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Unformatted text preview: Problem 1-5A Alex Kinch 103 General Instructions 1. The following worksheet may be used to complete the exercise/problem. You may need to refer to your textbook for additional information. 2. The blue cells are for data entry. Enter text in the T cells, formulas in the F cells, dollar/numbers in the $ cells. 3. The completed exercise/problem may be printed or e-mailed per direction from your instructor. Shown below, in alphabetical order, is a list of the various items that regularly appear on the financial statements of Sterns Audio Book Rental Corp. The amounts shown for balance sheet P1-5Aare balances as of December 31, 2007 (with the exception of retained earnings, which is the items balance on January 1, 2007), and the amounts shown for income statement items are balances for the year ended December 31, 2007: Accounts payable Accounts receivable Advertising expense Audio tape inventory Capital stock Cash Display fixtures Dividends paid during the year Notes payable Rental revenue Rent paid on building Retained earnings Salaries and wages expense Water, gas, and electricity Required 1. Prepare an income statement for the year ended December 31, 2007. STERNS AUDIO BOOK RENTAL CORP. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2007 Revenues: Rental revenue Total revenues Expenses: Water, gas, and electricity Rent paid on building Advertising expense Salaries and wages expense Total expenses Net income $4,500 300 14,500 70,000 50,000 2,490 45,000 12,000 10,000 125,900 60,000 35,390 17,900 3,600 $125,900 $125,900 $3,600 60,000 14,500 17,900 $96,000 $29,900 2. Prepare a statement of retained earnings for the year ended December 31, 2007. STERNS AUDIO BOOK RENTAL CORP. STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2007 Beginning balance, January 1, 2007 T T Ending balance, December 31, 2007 $F F $29,900 3. Prepare a balance sheet at December 31, 2007. STERNS AUDIO BOOK RENTAL CORP. BALANCE SHEET December 31, 2007 Assets Cash Display fixtures Accounts receivable Audio tape inventory Total assets $2,490 45,000 300 70,000 $117,790 Liabilities and Stockholders' Equity Accounts payable $4,500 Salaries and wages expense 17,900 Rent paid on building 10,000 Retained earnings 60,000 Total liabilities and stockholders' equity $92,400 4. You have $1,000 to invest. On the basis of the statement you prepared, would you use it to buy stock in this company? What other information would you want before deciding? not yet, I would like to know if they had any plans for future expansion ...
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This homework help was uploaded on 04/14/2008 for the course ACCT 1021 taught by Professor Teti during the Spring '08 term at Saint Joseph's University.
- Spring '08
- Managerial Accounting