Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 1 The Role of Accounting in Business 43

Inventories $ 126,000

Note payable (due in 2015) 140,000

Property, plant, and equipment 529,200

Retained earnings?

Sales 1,239,000

Selling and administrative expense 147,000

Instructions

1. Prepare an income statement for the year ended December 31, 2007.


2. Prepare a retained earnings statement for the year ended December 31, 2007.


3. Prepare a balance sheet as of December 31, 2007.


4. Prepare a statement of cash flows for the year ended December 31, 2007.

Following are the amounts of the assets and liabilities of Greco Travel Agency at December 31,

2006, the end of the current year, and its revenue and expenses for the year. The retained earn-

ings were $8,700, and the capital stock was $7,500 on January 1, 2006, the beginning of the cur-

rent year. During the current year, dividends of $47,000 were paid.

Accounts payable $ 5,120 Rent expense $36,000

Accounts receivable 31,200 Supplies 3,000

Cash 11,520 Supplies expense 4,500

Fees earned 188,000 Utilities expense 16,500

Miscellaneous expense 2,800 Wages expense 56,800

Instructions

1. Prepare an income statement for the current year ended December 31, 2006.


2. Prepare a retained earnings statement for the current year ended December 31, 2006.


3. Prepare a balance sheet as of December 31, 2006.

The financial statements at the end of Zeppelin Realty’s first month of operations are shown

below and on the next page.

Alternate Problem
1-1B

Financial statements

Goal 4

Net income: $71,400

Alternate Problem
1-2B

Missing amounts from finan-
cial statements

Goal 4

j. $30,000

Zeppelin Realty

Income Statement

For the Month Ended November 30, 2006

Fees earned $ (a)

Operating expenses:

Wages expense $8,500

Rent expense 3,200

Supplies expense (b)

Utilities expense 1,800

Miscellaneous expense 1,100

Total operating expenses 17,600

Net income $12,400

ALTERNATE ACCOUNTING APPLICATION PROBLEMS