You are on page 1of 20

Assignment 1:

Brief Exercise 1-1


Match each of the following forms of business organization with a set of characteristics:
sole proprietorship, partnership, corporation.

(a)
(b)
(c)

Partnership

Sole proprietorship

Corporation

Shared control, tax advantages, increased skills and


resources.
Simple to set up and maintains control with owner.
Easier to transfer ownership and raise funds, no
personal liability.

LINK TO TEXT

Brief Exercise 1-8


Use the basic accounting equation to answer these questions.
(a) The liabilities of Jantz Company are $93,040 and the stockholders equity is
$252,500. What is the amount of Jantz Companys total assets?
Total assets

345,540

(b) The total assets of Foley Company are $175,200 and its stockholders equity is
$89,600. What is the amount of its total liabilities?
Total liabilities

85,600

(c) The total assets of Sundberg Co. are $888,500 and its liabilities are equal to onefourth of its total assets. What is the amount of Sundberg Co.s stockholders equity?

Stockholders equity

666,375

SHOW SOLUTION
LINK TO TEXT

Exercise 1-5
Suppose the following information was taken from the 2014 financial statements of
pharmaceutical giant Merck and Co. (All dollar amounts are in millions.)
Retained earnings, January 1, 2014

$47,930.8

Cost of goods sold

8,546.8

Selling and administrative expenses

8,284.0

Dividends

3,059.4

Sales revenue
Research and development expense
Income tax expense

37,709
5,258
2,428.4

After analyzing the data, prepare an income statement for the year ending December
31, 2014. (Enter amounts in millions upto 1 decimal place, e.g. 45.5 million.)

MERCK AND CO.


Income Statement
For the Year Ended December 31, 2014
(in millions)
Revenues
Sales Revenu

37,709

Expenses
Cost of Goods

8,546.8

Selling and Ad

8,284.0

Research and

5,258

Income Tax Ex

2,428.4

Total Expenses

24,517.2

Net Income / (Loss)

13,191.8

SHOW LIST OF ACCOUNTS


LINK TO TEXT

After analyzing the data, prepare a retained earnings statement for the year ending
December 31, 2014. (List items that increase retained earnings first. Enter
amounts in millions upto 1 decimal place, e.g. 45.5 million.)
MERCK AND CO.
Retained Earnings Statement
For the Year Ended December 31, 2014
(in millions)
Retained Earnings, January 1
Add

Net Income / (Loss)

47,930.8
13,191.8
61,122.6

Less

Dividends

Retained Earnings, December 31

3,059.4

58,063.2

SHOW LIST OF ACCOUNTS


LINK TO TEXT

Copyright 2000-2014 by John Wiley & Sons, Inc. or related companies. All rights reserved.

Change Values

Report Content Error

Exercise 1-8
The following items and amounts were taken from Motte Inc.s 2014 income statement
and balance sheet.
In each case, identify on the item is an asset, liability, stockholders' equity, revenue, or
expense item.
Asset

Cash

Stockholders' Equity

Retained earnings

123,640

Expense

Cost of goods sold

437,528

Expense

Salaries and wages expense

114,689

Asset

Prepaid insurance

Asset

Inventory

64,121

Asset

Accounts receivable

90,426

Revenue

Sales revenue

583,427

Liability

Notes payable

6,443

Liability

Accounts payable

Revenue

Service revenue

5,410

Expense

Interest expense

1,786

$ 85,929

8,088

58,244

Prepare an income statement for Motte Inc. for the year ended December 31, 2014.

MOTTE INC.
Income Statement
For the Year Ended December 31, 2014
Revenues
Sales Revenu

Service Reven

583,427
5,410

Total Revenues

588,837

Expenses
Cost of Goods

437,528

Salaries and W

114,689

Interest Expen

1,786

Total Expenses

554,003

Net Income / (Loss)

34,834

SHOW LIST OF ACCOUNTS


LINK TO TEXT

LINK TO VIDEO

Copyright 2000-2014 by John Wiley & Sons, Inc. or related companies. All rights reserved.

Change Values

Report Content Error

Exercise 1-9
Here are incomplete financial statements for Riedy, Inc. Calculate the missing amounts.
REIDY, INC.
Balance Sheet
Assets
$ 12,650

Cash

15,650

Inventory

39,350

Buildings

$67,650

Total assets
Liabilities and Stockholders' Equity
Liabilities

$ 5,070

Accounts payable
Stockholders' Equity
Common stock

29,930

(a)

Retained earnings

32,650

(b)

$67,650

Total liabilities and stockholders' equity

RIEDY, INC.
Income Statement
$84,800

Revenues

54,640

Cost of goods sold

(c)

10,330

Salaries and wages expense


Net Income

19,830

(d)

RIEDY, INC.
Retained Earnings Statement
$17,650

Beginning retained earnings


Add: Net income
Less: Dividends
Ending retained earnings

SHOW SOLUTION
LINK TO TEXT

19,830

(e)
4,830
$32,650

Copyright 2000-2014 by John Wiley & Sons, Inc. or related companies. All rights reserved.

Change Values

Report Content Error

Assignment 2:

Brief Exercise 2-2


A list of financial statement items for Morales Company includes the following: accounts
receivable $16,356; prepaid insurance $3,038; cash $12,150; supplies $4,440; and debt
investments (short-term) $9,580.
Prepare the current assets section of the balance sheet listing the items in the proper
sequence. (List current assets in order of liquidity.)
MORALES COMPANY
Partial Balance Sheet
Current Assets
Cash

12,150

Debt investme

9,580

Accounts Rec

16,356

Supplies

4,440

Prepaid Insura

3,038

Total Current Assets

SHOW LIST OF ACCOUNTS


LINK TO TEXT

45,564

Copyright 2000-2014 by John Wiley & Sons, Inc. or related companies. All rights reserved.

Change Values

Report Content Error

Brief Exercise 2-5


These selected condensed data are taken from a recent balance sheet of Bob Evans
Farms(in millions of dollars).
Cash

$ 29.3

Accounts receivable

20.5

Inventory

28.7

Other current assets

24.0

Total current assets

$102.5

Total current liabilities

$201.2

Compute working capital and the current ratio. (If answer is negative enter it with a
negative sign preceding the number e.g. -15,000 or in parentheses e.g.
(15,000). Round Current Ratio to 2 decimal places, e.g. 0.78 : 1.)
Working capital (in millions)
Current ratio

SHOW SOLUTION
LINK TO TEXT

(98.7)
0.51

:1

Copyright 2000-2014 by John Wiley & Sons, Inc. or related companies. All rights reserved.

Report Content Error

Exercise 2-1
Classify each of the following financial statement items taken from Mordica Corporations
balance sheet.
Current liabilities

Accounts payable

Current assets

Accounts receivable

Property, plant, and equipment

Accumulated depreciationequipment

Property, plant, and equipment

Buildings

Current assets

Cash

Current liabilities

Interest payable

Intangible assets

Goodwill

Current liabilities

Income taxes payable

Current assets

Inventory

Current assets

Stock investments (to be sold in 7 months)

Property, plant, and equipment

Land (in use)

Long-term liabilities

Mortgage payable

Current assets

Supplies

Property, plant, and equipment

Equipment

Current assets

Prepaid rent

LINK TO TEXT

Copyright 2000-2014 by John Wiley & Sons, Inc. or related companies. All rights reserved.

Report Content Error

Exercise 2-3
Suppose the following items were taken from the December 31, 2014, assets section of
the Boeing Company balance sheet. (All dollars are in millions.)
Inventory

$16,295

Notes receivabledue after December 31, 2015

4,784

Notes receivabledue before December 31, 2015


Accumulated depreciationbuildings

370
12,312

Patents
Buildings
Cash
Accounts receivable
Debt investments (short-term)

Prepare the assets section of a classified balance sheet. (List the current assets in
order of liquidity.)
THE BOEING COMPANY
Partial Balance Sheet
December 31, 2014
(in millions)
Assets
Current Assets
Cash

9,199

Debt investme

2,243

Accounts Rec

5,597

Notes Receiva

370

Inventory

16,295

Total Current Assets

33,704

Long-term Investments
Notes Receiva

4,784

Property, Plant and Equipment


Buildings

21,582

Less

Accumulated D

12,312

9,270

Intangible Assets
Patents

13,035

Total Assets

60,793

SHOW LIST OF ACCOUNTS


LINK TO TEXT

Copyright 2000-2014 by John Wiley & Sons, Inc. or related companies. All rights reserved.

Change Values

Report Content Error

Exercise 2-6
Suppose the following items were taken from the 2014 financial statements of Texas
Instruments, Inc.(All dollars are in millions.)
Common stock

$2,065

Prepaid rent

159

Equipment

6,276

Stock investments (long-term)

644

Debt investments (short-term)

1,746

Income taxes payable


Cash

177
1,449

Accumulated depreciationequipment

$4,086

Accounts payable

1,519

Patents

2,260

Notes payable (long-term)

820

Retained earnings

6,894

Accounts receivable

1,957

Inventory

1,070

Prepare a classified balance sheet in good form as of December 31, 2014. (List current
assets in order of liquidity.)
TEXAS INSTRUMENTS, INC.

Balance Sheet
December 31, 2014
(in millions)
Assets
Current Assets

Cash

1,449

Debt investme

1,746

Accounts Rec

1,957

Inventory

1,070

Prepaid Rent

159

Total Current Assets

6,381

Long-term Investments
Stock Investm

644

Property, Plant and Equipment


Equipment
Less

6,276

Accumulated D

4,086

2,190

Intangible Assets
Patents

2,260

Total Assets

11,475

Liabilities and Stockholders' Equity


Current Liabilities
Accounts Pay
Income Taxes
Total Current Liabilities

$
1,519
177

$
1,696

Long-term Liabilities
Notes Payable

820

Total Liabilities

2,516

Stockholders' Equity
Common Stock

2,065

Retained Earn

6,894

Total Stockholders' Equity

8,959

Total Liabilities and Stockholders' Equity

11,475

SHOW LIST OF ACCOUNTS


LINK TO TEXT

Copyright 2000-2014 by John Wiley & Sons, Inc. or related companies. All rights reserved.

Change Values

Assignment 3:

Report Content Error

Step 1: Analyze each transaction in terms of its effect on the accounts.


In this first step, you are gathering the transactions to analyze. These
transactions can come from a source document such as a sales slip,
check or bill.
Step 2: Enter the transaction information in a journal
In step 2, you are entering the analyzed information in a journal.
Step 3: Transfer the journal information to the appropriate accounts in
the ledger.
In the last step, step 3, you are transferring the journal entries into
their designated accounts in the ledger.

Assignment 4:

360x8=2880
460x10=4600
560x11=6160
Total=13640
Unit total: 360+460+560=1380
Average unit cost: 13640/1380=9.884
Cost of ending inventory: 9.884x260=2570 rounded

230x6=1380
330x7=2310
270x8=2160
Total=5850
300x8=2400
230+330+270=830
830-300=530
230x6=1380
300x8=2400
total=3780