214) Below are the account balances for Huffman Corporation at the end of December. Use only
the appropriate accounts to prepare an income statement.
Accounts
Balances
Cash
$5,200
Salaries expense
2,300
Retained earnings
2,500
Advertising expense
1,200
Equipment
12,400
Service revenue
9,400
Common stock
8,000
Accounts payable
2,200
Service revenue
Expenses:
Salaries
$2,300
Advertising
1,200
Total expenses
Net income
82
215) At the beginning of the year (January 1), Maurice and Sons has $12,000 of common stock
outstanding and retained earnings of $4,200. During the year, the company reports net income of
$3,200 and pays dividends of $1,200. In addition, the company issues additional common stock
for $5,000. Prepare the statement of stockholders’ equity at the end of the year (December 31).
83
216) Klein Interiors has the following account balances at the end of the year. Use only the
appropriate accounts to prepare a balance sheet.
Accounts
Balances
Equipment
$78,000
Accounts Payable
12,000
Common Stock
20,000
Service Revenue
62,000
Cash
8,000
Retained Earnings
?
Salaries Expense
38,000
Notes Payable
25,000
Answer: Klein Interiors
Assets
Liabilities
Cash
Equipment
Total liabilities
Stockholders’ Equity
Common stock
Retained earnings
Total stockholders’ equity
Total assets
84
217) Thomason Financial has the following cash transactions for the year. Assume cash at the
beginning of the period is $6,000. Prepare a statement of cash flows.
Accounts
Amounts
Cash received for sale of services to customers
$42,000
Cash received from issuance of common stock
33,000
Cash paid to purchase office equipment
(49,000)
Cash paid for building maintenance
(7,000)
Cash paid for advertisement
(8,000)
Cash paid to workers
(18,000)
Cash paid for dividends to stockholders
(3,000)
Cash received from sale of land
7,000
Cash received from borrowing
14,000
Answer: Thomason Financial
Cash Flows from Operating Activities
Cash inflows:
From sale of services to customers
$42,000
Cash outflows:
For building maintenance
(7,000)
For advertisement
(8,000)
For workers
(18,000)
Net cash flows from operating activities
Cash Flows from Investing Activities
Purchase office equipment
Sale of land
Net cash flows from investing activities
Cash Flows from Financing Activities
Issue common stock
Borrow from bank
Pay dividends
Net cash flows from financing activities
Net increase in cash
Cash at the beginning of the year
Cash at the end of the year
85
218) Each of the following independent situations represents amounts shown on the four basic
financial statements. Fill in the missing blanks using your knowledge of amounts that appear on
the financial statements.
1. Revenues = $27,000; Expenses = $18,000; Net income = ________.
2. Increase in stockholders’ equity = $20,000; Issuance of common stock = $12,000; Dividends =
$5,000; Net income = ________.
3. Assets = $25,000; Liabilities = $13,000; Stockholders’ equity = ________.
4. Total change in cash = +$28,000; Net operating cash flows = +$30,000; Net financing cash
flows = +$18,000; Net investing cash flows = ________.
Answer:
219) During its first five years of operations, Della Manufacturing reports net income and pays
dividends as follows. Calculate the balance of retained earnings at the end of each year. Note that
retained earnings will always equal $0 at the beginning of year 1.
Year
Net
Income
Dividends
Retained
Earnings
1
$1,700
$1,000
________
2
2,700
1,000
________
3
3,200
2,000
________
4
5,400
2,000
________
5
7,600
3,000
________
Year
Income
Dividends
Earnings*
1
$1,700
$1,000
2
2,700
1,000
3
3,200
2,000
4
5,400
2,000
5
7,600
3,000
87
220) Below is information related to retained earnings for five independent situations. Calculate
the answer to each.
1. A company reports an increase in retained earnings of $3,200 and net income of $4,800. What
is the amount of dividends?
2. A company reports beginning retained earnings of $1,800, net income of $1,200, and $200
dividends. What is the amount of ending retained earnings?
3. A company reports an increase in retained earnings of $2,500 and dividends of $1,500. What
is the amount of net income?
4. A company reports ending retained earnings of $2,700, net income of $900, and dividends of
$500. What is the amount of beginning retained earnings?
5. A company reports an increase in retained earnings of $500 and net income of $1,200. What is
the amount of dividends?
88
221) Below is balance sheet information for five independent situations. Calculate the answer to
each.
1. A company reports total assets of $2,000 and total liabilities of $900. What is the amount of
stockholders’ equity?
2. A company reports total liabilities of $2,400 and stockholders’ equity of $1,100. What is the
amount of total assets?
3. A company reports total assets of $2,700 and total stockholders’ equity of $700. What is the
amount of total liabilities?
4. A company reports an increase in assets of $1,700 and an increase in liabilities of $400. What
is the amount of the change in stockholders’ equity?
5. A company reports an increase in liabilities of $300 and a decrease in stockholders’ equity of
$800. What is the amount of the change in total assets?
Answer:
89
222) Below is cash flow information for five independent situations. Calculate the answer to
each.
1. A company reports operating cash flows of $3,200, investing cash flows of $700, and
financing cash flows of -$400. What is the amount of the change in total cash?
2. A company reports operating cash flows of $1,800, investing cash flows of -$400, and
financing cash flows of -$1,100. If the beginning cash amount is $500, what is the ending cash
amount?
3. A company reports operating cash flows of $700, investing cash flows of $300, and a change
in total cash of $100. What is the amount of cash flows from financing activities?
4. A company reports operating cash flows of $600, financing cash flows of $400, and a change
in total cash of $100. What is the amount of cash flows from investing activities?
5. A company reports investing cash flows of -$1,400, financing cash flows of $900, and a
change in total cash of $200. What is the amount of cash flows from operating activities?
90
223) Riley, Incorporated reports the following amounts at the end of the year:
Cash
$3,200
Service Revenue
$92,500
Buildings
60,000
Salaries Expense
72,800
Accounts Payable
8,500
Equipment
72,000
Interest Expense
4,000
Supplies
6,400
Advertising Expense
11,300
Notes payable
40,000
In addition, the company had common stock of $65,000 at the beginning of the year and issued
an additional $5,000 during the year. The company also had retained earnings of $20,700 at the
beginning of the year and paid dividends of $2,000 during the year. Prepare the income
statement, statement of stockholders’ equity, and balance sheet.
92
224) Below are incomplete financial statements for Beasley, Incorporated. Calculate the missing
amounts.
Income Statement
Statement of Stockholders’ Equity
Revenues
$(a)
Common Stock
Retained
Earnings
Expenses:
Beginning
$25,000
$12,000
Salaries
8,000
Issuances
(c)
Delivery
7,000
Net income
5,000
Utilities
5,000
Dividends
(d)
Net income
(b)
Ending
$30,000
$15,000
Balance Sheet
Assets:
Liabilities:
Cash
$15,000
Accounts payable
15,000
Supplies
7,000
Stockholders’ Equity:
Prepaid rent
(e)
Common stock
(g)
Equipment
35,000
Retained earnings
(h)
Total assets
(f)
Total liabilities and stockholders’
equity
(i)
93
225) Use the following information available as of December 31 to prepare an income statement
for the year and a balance sheet for Goldie Company.
Fees for services performed during the year, $120,000
Accounts payable, $18,500
Accounts receivable, $17,300
Miscellaneous expenses for the year, $8,700
Supplies on hand, $2,700
Notes payable, $30,000
Interest expense on the note for the year, $3,000
Equipment, $84,400
Cash on hand, $11,200
Salaries expense for the year, $71,500
Supplies expense for the year, $9,400
Rent expense for the year, $12,000
Common stock that has been issued, $60,000
Retained earnings at the end of the year, $7,100
