Assignment_1_Solution - EXERCISE[1-4 VI CONNOR 00 Income...

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Unformatted text preview: EXERCISE [1-4 VI CONNOR 00. Income Statement For the Year Ended December 31, 2007 Revenues Service revenue .............................................................. .. $58,000 Expenses Salaries expense ............................................................ .. $30,000 Rent expense ................................................................... .. 10,400 Utilities expense ............................................................. .. 2,400 Advertising expense ..................................................... .. 1,800 - Total expenses .............................. ....................... .. 44,600 Net income ................................................................................ .. $1 3,400 CONNOR CO. Retained Earnings Statement For the Year Ended December 31, 2007 Retained earnings, January 1 .................................................................. .. $64,000 Add: Net income ........................................................................................ .. 13,400 77,400 Less: Dividends ........................................................................................... .. 6,000 Retained earnings, December 31 ............................................................ .. $71,400 EXERCISE 2-4 V]! DONOVAN COMPANY Balance Sheet December 31, 2007 Assets Current assets Cash ............................................................ .. $16,840 Accounts receivable .............................. .. 1 2,600 Prepaid insurance .................................. .. 4,680 Total current assets ...................... .. $ 34,120 Property, plant, and equipment Land ............................................................ .. 61,200 Building ...................................................... .. $105,800 Less: Accumulated depreciation— building .................................... .. 45,600 60,200 Equipment ................................................. .. 82,400 Less: Accumulated depreciation— equipment ................................ .. 1 8,720 63,680 1 85,0_80 Total assets ..................................... .. ' Liabilities and Stockholders’ Equity E; Current liabilities Accounts payable ................................... .. $ 9,500 Current portion of mortgage payable... 13,600 Interest payable ....................................... .. 3,600 Total current liabilities ................. .. $ 26,700 Long-term liabilities Mortgage payable ................................... .. 80,000 Total liabilities ................................ .. 106,700 a Stockholders’ equity " Common stock ........................................ .. 62,000 Retained earnings ($40,000 + $10,500") 50,500 Total stockholders’ equity .......... .. 112,500 Total liabilities and stockholders’ equity 631;,2700 1 income = $19,180 - $780 — $5,300 — $2,600 = $10,500 ...
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