missing amount in each category of the accounting equation.
Assets Liabilities Stockholders’ Equity
(a) $263,000 $ ? $ 91,000
(b) $183,000 $ 75,000 $ ?
(c) $ ? $212,000 $310,000
Ans: N/A, SO: 5, Bloom: AN, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 191 (5 min.)
(a) $172,000: ($263,000 - $91,000 = $172,000).
(b) $108,000: ($183,000 - $75,000 = $108,000).
(c) $522,000: ($212,000 + $310,000 = $522,000).
EXERCISES
Ex. 192
Prepare an income statement, a retained earnings statement, and a balance sheet for the medical practice of Linda Denny, MD, from the items listed below for the month of October 2010.
Retained earnings (October 1) $15,000
Common stock 30,000
Accounts payable 6,000
Equipment 32,000
Service revenue 26,000
Dividends 6,000
Dental supplies expense 3,500
Cash 13,000
Utilities expense 700
Dental supplies 2,800
Salaries expense 7,000
Accounts receivable 10,000
Rent expense 2,000
LINDA DENNY, MD Income Statement
For the Month Ended October 31, 2010
____________________________________________________________________________
Revenues $
Expenses $
Total expenses
Net income $ t
Ex. 192 (Cont.)
LINDA DENNY, MD Retained Earnings Statement For the Month Ended October 31, 2010
____________________________________________________________________________
Retained Earnings, October 1 $
Add:
Less:
$ t
LINDA DENNY, MD Balance Sheet October 31, 2010
____________________________________________________________________________
Assets
$
Total assets
$
t Liabilities and Stockholders’ Equity
Liabilities
$ Stockholders’ Equity
$
Total liabilities and stockholders’ equity $ t
Ans: N/A, SO: 4, Bloom: AP, Difficulty: Medium, Min: 15, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 192 (15 min.)
LINDA DENNY, MD Income Statement
For the Month Ended October 31, 2010
____________________________________________________________________________
Revenues
Service revenue ... $26,000 Expenses
Salaries expense ... $7,000 Dental supplies expense ... 3,500 Rent expense ... 2,000 Utilities expense ... 700
Total expenses ... 13,200 Net income ... $12,800
LINDA DENNY, MD Retained Earnings Statement For the Month Ended October 31, 2010
____________________________________________________________________________
Retained Earnings, October 1 ... $15,000 Add: Net income ... 12,800 27,800 Less: Dividends ... 6,000 Retained Earnings, October 31 ... $21,800
LINDA DENNY, MD Balance Sheet October 31, 2010
____________________________________________________________________________
Assets
Cash ... $ 13,000 Accounts receivable ... 10,000 Dental supplies ... 2,800 Equipment ... 32,000
Total assets ... $57,800
Liabilities and Stockholders’ Equity Liabilities
Accounts payable ... $ 6,000 Stockholders’ Equity
Common stock... $30,000
Retained earnings... 21,800 51,800 Total liabilities and stockholders’ equity ... $57,800
Ex. 193
Use the following accounts and information to prepare, in good form, an income statement, a retained earnings statement, and a balance sheet for Pierce Industries for the month ended August 31, 2010.
Accounts payable $ 1,100 Dividends $ 3,000
Accounts receivable 5,400 Insurance expense 1,200
Buildings 60,000 Supplies 1,400
Cash 18,600 Notes payable 3,300
Service revenue 20,700 Rent expense 3,400
Common stock 52,000 Salaries expense 10,000
Retained earnings (beginning) 25,900
PIERCE INDUSTRIES Income Statement
For the Month Ended August 31, 2010
____________________________________________________________________________
Revenues
$ Expenses
$
Total expenses
Net income $ t
PIERCE INDUSTRIES Retained Earnings Statement For the Month Ended August 31, 2010
____________________________________________________________________________
Retained Earnings, August 1 $
Add:
Less:
Retained Earnings, August 31 $ t
Ex. 193 (Cont.)
PIERCE INDUSTRIES Balance Sheet August 31, 2010
____________________________________________________________________________
Assets
$
Total assets
$ t Liabilities and Stockholders’ Equity
Liabilities
$
$ Stockholders’ Equity
$
Total liabilities and stockholders’ equity $ t
Ans: N/A, SO: 4, Bloom: AP, Difficulty: Medium, Min: 15, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 193 (15 min.)
PIERCE INDUSTRIES Income Statement
For the Month Ended August 31, 2010
____________________________________________________________________________
Revenues
Service revenue ... $20,700 Expenses
Salaries expense ... $10,000 Rent expense ... 3,400 Insurance expense ... 1,200
Total expenses ... 14,600 Net income ... $ 6,100
Solution 193 (Cont.)
PIERCE INDUSTRIES Retained Earnings Statement For the Month Ended August 31, 2010
____________________________________________________________________________
Retained Earnings, August 1 ... $25,900 Add: Net income ... 6,100 32,000 Less: Dividends ... 3,000 Retained Earnings, August 31 ... $29,000
PIERCE INDUSTRIES Balance Sheet August 31, 2010
____________________________________________________________________________
Assets
Cash ... $ 18,600 Accounts receivable ... 5,400 Supplies ... 1,400 Buildings... 60,000
Total assets ... $85,400 Liabilities and Stockholders’ Equity
Liabilities
Accounts payable ... $ 1,100 Notes payable ... 3,300
Total liabilities... $ 4,400 Stockholders’ Equity
Common stock... $52,000
Retained earnings... 29,000 81,000 Total liabilities and stockholders’ equity ... $85,400 Ex. 194
At September 1, the balance sheet accounts for Kiner's Restaurant were as follows:
Accounts Payable $ 3,800 Land $33,000
Accounts Receivable 1,600 Common Stock ?
Building 66,000 Notes Payable 46,000
Cash 5,000 Supplies 3,600
Furniture 15,700 Retained Earnings 45,200
The following transactions occurred during the next two days:
Stockholders invested an additional $25,000 cash in the business. The accounts payable were paid in full. (No payment was made on the notes payable.)
Instructions
Prepare a balance sheet at September 3, 2010.
Ans: N/A, SO: 4, Bloom: AP, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 194 (10 min.)
KINER’S RESTAURANT Balance Sheet September 3, 2010
ASSETS
Cash $26,200 Accounts receivable 1,600 Supplies 3,600 Furniture 15,700 Building 66,000 Land 33,000
Total assets $146,100
LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities
Notes payable $ 46,000
Stockholders’ Equity
Common stock $54,900
Retained earnings 45,200 100,100
Total liabilities and stockholders’ equity $146,100
Cash ($5,000 + $25,000 - $3,800) = $26,200 Accounts Payable ($3,800 - $3,800) = $0
Common Stock Beginning balance ($124,900 - $95,000) $ 29,900
Additional investment 25,000
Ending balance $ 54,900
Ex. 195
This information relates to Connor Co. for the year 2010.
Retained earnings, January 1, 2010 $59,000
Advertising expense 1,800
Dividends paid during 2010 7,000
Rent expense 10,400
Service revenue 55,000
Utilities expense 2,400
Salaries expense 28,000
Instructions
After analyzing the data, prepare an income statement and a retained earnings statement for the year ending December 31, 2010.
Ans: N/A, SO: 4, Bloom: AP, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 195 (10 min.)
CONNOR CO.
Income Statement
For the Year Ended December 31, 2010
____________________________________________________________________________
Revenues
Service revenue ... $55,000 Expenses
Salaries expense ... $28,000 Rent expense ... 10,400 Utilities expense ... 2,400 Advertising expense ... 1,800
Total expenses ... 42,600 Net income ... $12,400
CONNOR CO.
Retained Earnings Statement For the Year Ended December 31, 2010
____________________________________________________________________________
Retained earnings, January 1 ... $59,000 Add: Net income ... 12,400 71,400 Less: Dividends ... 7,000 Retained earnings, December 31 ... $64,400 Ex. 196
Here are incomplete financial statements for Brandon, Inc.
BRANDON, INC.
Balance Sheet
Assets Liabilities and Stockholders' Equity
Cash $ 5,000 Liabilities
Inventory 10,000 Accounts payable $ 5,000
Building 40,000 Stockholders' equity
Total assets $55,000 Common stock (a)
Retained earnings (b) Total liabilities and
stockholders' equity $55,000
Ex. 196 (Cont.)
Income Statement
Revenues $80,000
Cost of goods sold (c)
Administrative expenses 10,000
Net income $ (d)
Retained Earnings Statement Beginning retained earnings $10,000
Net income (e)
Dividends 5,000
Ending retained earnings $29,000 Instructions
Calculate the missing amounts.
Ans: N/A, SO: 4,5, Bloom: AN, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 196 (10 min.)
First note that the retained earnings statement shows that (b) equals $29,000.
Accounts payable + Common stock + Retained earnings = Total liabilities and stockholders' equity
$5,000 + a + $29,000 = $55,000 a + $34,000 = $55,000
a = $21,000
Beginning retained earnings + Net income – Dividends = Ending retained earnings
$10,000 + e – $5,000 = $29,000
$5,000 + e = $29,000 e = $24,000
From above, we know that net income (d) equals $24,000.
Revenue – Cost of goods sold – Administrative expenses = Net income
$80,000 – c – $10,000 = $24,000
$70,000 – c = $24,000 c = $46,000
Ex. 197
Sleep Cheap is a private camping ground near the Boulder Peak Recreation Area. It has compiled the following financial information as of December 31, 2010.
Revenues during 2010: camping fees $137,000 Dividends $ 8,000 Revenues during 2010: general store 25,000 Notes payable 50,000
Accounts payable 13,000 Expenses during 2010 127,000
Cash 13,500 Supplies 2,500
Equipment 119,000 Common stock 40,000
Retained earnings (1/1/2010) 5,000 Instructions
(a) Determine net income from Sleep Cheap for 2010.
(b) Prepare a retained earnings statement and a balance sheet for Sleep Cheap as of December 31, 2010.
Ans: N/A, SO: 4,5, Bloom: AP, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 197 (10 min.)
(a) Camping fee revenue ... $137,000 General store revenue ... 25,000 Total revenue ... 162,000 Expenses ... 127,000 Net income ... $ 35,000
(b) SLEEP CHEAP
Retained Earnings Statement For the Year Ended December 31, 2010
__________________________________________________________________
Retained earnings, January 1 ... $ 5,000 Add: Net income ... 35,000 40,000 Less: Dividends... 8,000 Retained earnings, December 31... $32,000
SLEEP CHEAP Balance Sheet December 31, 2010
__________________________________________________________________
Assets
Cash ... $ 13,500 Supplies ... 2,500 Equipment... 119,000 Total assets ... $135,000
Solution 197 (Cont.)
Liabilities and Stockholders’ Equity Liabilities
Notes payable ... $50,000 Accounts payable ... 13,000
Total liabilities... $ 63,000 Stockholders’ equity
Common stock... 40,000
Retained earnings... 32,000 72,000 Total liabilities and stockholders’ equity ... $135,000 Ex. 198
John Tate is the bookkeeper for Gabelli Company. John has been trying to get the balance sheet of Gabelli Company to balance. It finally balanced, but now he's not sure it is correct.
GABELLI COMPANY Balance Sheet December 31, 2010
Assets Liabilities and Stockholders' Equity
Cash $18,500 Accounts payable $21,000
Supplies 9,500 Accounts receivable (12,000)
Equipment 50,000 Common stock 40,000
Dividends 10,000 Retained earnings 39,000
Total assets $88,000 Total liabilities and
stockholders' equity $88,000 Instructions
Prepare a correct balance sheet.
Ans: N/A, SO: 5, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 198 (5 min.)
GABELLI COMPANY Balance Sheet December 31, 2010
____________________________________________________________________________
Assets
Cash ... $18,500 Accounts receivable ... 12,000 Supplies... 9,500 Equipment... 50,000 Total assets ... $90,000
Solution 198 (Cont.)
Liabilities and Stockholders’ Equity Liabilities
Accounts payable ... $21,000 Stockholders’ equity
Common stock... $40,000
Retained earnings... 29,000* 69,000 Total liabilities and stockholders’ equity ... $90,000
*$39,000 – $10,000 Ex. 199
The summaries of data from the balance sheet, income statement, and retained earnings statement for two corporations, Bates Corporation and Wilson Enterprises, are presented below for 2010.
Bates Corporation Wilson Enterprises Beginning of year
Total assets $110,000 $130,000
Total liabilities 80,000 (d)
Total stockholders' equity (a) 90,000
End of year
Total assets (b) 180,000
Total liabilities 120,000 65,000
Total stockholders' equity 70,000 (e)
Changes during year in retained earnings
Dividends (c) 5,000
Total revenues 225,000 (f)
Total expenses 165,000 80,000
Instructions
Determine the missing amounts. Assume all changes in stockholders' equity are due to changes in retained earnings.
Ans: N/A, SO: 5, Bloom: AN, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 199 (10 min.)
(a) Assets = Liabilities + Stockholders' Equity
$110,000 = $80,000 + (a)
(a) = $30,000
(b) Assets = Liabilities + Stockholders' Equity
(b) = $120,000 + $70,000
(b) = $190,000
Solution 199 (Cont.)
(c) Beginning + Revenues – Expenses – Dividends = Ending
stockholders' stockholders'
Equity Equity
$30,000(a) + $225,000 – $165,000 – (c) = $70,000
$90,000 – (c) = $70,000
(c) = $20,000
(d) Assets = Liabilities + Stockholders' Equity
$130,000 = (d) + $90,000
(d) = $40,000
(e) Assets = Liabilities + Stockholders' Equity
$180,000 = $65,000 + (e)
(e) = $115,000
(f) Beginning + Revenues – Expenses – Dividends = Ending
stockholders' stockholders'
Equity Equity
$90,000 + (f) – $80,000 – $5,000 = $115,000(e)
(f) = $110,000
Ex. 200
This information is for Campo Corporation for the year ended December 31, 2010.
Cash received from lenders $15,000 Cash received from customers 55,000 Cash paid for new equipment 30,000
Cash dividends paid 6,000
Cash paid to suppliers 18,000
Cash balance 1/1/10 12,000
Instructions
Prepare the 2010 statement of cash flows for Campo Corporation.
Ans: N/A, SO: 5, Bloom: AP, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 200 (10 min.)
CAMPO CORPORATION Statement of Cash Flows
For the Year Ended December 31, 2010
_____________________________________________________________________________
Cash flows from operating activities
Cash received from customers ... $55,000 Cash paid to suppliers ... (18,000)
Net cash provided by operating activities ... $37,000 Cash flows from investing activities
Cash paid for new equipment... (30,000)
Net cash used by investing activities... (30,000) Cash flows from financing activities
Cash received from lenders... 15,000 Cash dividends paid... (6,000)
Net cash provided by financing activities... 9,000 Net increase in cash ... 16,000 Cash at beginning of period ... 12,000 Cash at end of period ... $28,000 Ex. 201
One item is omitted in each of the following summaries of balance sheet and income statement data for three different corporations, A, B, and C.
Determine the amounts of the missing items, identifying each corporation by letter.
Corporation A B C Beginning of the Year:
Assets $410,000 $150,000 $199,000
Liabilities 250,000 115,000 166,000
End of the Year:
Assets 430,000 195,000 195,000
Liabilities 280,000 95,000 169,000
During the Year:
Additional Investment by stockholders ? 79,000 78,000
Dividends 70,000 83,000 ?
Revenue 195,000 ? 187,000
Expenses 155,000 113,000 183,000
Ans: N/A, SO: 5, Bloom: AN, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting
Solution 201 (10 min.) Corporation A ($20,000)
Beginning Stockholders’ equity ($410,000 - $250,000) $160,000 Additional investments ($150,000 + $70,000 - $160,000 - $40,000) 20,000
Net income for year ($195,000 - $155,000) 40,000
220,000
Less dividends 70,000
Ending Stockholders’ equity ($430,000 - $280,000) $150,000 Corporation B ($182,000)
Beginning Stockholders’ equity ($150,000 - $115,000) $ 35,000
Additional investments 79,000
Net income for year ($183,000 - $35,000 - $79,000) 69,000 [Revenues = $182,000 ($113,000 + $69,000)] 183,000
Less dividends 83,000
Ending Stockholders’ equity ($195,000 - $95,000) $100,000 Corporation C ($89,000)
Beginning Stockholders’ equity ($199,000 - $166,000) $ 33,000
Additional investments 78,000
Net income for year ($187,000 - $183,000) 4,000 115,000
Less dividends ($115,000 - $26,000) 89,000
Ending Stockholders’ equity ($195,000 - $169,000) $ 26,000