Fundamentals of Financial Accounting, 5/e 1-31
ANSWERS TO GROUP B PROBLEMS
PB1-1
Req. 1 APEC AEROSPACE CORPORATION
Income Statement
For the Year Ended December 31
Sales Revenue $ 94,000
Expenses
Req. 2 APEC AEROSPACE CORPORATION
Statement of Retained Earnings
For the Year Ended December 31
Retained Earnings, January 1 $ 0
PB1-1 (continued)
Req. 3 APEC AEROSPACE CORPORATION
Balance Sheet
At December 31
Assets
Cash $ 13,900
Accounts Receivable 9,500
Supplies 9,000
PB1-2
Req. 1
APEC Aerospace Corporation’s balance sheet reports total liabilities of $84,350 and
stockholders’ equity of $34,050, indicating that the company is financed mainly by
flows.
PB1-2 (continued)
Fundamentals of Financial Accounting, 5/e 1-33
Req. 4
PB1-3
Req. 1
CHEESE FACTORY INCORPORATED
Income Statement
For the Year Ended August 31, 2015
Revenues:
Sales Revenue
$1,660,000
Total Revenues
1,660,000
Expenses:
Salaries and Wages Expense
955,000
Utilities Expense
530,000
Office Expenses
95,000
Total Expenses
1,580,000
Net Income
$80,000
Req. 2
CHEESE FACTORY INCORPORATED
Statement of Retained Earnings
For the Year Ended August 31, 2015
Retained Earnings, Beginning
$ 410,000
Add: Net Income
80,000
Subtract: Dividends
(10,000)
Retained Earnings, Ending
$ 480,000
Fundamentals of Financial Accounting, 5/e 1-34
PB1-3 (continued)
Req. 3
CHEESE FACTORY INCORPORATED
Balance Sheet
At August 31, 2015
Assets:
Cash
$ 80,000
Accounts Receivable
15,000
Supplies
25,000
Prepaid Rent
50,000
Equipment
755,000
Total Assets
$925,000
Liabilities:
Accounts Payable
$ 145,000
Notes Payable
30,000
Salaries and Wages Payable
170,000
Total Liabilities
345,000
Stockholders’ Equity:
Common Stock
100,000
Retained Earnings
480,000
Total Stockholders’ Equity
580,000
Total Liabilities and Stockholders’ Equity
$925,000
Fundamentals of Financial Accounting, 5/e 1-35
PB1-3 (continued)
Req. 4
CHEESE FACTORY INCORPORATED
Statement of Cash Flows
For the Year Ended August 31, 2015
Cash Flows from Operating Activities
Cash received from customers
$ 1,661,000
Cash paid to suppliers and employees
(1,490,000)
Cash Provided by Operating Activities
171,000
Cash Flows from Investing Activities
Cash paid to purchase equipment
(40,000)
Cash Used in Investing Activities
(40,000)
Cash Flows from Financing Activities
Additional investments by stockholders
34,000
Cash received from borrowings
5,000
Repayments of borrowings
(155,000)
Dividends paid to stockholders
(10,000)
Cash Used in Financing Activities
(126,000)
Change in Cash
5,000
Cash at September 1, 2014
75,000
Cash at August 31, 2015
$ 80,000
Fundamentals of Financial Accounting, 5/e 1-36
PB1-4
Req. 1
The statement of cash flows shows that the Cheese Factory increased its cash balance
by $5,000, during the year ended August 31, 2015.
Req. 2
The income statement shows that the Cheese Factory earned net income of $80,000
ANSWERS TO SKILLS DEVELOPMENT CASES
S1-1
Sources:
Req. 1
The Home Depot’s income statement (called “Consolidated Statements of Earnings”)
shows net income of $5,385 (million), which is labeled net earnings (answer d).
Req. 2
The income statement (called “Consolidated Statements of Earnings”) shows that the
S1-2
Req. 1
Lowe’s net income for the year ended January 31, 2014, was $2,286 (million). This is
less than the $5,385 (million) earned by Home Depot for the year ended February 2,
2014.
Req. 2
Req. 3
Lowe’s inventory as of January 31, 2014, was $9,127 (million). This is less than the
$11,057 (million) reported by Home Depot as of February 2, 2014.
Req. 4