Chapter 1
Chapter 1
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191. Inventories
192. Issues financial accounting concepts that are used as a guide to accounting standard setting
193. Has the ultimate authority to set accounting standards, but has allowed the profession to do so
194. Prepares and grades the Uniform CPA Examination
195. An agency of the federal government
196. A professional organization of certified public accountants
197. Primarily responsible for setting accounting standards today
198. Requires that publicly traded companies file annual and quarterly financial statements on a timely basis
Chapter 1
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200. Vick Corporation has been in the business of delivering small packages for local companies within the city of
Atlanta, Georgia, since 1960. The following information concerning financial activities during 2017 is available at
December 31, 2017:
Delivery revenue $380,000 Salary and wage expense $82,000
Dividends declared and paid 85,000 Rent expense 43,000
Buildings 140,000 Land 60,000
Accounts payable 30,000 Accounts payable 30,000
Capital stock 105,000 Retained earnings,
Water, gas, and January 1, 2017 42,000
electricity 28,000 Notes payable 34,000
Cash 56,000 Income tax expense 18,000
A. Prepare an income statement for the year ended December 31, 2017.
B. If you were a bank loan officer and Vick Corporation wanted to borrow $100,000 from your bank, would you lend
the money? Explain.
C. Calculate retained earnings at December 31, 2017.
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201. Meredith Corporation is in the business of providing dog and cat grooming services to customers within the city of
New York. The following information concerning financial activities during 2017 is available at December 31, 2017:
Grooming revenue $130,000 Salary and wage expense $44,000
Dividends declared and paid 13,000 Rent expense 24,000
Equipment 40,000 Furniture 60,000
Accounts payable 30,000 Accounts receivable 23,000
Capital stock 22,000 Retained earnings, Jan. 1,2017 21,000
Utilities expense 10,000 Notes payable 88,000
Cash 33,000 Income tax expense 7,000
A. Calculate net income for 2017.
B. Prepare a statement of retained earnings for the year ended December 31, 2017.
C. What information can you derive from the statement of retained earnings concerning this company? Explain.
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203. Read the information for Taryn Corporation and determine the following amounts.
A) The balance of retained earnings at the end of 2017.
B) The total stockholders’ equity at the end of 2017. ___________________________
C) Name the two events that might cause stockholders’ equity to increase.
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204. Read the information for Taryn Corporation and prepare an income statement in good form.
205. Read the information for Taryn Corporation and prepare a balance sheet in good form.
Chapter 1
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KEYWORDS: Bloom’s: Analyzing
206. Read the information for Taryn Corporation and determine the following amounts.
A) Total revenues for 2017.
B) Total expenses for 2017. __________________________
C) What is the purpose of the income statement?
D) Is Taryn Corporation profitable? Explain your answer.
E) Is this the first year of operations for Taryn Corporation? Explain your answer.
Chapter 1
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208. Read the information for Canyon Corporation and determine the following amounts.
A) Total revenues for 2017.
B) Total expenses for 2017.
C) Net income for 2017.
Chapter 1
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209. Read the information for Canyon Corporation and determine the following amounts.
A) Stockholders’ equity at the end of 2017.
B) Retained earnings at the end of 2017. ____________________________
C) Name two events that might cause stockholders’ equity to decrease.
Chapter 1
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210. Read the information for Canyon Corporation and prepare an income statement in good form.
Chapter 1
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211. Read the information for Canyon Corporation and prepare a balance Sheet in good form.
Chapter 1
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212. Assume that you have received copies of the financial statements for PepsiCo for the years ending December 31,
2017 and 2016. Answer the following questions:
A) If you were a banker, why would you need information from PepsiCo’s financial statements?
B) If you were a potential investor in PepsiCo stock, what information would you want from its financial statements?
C) If you were a labor negotiator for a union that represents a group of PepsiCo’s employees, which financial
statement would provide you with the most useful information?
Chapter 1
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213. Bullseye, Inc., started the year with total assets of $400,000 and total liabilities of $240,000. Net income for the year
is $120,000 and dividends declared and paid during the year are $90,000.
A) What is the amount of Bullseye’s total stockholders’ equity at the end of the year?
B) Could Bullseye have paid additional dividends during the year? Explain your answer.
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214. Ramos Corp. started business at the beginning of the year, with assets of $650,000 and stockholders’ equity of
$290,000. By the end of the year, assets increased by $80,000 and liabilities increased by $60,000. Other than net income
or loss, the only change in stockholders’ equity was dividends declared and paid of $55,000.
A) What was the amount of Ramos Corp. stockholders’ equity at the end of the year?
B) What was the amount of Ramos Corp. net income or net loss for the year?
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215. Presented below are selected data from the balance sheet of Farmer Company for 2017. The figures are expressed in
millions.
Total current assets $ 5,572
Property, plant, and equipment 16,325
Other assets ?
Total current liabilities 3,274
Total long-term debt 5,632
Total stockholders’ equity 19,639
A) Determine the amount of “Other assets” for Farmer’s 2017 balance sheet. (HINT: You must use the accounting
equation concept to determine your answer.)
B) How much of Farmer Company is financed by creditors? How much is financed by the owners?
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216. Presented below are selected data from the accounting records for Micco’s Gift Store for 2017.
Net sales $ 190,000
Income taxes 30,000
Cost of sales 80,000
Operating expenses 45,000
Dividends 12,000
A) Calculate the net income or loss for 2017.
B) Explain how the amount from part “A” will affect the financial position of Micco’s Gift Store.
C) Is the company profitable? Explain your answer.
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217. The following information comes from the records of Morton Corporation. Assume no additional investment by
owners when answering the following questions:
Assets Liabilities Owners’ Equity
January 1, 2017 $ 98,000 $ 54,000 $
December 31, 2017 131,000 84,000
A) What is the amount of owners’ equity at January 1, 2017? __________________
B) What is the amount of liabilities at December 31, 2017? __________________
C) Assume that the company declared and paid dividends of $22,000 during the year. How much net income did it
earn during the year?
D) Assume that the company paid no dividends during the year. Without looking at the income statement, how can
you tell if the company is profitable or not?