Financial Accounting: An Integrated Statements Approach, 2nd Edition

Based on the data presented in Exercise 1-10, identify those items that would appear on the in-

come statement.

Identify each of the following items as (a) an asset, (b) a liability, (c) revenue, (d) an expense, or

(e) a dividend:

1. Amounts due from customers


2. Amounts owed vendors


3. Cash on hand


4. Cash paid to stockholders


5. Cash sales


6. Equipment


7. Note payable owed to the bank


8. Rent paid for the month


9. Sales commissions paid to salespersons


10. Wages paid to employees

Financial information related to Madras Company for the month ended April 30, 2006, is as

follows:

Net income for April $ 73,000

Dividends during April 12,000

Retained earnings, April 1, 2006 297,200

Prepare a retained earnings statement for the month ended April 30, 2006.

Hercules Services was organized on November 1, 2006. A summary of the revenue and expense

transactions for November follows:

Fees earned $232,120

Wages expense 100,100

Miscellaneous expense 3,150

Rent expense 35,000

Supplies expense 4,550

Prepare an income statement for the month ended November 30.

One item is omitted in each of the following summaries of balance sheet and income statement

data for four different corporations, A, B, C, and D.

AB CD

Beginning of the year:

Assets $720,000 $125,000 $160,000 $ (d)

Liabilities 432,000 65,000 121,600 150,000

End of the year:

Assets 894,000 175,000 144,000 310,000

Liabilities 390,000 55,000 128,000 170,000

During the year:

Additional issue of capital stock (a) 11 25,000 16,000 50,000

Dividends 48,000 8,000 (c) 11 75,000

Revenue 237,300 (b) 11 184,000 140,000

Expenses 129,600 32,000 196,000 160,000

Determine the missing amounts, identifying them by letter. [Hint:First determine the amount of

increase or decrease in owners’ (stockholders’) equity during the year.]

34 Chapter 1 The Role of Accounting in Business

Exercise 1-11

Income statement items

Goal 4

Exercise 1-12

Financial Statement Analysis

Goal 4

Exercise 1-13

Retained earnings statement

Goal 4

Retained earnings, April 30,

2006: $358,200

Exercise 1-14

Income statement

Goal 4

Net income: $89,320

Exercise 1-15

Missing amounts from balance

sheet and income statement

data

Goal 4

(a) $156,300