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218. Avery Corporation began the year with total assets of $800,000 and total liabilities of $620,000. Use the accounting
equation to answer the following questions. Assume no additional investment by owners when answering these questions.
A) What was the amount of Avery’s total assets at the end of the year if liabilities decreased by $60,000 and owners’
equity increased by $90,000?
B) Was the company profitable? Explain your answer.
219. The beginning balance of retained earnings was $630,000, and the ending balance was $650,000. The company
declared and paid dividends of $60,000.
A) Determine the amount of net income for the year.
B) What information would one find on the income statement in addition to net income?
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220. The Trenton Corporation began 2017 with $390,000 in assets, $140,000 in liabilities, and $170,000 of retained
earnings. Net income for the year was $120,000, and dividends of $110,000 were declared and paid.
A) Prepare a statement of retained earnings for 2017.
B) What is the nature or purpose of the statement of retained earnings?
C) What was the amount of capital stock for Trenton Corporation at the beginning of 2017?
D) Identify what business events might occur in Trenton’s business operations that would cause the two stockholders’
equity items to increase.
E) How do you identify whether Trenton was profitable during 2017 by examining the statement of retained earnings?
Chapter 1
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221. Below are several accounts from Costello Company’s accounting records. Answer the questions that follow.
Total liabilities, end of the year $92,000 Total assets, end of the year $143,000
Capital stock, end of the year 16,000 Retained earnings,
beginning of the year 15,000
Dividends declared and paid for the period 20,000 Net income 40,000
A) How much is the balance of retained earnings at the end of the year?
B) Show the accounting equation for Costello Company at the end of the year with the respective dollar amounts.
C) If stockholders’ equity increases during the year, does that mean that the company is profitable? Explain your
answer.
Chapter 1
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222. Classify the following items according to the financial statement on which each belongs, either the income statement
(IS) or the balance sheet (BS). Also indicate whether each is a revenue (R), expense (E), asset (A), liability (L), or owners’
equity (OE) item.
Appears on Which Statement? Type of Account
1. Retained earnings _________________ _________________
2. Buildings _________________ _________________
3. Common stock _________________ _________________
4. Accounts payable _________________ _________________
5. Football ticket sales _________________ _________________
6. Salaries expense _________________ _________________
7. Accounts receivable _________________ _________________
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223. Several amounts from Duggard Company at December 31, 2017, are listed below. Answer the questions.
Service revenue $245,000 Salaries expense $109,000
Dividends declared and paid 15,000 Rent expense 36,000
Buildings 110,000 Land 100,000
Accounts payable 40,000 Accounts receivable 28,000
Capital stock 60,000 Retained earnings, Jan. 1, 2017 40,000
Utilities expense 19,000 Notes payable 30,000
Income tax payable 4,000 Income tax expense 11,000
A) Calculate net income for 2017.
B) How much is Duggard Company’s retained earnings at the end of 2017?
C) What primary asset account is missing?
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224. Gym Corporation reported the following information at December 31, 2017:
Accounts payable $40,000 Dividends declared and paid $10,000
Cash 75,000 Expenses 60,000
Inventories 18,000 Revenue 75,000
A) Calculate Gym Corporation’s total assets.
B) Calculate Gym Corporations’ net income for 2017.
C) Calculate Gym Corporations’ total stockholders’ equity at the end of 2017.
Chapter 1
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225. Joseph is the president of Sunshine Enterprises. Sunshine Enterprises began business on January 1, 2017. The
company’s controller is out of the country on business. Joseph needs a copy of the company’s balance sheet for a meeting
tomorrow and asks his assistant to obtain the required information from the company’s records. She presents Joseph with
the following balance sheet. He asks you to review it for accuracy.
Sunshine Enterprises
Balance Sheet
For the Year Ended December 31, 2017
ASSETS LIABILITIES & STOCKHOLDERS’ EQUITY
Accounts payable $ 30,600 Accounts receivable $ 24,200
Building and equipment 177,300 Supplies 12,200
Cash 14,700 Capital stock 100,000
Cash dividends declared and paid 16,000 Net income for 2017 113,800
Required:
1. Prepare a corrected balance sheet.
2. Draft a memo explaining the major differences between the balance sheet Joseph’s assistant prepared and the one you
prepared.
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Chapter 1
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226. The following items are available from the records of Ramos Corporation at the end of its fiscal year, June 30, 2017:
Accounts payable $17,000
Advertising expense 4,600
Accounts receivable 5,700
Notes payable 50,000
Buildings 35,000
Office equipment 12,000
Inventory 12,100
Retained earnings (end of year) 26,300
Capital stock 25,000
Salary and wage expense 8,230
Cash 21,900
Sales revenue 14,220
Computerized grinders 25,800
Hand tools 5,800
Required:
(1) Prepare a balance sheet.
(2) For each non-balance-sheet item, indicate where it should appear.
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227. Tentco reported the following amounts in various statements included in its 2017 annual report. (All amounts are
stated in millions of dollars.)
Net income for 2017 $142
Cash dividends declared in 2017 15
Retained earnings, December 31, 2016 95
REQUIRED:
(1) Prepare a statement of retained earnings for the year ended December 31, 2017.
(2) Assume that Tentco presents a statement of stockholders’ equity rather than a statement of retained earnings in its
annual report. Explain how the information differs between the two statements.
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228. The following information is available from the records of Focus Seascapes, Inc. at the end of the 2017 calendar
year:
Accounts payable $ 4,700
Service revenues 28,000
Accounts receivable 3,600
Office equipment 9,200
Capital stock ?
Rent expense 2,500
Cash 13,200
Retained earnings, beginning of year 10,500
Dividends declared and paid during the year 3,800
Salary and wage expense 14,000
Required:
(1) What is Focus’s net income for the year ended December 31, 2017?
(2) What is Focus’s retained earnings balance for the year ended December 31, 2017?
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229. The following information is available from the records of Focus Seascapes, Inc. at the end of the 2017 calendar
year:
Accounts payable $ 4,700
Service revenues 28,000
Accounts receivable 3,600
Office equipment 9,200
Capital stock ?
Rent expense 2,500
Cash 13,200
Retained earnings, beginning of year 10,500
Dividends declared and paid during the year 3,800
Salary and wage expense 14,000
Required:
1. What is the total amount of Focus’s assets at December 31, 2017?
2. What is the total amount of owners’ equity at December 31, 2017?
3. What is the capital stock balance at December 31, 2017?
ANSWER:
Chapter 1
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230. Rogers Corporation starts the year with a Retained Earnings balance of $55,000. Net income for the year is $27,000.
The ending balance in Retained Earnings is $70,000. What was the amount of dividends declared and paid for the year?
Essay
231. List the names of three companies with which you are familiar that are manufacturers or producers. Also list the
names of three companies that are retailers. Finally, provide the names of three service companies.