Chapter 1 Introduction to Accounting and Business
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EX 1-15 Net income and stockholders’ equity for four businesses
OBJ. 5
Four different corporations, Juliet, Kilo, Lima, and Mike, show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of stockholders’
equity, are summarized as follows:
Total Assets Total Liabilities
Beginning of the year 600,000
150,000 End of the year
1,125,000 500,000
On the basis of the above data and the following additional information for the year, determine the net income or loss of each company for the year. Hint: First determine
the amount of increase or decrease in stockholders’ equity during the year. Juliet:
No additional capital stock was issued, and no dividends were paid. Kilo:
No additional capital stock was issued, but dividends of 55,000 were paid. Lima:
Additional capital stock of 100,000 was issued, but no dividends were paid. Mike:
Additional capital stock of 100,000 was issued, and dividends of 55,000 were paid.
EX 1-16 Balance sheet items
OBJ. 5
From the following list of selected items taken from the records of Hoosier Appliance Service as of a specific date, identify those that would appear on the balance sheet:
1. Accounts Receivable 2. Cash
3. Fees Earned 4. Land
5. Capital Stock 6. Supplies
7. Supplies Expense 8. Utilities Expense
9. Wages Expense 10. Wages Payable
EX 1-17 Income statement items
OBJ. 5
Based on the data presented in Exercise 1-16, identify those items that would appear on the income statement.
EX 1-18 Retained earnings statement
OBJ. 5
Financial information related to Infra-Systems Company for the month ended November 30, 2014, is as follows:
Net income for November 275,000
Dividends paid during November 40,000
Retained earnings, November 1, 2014 400,000
a. Prepare a retained earnngs statement for the month ended November 30, 2014. b. Why is the retained earnings statement prepared before the November 30, 2014, bal-
ance sheet?
EX 1-19 Income statement
OBJ. 5
Exploration Services was organized on March 1, 2014. A summary of the revenue and expense transactions for March follows:
Fees earned 1,100,000
Wages expense 715,000
Rent expense 80,000
Supplies expense 9,000
Miscellaneous expense 12,000
Prepare an income statement for the month ended March 31.
Kilo: Net income, 230,000
Retained earnings, November 30, 2014:
635,000
Net income: 284,000
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Chapter 1 Introduction to Accounting and Business
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