FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-21A
(10-20 min.)
Solution:
1 2 3
Total stockholders’ equity,
January 31, 2016 ($53 – $15) $38 $38 $38
Add: Issuances of stock 12 088
Net income* 226 0
Less: Dividends declared 0(12) (30)
Net loss* 00(44)
Total stockholders’ equity,
January 31, 2017 ($75 – $23) $52 $52 $52
*must solve for net income
Situation
(Millions)
1. Franklin issued $12 million of stock and declared no dividends.
2. Franklin issued no stock but declared dividends of $12 million.
3. Franklin issued $88 million of stock and declared dividends of $30
Chapter 1: The Financial Statements Page 21 of 70
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-22A
(10-15 min.)
Solution:
a.
b.
c.
Income statement
Statement of retained earnings, Statement of cash flows
Balance sheet, Statement of cash flows
Identify the financial statement where these decision makers can find the following
information about Malcolm Tech, Inc. In some cases, more than one statement will
report the needed data.
Chapter 1: The Financial Statements Page 22 of 70
d.
e.
h.
k.
n.
Balance sheet
Income statement
Balance sheet, Statement of retained earnings
Balance sheet
Balance sheet
Balance sheet
Statement of cash flows
Statement of cash flows
Balance sheet
Income statement
Income statement, Statement of retained earnings, Statement of cash flows
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-23A
(10-20 min.)
Solution:
ASSETS LIABILITIES
Current Assets: Current liabilities
Cash 23,000$ Accounts payable 24,000$
Receivables 15,000 Total current Liabilities 24,000
Prepare Womack’s balance sheet at December 31, 2016, complete with its proper
heading. Use the accounting equation to compute retained earnings.
Womack Products
Balance Sheet
December 31, 2016
Chapter 1: The Financial Statements Page 23 of 70
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-24A
(10-20 min.)
Solution:
ASSETS LIABILITIES
Cash 1.6$ Current liabilities 2.6$
Receivables 0.5 Long-term liabilities 102.8
Construct the balance sheet of Ellen Samuel Realty Company at May 31, 2016. Use the
accounting equation to compute ending retained earnings.
Ellen Samuel Realty Company
Balance Sheet
May 31, 2016
Chapter 1: The Financial Statements Page 24 of 70
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-25A
(15-25 min.)
Solution:
Req. 1
(Amounts in millions)
Total revenue $ 37.9
Expenses:
1. Prepare the income statement of Ellen Samuel Realty Company for the
year ended May 31, 2016.
2. What amount of dividends did Ellen Samuel declare during the year ended
May 31, 2016?
Ellen Samuel Realty Company
Income Statement
Year Ended May 31, 2016
Chapter 1: The Financial Statements Page 25 of 70
Req. 2
(Amounts in millions)
Retained earnings, beginning of year 16.8$
Add: Net income for the year (Req. 1) 18.5
Ellen Samuel Realty Company
Year Ended May 31, 2016
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-26A
(15-25 min.)
Solution:
Revenue:
Service revenue 279,600$
Expenses:
Carson Coffee Roasters Corp.
Income Statement
For the Month Ended August 31, 2017
1. Prepare the income statement and the statement of retained earnings
of Carson Coffee Roasters Corp., for the month ended August 31, 2017.
Chapter 1: The Financial Statements Page 26 of 70
Salary expense 78,400$
Utilities expense 5,400
Rent expense 1,900
Total expenses 85,700
Carson Coffee Roasters Corp.
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-27A
(15-20 min.)
Solution:
Cash 5,900$ Accounts payable 9,000$
Office supplies 7,500
Liabilities
Carson Coffee Roasters Corp.
1. Prepare the balance sheet of Carson Coffee Roasters Corp., for August 31,
2017.
Balance Sheet
August 31, 2017
Assets
Chapter 1: The Financial Statements Page 27 of 70
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-28A
(15-20 min.)
Solution:
Cash flows from operating activities:
Net income 193,900$
Adjustments to reconcile net income to net
cash provided by operating activities 1,500
Carson Coffee Roasters Corp.
1. Prepare the statement of cash flows of Carson Coffee Roasters Corp.,
for the month ended August 31, 2017. Using Exhibit 1-11 as a model, show
with arrows the relationships among the income statement, statement of
retained earnings, balance sheet, and statement of cash flows.
Statement of Cash Flows
For the Month Ended August 31, 2017
Chapter 1: The Financial Statements Page 28 of 70
Cash flows from investing activities:
Acquisition of equipment (200,400)$
Cash flows from financing activities:
Net increase in cash 5,900$
Cash balance, August 1, 2017 0
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-29A
(10-15 min.)
Solution:
Complete the report giving him your opinion of net income, dividends, financial
position, and cash flows during his first month of operations.
TO: Owner of Carson Coffee Roasters Corp.
FROM: Student Name
SUBJECT: Opinion of net income, dividends, financial position, and cash
flows
Chapter 1: The Financial Statements Page 29 of 70
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-30A
(20-25 min.)
Solution:
Req. 1
Revenue (millions)
Service revenue 140$
Expenses:
Salary expense 31$
Req. 2
Retained earnings, December 31, 2015 68$
Add: Net income 71
Less: Dividends declared (12)
Retained earnings, December 31, 2016 127$
Year Ended December 31, 2016
McFall Company
Statement of Retained Earnings
Year Ended December 31, 2016
Prepare the following financials statements: 1) Income statement, 2) Statement of
retained earnings, 3) Balance sheet
McFall Company
Income Statement
Chapter 1: The Financial Statements Page 30 of 70
Rent expense 16
Utilities expense 22
Net income 71$
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
Req. 3
ASSETS LIABILITIES
Current assets: Current Liabilities:
Cash 150$ Accounts payable 60
Accounts receivable 55 Total current liabilities 60
December 31, 2016
McFall Company
Balance Sheet
Chapter 1: The Financial Statements Page 31 of 70
Total current assets 205 Long-term liabilities:
Property and equipment 32 Long-term notes payable 27
Other long-term assets 17 Total liabilities 87
Total assets 254$ 254$
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-31B
(10-15 min.)
Solution:
Corner Grocery $88 $51 $37
Sixth Street Bank $21 $1 $20
Which company appears to have the strongest financial position? Explain your
reasoning.
Assets
=
Liabilities
+
Stockholders’
Equity
Chapter 1: The Financial Statements Page 32 of 70
Valaries Gifts $29 $13 $16
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-32B
(10-15 min.)
Solution:
Req. 1
Assets = Liabilities + Stockholders’ Equity
$240 $150
1. Use these data to write Blackwell Services’s accounting equation.
2. How much in resources does Blackwell Services have to work with?
3. How much does Blackwell Services owe creditors?
4. How much of the company’s assets do the Blackwell Services stockholders
actually own?
(Amounts in millions)
Chapter 1: The Financial Statements Page 33 of 70
Req. 2
Req. 3
Req. 4
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-33B
(10-20 min.)
Solution:
1 2 3
Total stockholders’ equity,
January 31, 2016 ($51 – $12) $39 $39 $39
1. Cranberry issued $13 million of stock and declared no dividends.
2. Cranberry issued no stock but declared dividends of $20 million.
3. Cranberry issued $66 million of stock and declared dividends of $20
Situation
(Millions)
Chapter 1: The Financial Statements Page 34 of 70
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-34B
(10-15 min.)
Solution:
a.
b.
c.
d.
Identify the financial statement where these decision makers can find the following
information about Flurrish, Inc. In some cases, more than one statement will report
the needed data.
Income statement, Statement of retained earnings, Statement of cash flows
Balance sheet
Statement of cash flows
Statement of cash flows
Chapter 1: The Financial Statements Page 35 of 70
e.
h.
k.
n.
Balance sheet
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-35B
(10-20 min.)
Solution:
ASSETS LIABILITIES
Current Assets: Current liabilities
Cash 18,000$ Accounts payable 29,000$
Receivables 20,000 Total current Liabilities 29,000
Prepare Robinson’s balance sheet at December 31, 2016, complete with its proper
heading. Use the accounting equation to compute retained earnings.
Robinson Products
Balance Sheet
December 31, 2016
Chapter 1: The Financial Statements Page 36 of 70
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-36B
(10-20 min.)
Solution:
ASSETS LIABILITIES
Cash 1.3$ Current liabilities 2.1$
Receivables 0.70 Long-term liabilities 102.1
Property and Equipment, net 1.80 Total liabilities 104.2
Construct the balance sheet of David Austin Realty Company at January 31, 2016. Use
the accounting equation to compute ending retained earnings.
David Austin Realty Company
Balance Sheet
January 31, 2016
Chapter 1: The Financial Statements Page 37 of 70
Investment Assets 135.60 STOCKHOLDERS’
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-37B
(15-25 min.)
Solution:
Req. 1
(Amounts in millions)
Total revenue $ 37.2
Expenses:
1. Prepare the income statement of David Austin Realty Company for the year
ended January 31, 2016.
2. What amount of dividends did David Austin declare during the year ended
January 31, 2016?
David Austin Realty Company
Income Statement
Year Ended January 31, 2016
Chapter 1: The Financial Statements Page 38 of 70
Req. 2
(Amounts in millions)
Retained earnings, beginning of year 16.9$
Add: Net income for the year (Req. 1) 17.6
Year Ended January 31, 2016
David Austin Realty Company
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-38B
(15-25 min.)
Solution:
Revenue:
Service revenue 270,800$
Expenses:
Salary expense 78,700$
1. Prepare the income statement and the statement of retained earnings
of Earl Coffee Roasters Corp., for the month ended August 31, 2016.
Earl Coffee Roasters Corp.
Income Statement
For the Month Ended August 31, 2016
Chapter 1: The Financial Statements Page 39 of 70
Utilities expense 5,900
Rent expense 1,900
Total expenses 86,500
Earl Coffee Roasters Corp.
FINANCIAL ACCOUNTING – Eleventh Edition Solutions Manual
E 1-39B
(15-20 min.)
Solution:
Cash 5,300$ Accounts payable 8,800$
Office supplies 7,300
Liabilities
1. Prepare the balance sheet of Earl Coffee Roasters Corp., for August 31,
2016.
Earl Coffee Roasters Corp.
Balance Sheet
August 31, 2016
Assets
Chapter 1: The Financial Statements Page 40 of 70