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Cash flows from operating activities:
8,000$
Cash paid for expenses (3,200)
Cash paid for accounts payable (6,800)
Statement of Cash Flows
For the Period October 1-6, 2015
Cash received from revenues
PROBLEM 2.8B
THE SWEET SHOP
(
concluded
)
THE SWEET SHOP
a
.
Liabilities & Owner's Equity
Cash 18,400$ Liabilities:
Accounts receivable 10,000 Notes payable 15,000$
b. (1)
(2)
(5)
(6)
The cash in Jaffe's personal savings account is not an asset of the business entity Old Town
PROBLEM 2.9B
OLD TOWN PLAYHOUS
E
35 Minutes, Strong
OLD TOWN PLAYHOUSE
Balance Sheet
September 30, 2015
Assets
As the automobile is not used in the business, it appears to be Jaffe’s personal asset rather than
Only the amount receivable from Dell, Inc. ($10,000) should be included in the company’s
accounts receivable as of September 30. The amounts expected from future tickets sales do not
relate to completed transactions and are not yet assets of the business.
The lighting equipment is an asset of the business and should be valued in the balance sheet at its
cost, $10,000.
(8)
PROBLEM 2.9B
OLD TOWN PLAYHOUSE
(
concluded
)
The amount owed to stagehands for work done through September 30 is the result of completed
transactions and should be included among the liabilities of the business. Even if agreement has
a.
Liabilities & Owner's Equity
Cash 3,200$ Liabilities:
Notes receivable 3,400 Notes payable 72,500$
* Total assets [$115,900, less (total liabilities, $102,500, + Capital Stock, $10,000)]
b. (1)
(3)
PROBLEM 2.10B
STAR SCRIPT
S
30 Minutes, Strong
STAR SCRIPTS
Balance Sheet
November 30, 2015
Assets
The cash in Joe’s personal savings account is not an asset of the business entity Star Scripts and
The total amount to be included in “Office furniture” for the rug is $10,000, the total cost,
regardless of whether this amount was paid in cash. Consequently, “Office furniture” should be
CONTENT OF A BALANCE SHEE
T
This case requires students to prepare a hypothetical balance sheet for an entity to be specified by the
instructor. Therefore, we cannot provide a “solution.”
The purpose of the case is to challenge students to think about the types of assets necessary to the
SOLUTIONS TO CRITICAL THINKING CASE
S
CASE 2.1
30 Minutes, Medium
CASE 2.2
30 Minutes, Strong
pp , p p
ready availability to students of annual reports. Some large libraries maintain a file of print copies of
annual
reports. Also, many companies’ financial statements are readily available on the Internet. In our
classes, we have handed out annual reports from our own collection but increasingly rely on the
internet for access to public company financial statements. After students have completed the case, we
discuss in class various features of the reports and the financial reporting process.
Our 30-minute time estimate is adequate for answering the questions raised in the case, but it does not
provide for time that a student may spend in locating an annual report.
This case is intended to acquaint students with using the financial statements and annual report of a
publicly held company of their (or your) choice. As students will select various reports, we cannot
USING FINANCIAL STATEMENT
S
