Chapter 03 – Operating Decisions and the Income Statement
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Chapter 03 – Operating Decisions and the Income Statement
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110. Part A. Perform transaction analysis for Blake Company regarding the following
transactions for March. Indicate the account affected by the transaction as well as the increase
(+) or decrease (-) to the components of the accounting equation and the amount.
Part B. Determine whether the transactions A-F above affected cash flows during March. If
so, determine the type of activity as an operating activity, an investing activity, or a financing
activity. If cash is not affected use “no effect.” Place an X under the appropriate column for
each transaction.
Chapter 03 – Operating Decisions and the Income Statement
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Chapter 03 – Operating Decisions and the Income Statement
111. For the year ending December 31, 2010, the accounts of Jackson Corporation showed the
following balances:
Requirement: Determine the components of stockholders’ equity as of December 31, 2010.
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112. The following accounts for Carthage Enterprises, Inc. are listed randomly. Enter the
number associated with each transaction to identify the accounts that would be used in the
journal entry for each transaction given below.
Chapter 03 – Operating Decisions and the Income Statement
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113. World Services Inc. has provided the following information pertaining to the month
ended October 31, 2010:
Prepare an income statement through operating income for the month ended October 31,
2010.
Chapter 03 – Operating Decisions and the Income Statement
114. The following information has been provided by Flatiron Company for the year ended
December 31, 2011:
• Net income was $71,000;
• Income tax expense was $47,000;
• Dividends declared and paid totaled $7,500;
• Interest expense was $8,700;
• Loss on sale of plant assets was $15,000;
• Operating expenses totaled $91,000;
• Cash collected from customers was $220,000.
How much was Flatiron’s operating income?
Chapter 03 – Operating Decisions and the Income Statement
115. Describe the transaction which created the following journal entries (amounts omitted):
Chapter 03 – Operating Decisions and the Income Statement
116. Explain why the net income reported on the income statement is usually not equal to net
cash flows from operating activities on the statement of cash flows.
117. Describe the operating activities section of the cash flow statement and provide three
examples of operating activities cash flows.
Chapter 03 – Operating Decisions and the Income Statement
118. Colby Company has provided the following selected information for the year ended
December 31, 2011:
• Cash collected from customers was $392,000.
• Cash received from stockholders in exchange for stock totaled $46,000.
• Cash paid to suppliers was $183,000.
• Cash paid to employees was $102,000.
• Cash received from a long-term bank loan was $75,000.
• Cash to stockholders for dividends was $17,000.
• Cash received from sale of a building was $125,000.
• Cash paid for rent was $19,000.
• Cash received for interest and dividends was $4,000.
• Cash paid for income taxes was $28,000.
Based on the selected information provided, how much was Colby’s cash flow from
operations?
Chapter 03 – Operating Decisions and the Income Statement
119. What does the total asset turnover ratio measure and how is it calculated? Give two
examples of transactions that decrease the ratio.
120. The following data is from Gauthier Machine Shop:
Compute Gauthier Machine Shop’s total asset turnover ratio for 2011 and 2010.