(10-15 min.) E 1-29A
TO: Owner of Carson Coffee Roasters Corp.
FROM: Student Name
SUBJECT: Opinion of net income, dividends, financial position,
and cash flows
Your first month of operations was successful. Revenues totaled
$279,600 and net income was $193,900. These operating results look
very strong.
(20-25 min.) E 1-30A
Req. 1
McFall Company
Income Statement
For the Year Ended December 31, 2016
Revenue:
(millions)
Revenues ……………………………………………….
$140
Expenses:
Salary expense ……………………………………….
$31
Rent expense …………………………………………
16
Utilities expense …………………………………….
Total expenses ……………………………………….
Net income …………………………..…………………….
(continued) E 1-30A
Req. 3
McFall Company
Balance Sheet
December 31, 2016
ASSETS
(in millions)
Current assets:
Cash …………………………………………………………………
$150
Accounts receivable …………………………………………..
55
Total current assets …………………………………………..
205
Property and equipment ………………………………………….
32
Other long-term assets ……………………………………………
17
Total assets ……………………………………………………………
$254
LIABILITIES
Current liabilities:
Accounts payable ………………………………………………
$ 60
Total current liabilities ……………………………………….
60
Long-term notes payable ……………………………………
27
Total liabilities ………………………………………………………..
87
Common stock ……………………………………………………….
40*
Retained earnings …………………………………………………..
(10-15 min.) E 1-31B
Amounts in billions; (computed amounts in boxes)
Stockholders’
Assets
=
Liabilities
+
Equity
Corner Grocery
$88
$51
$37
Sixth Street Bank
21
1
20
Valerie’s Gifts
29
13
16
Sixth Street Bank appears to have the strongest financial position
because its liabilities make up the smallest percentage of company
assets ($1/$21 = .05). Stated differently, Sixth Street Bank’s equity is
Total
=
+
(10-20 min.) E 1-33B
Situation
1
2
3
Millions
Total stockholders’ equity,
January 31, 2016 ($51 − $12) ……………….
$39
$39
$39
Add: Issuances of stock ……………………………..
13
-0-
66
Net income ………………………………………..
6*
39*
-0-
Less: Dividends declared …………………………...
-0-
Net loss …………………………………………….
January 31, 2017 ($77 − $19) ……………….
(10-15 min.) E 1-34B
a. Income statement, Statement of retained earnings, Statement of
cash flows
b. Balance sheet
c. Statement of cash flows
d. Statement of cash flows
e. Income statement
f. Balance sheet, Statement of cash flows
(10-20 min.) E 1-35B
Robinson Products
Balance Sheet
December 31, 2016
ASSETS
Current assets:
Cash ………………………………………………………………………
$ 18,000
Receivables ……………………………………………………………
20,000
Inventory ……………………………………………………………….
82,000
Total current assets ……………………………………………….
120,000
Equipment ……………………………………………………….………….
183,000
Total assets ………………………………………………………………..
$303,000
LIABILITIES
Current liabilities:
Total current liabilities ……………………………………………
171,000
Total liabilities …………………………………………………………….
200,000
Common stock ……………………………………………………………
Retained earnings …………………………..…………………………..
73,500*
103,000
(10-20 min.) E 1-36B
Req. 1
David Austin Realty Company
Balance Sheet
January 31, 2016
(Amounts in millions)
ASSETS
LIABILITIES
Cash
$ 1.3
Current liabilities
$ 2.1
Receivables
.7
Long-term liabilities
102.1
Common stock
Retained earnings
45.1
Total liabilities and
Total assets
$149.3
(15-25 min.) E 1-37B
Req. 1
David Austin Realty Company
Income Statement
Year Ended January 31, 2016
(Amounts in millions)
Total revenue ………………………………………………………
$37.2
Expenses:
Salary and other employee expenses ………………
$ 13.5
Other expenses ………………………………………………
5.6
Interest expense …………………………………………….
0.5
Total expenses ……………………………………………….
19.6
Net income………………………………………………………….
$17.6
(15-20 min.) E 1-38B
Req. 1
Earl Coffee Roasters Corporation
Income Statement
For the Month Ended August 31, 2016
Revenue:
Service revenue …………………………
$270,800
Expenses:
Salary expense ………………………….
Utilities expense ………………………..
Rent expense ……………………………
Total expenses ………………………….
Net income ………………………………………
$184,300
Retained earnings, August 1, 2016 ………………………
Add: Net income ………………………………………………..
Subtotal
Less: Dividends declared ……………………………………
Retained earnings, August 31, 2016 …………………….
(15-20 min.) E 1-39B
Req. 1
Earl Coffee Roasters Corporation
Balance Sheet
August 31, 2016
Assets
Liabilities
Cash …………………..
$ 5,300
Accounts payable………………
$ 8,800
Office supplies ……
7,300
Stockholders’ Equity
Equipment ………….
202,100
Common stock ………………….
24,600
Retained earnings ……………..
(15-20 min.) E 1-40B
Req. 1
Earl Coffee Roasters Corporation
Statement of Cash Flows
For the Month Ended August 31, 2016
Cash flows from operating activities:
Net income …………………………………………………….
$184,300
Adjustments to reconcile net income to net
cash provided by operations ………………………
1,500
Net cash provided by operating activities
185,800
(10-20 min.) E 1-41B
TO: Owner of Earl Coffee Roasters Corporation
FROM: Student Name
SUBJECT: Opinion of net income, dividends, financial position, and
cash flows
Your first month of operations was successful. Revenues totaled
$270,800 and net income was $184,300. These operating results look
very strong.
(20-25 min.) E 1-42B
Req. 1
Young Company
Income Statement
For the Year Ended December 31, 2016
Revenue:
(millions)
Revenues ……………………………………………….
$150
Expenses:
Salary expense ……………………………………….
Rent expense …………………………………………
Utilities expense …………………………………….
Total expenses ……………………………………….
Net income …………………………..…………………….
(continued) E 1-42B
Req. 3
Young Company
Balance Sheet
December 31, 2016
ASSETS
(in millions)
Current assets:
Cash …………………………………………………………………
$160
Accounts receivable …………………………………………..
62
Total current assets …………………………………………..
222
Property and equipment ………………………………………….
34
Other long-term assets ……………………………………………
19
Total assets ……………………………………………………………
LIABILITIES
Current liabilities:
Total current liabilities ……………………………………….
63
Long-term liabilities:
Long-term notes payable ……………………………………
25
Total liabilities ………………………………………………………..
88
Common stock ……………………………………………………….
45*
Retained earnings …………………………………………………..
Quiz
Q1–43
c
Q1–44
b
Q1–48
a
Q1–50
a
Q1–51
a
Q1–52
d [$230,000 − $185,000 − $83,000 − $26,000 = $(64,000)]
Q1–53
d ($340,000 + $185,000 − $85,000 = $440,000)
Q1–54
d
Q1–55
d
Q1–56
c
Stockholders’
Assets
=
Liabilities
+
Equity
Beg.
$144,000
=
$25,000*
+
$119,000
Changes
+ 74,000
End.
$237,000*
=
+
$138,000
_____
$305,000
+ X
− 70,000
$525,000
Problems
(30 min.) P 1-58A
Computed amounts in boxes.
Crystal
Co.
Lowell,
Inc.
Broom
Corp.
BALANCE SHEET
(Millions)
Beginning:
Assets ……………………………………..
$83
$43
$15
Liabilities ………………………………….
43
14
7
Common stock …………………………
6
3
7
Assets ……………………………………..
Liabilities ………………………………….
INCOME STATEMENT
STATEMENT OF RETAINED EARNINGS
Beginning RE …………………………...
(continued) P 1-58A
Crystal Co.
Lowell, Inc.
Broom Corp.
Millions
Net income ……………..
$6
$10
$2
Highest
to revenues ……….
(20-25 min.) P 1-59A
Req. 1
Salem News, Inc.
Balance Sheet
October 31, 2016
ASSETS
LIABILITIES
Cash
$ 10,500
Accounts payable
$ 5,000
Accounts receivable
2,800
Note payable
55,000
Notes receivable
15,500
Total liabilities
60,000
Office supplies
1,300
STOCKHOLDERS’
Land
Equipment
Total liabilities and
Total assets
$149,100
Req. 2
Salem News, Inc. is in better (not worse) financial position than the
erroneous balance sheet reports. Total assets ($149,100) are $10,100
higher than originally reported ($139,000), liabilities are $16,600 lower
than originally reported, and stockholders’ equity is $26,700 higher
than reported originally.
Req. 3
(20-25 min.) P 1-60A
Req. 1
Caden Healey Realtor, Inc.
Balance Sheet
December 31, 2017
ASSETS
LIABILITIES
Cash
$ 48,000
Accounts payable
$ 2,000
Office supplies
2,000
Note payable
132,000
Land
168,000
Total liabilities
134,000
Furniture
Franchise
Common stock
60,000
Retained earnings
Total liabilities and
Total assets
Req. 2
It appears that the business can pay its debts. Total assets exceed
total liabilities.
Req. 3
Personal items not reported on the balance sheet of the business: