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Chapter 2 Homework Solutions

Chapter 2 Homework Solutions - Chapter 2 Homework LO 3 1 CA...

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Chapter 2 Homework LO 3 EXERCISE 2-2 CLASSIFICATION OF ASSETS AND LIABILITIES [GRADED] 1. CA 2. CL 3. CA 4. NCA 5. CL 6. CL 7. CA 8. LTL 9. NCA LO 5 EXERCISE 2-3 SELLING EXPENSES AND GENERAL AND ADMINISTRATIVE EXPENSES 1. Advertising expense— S 2. Depreciation expense—store furniture and fixtures— S 3. Office rent expense— G&A 4. Office salaries expense— G&A 5. Store rent expense— S 6. Store salaries expense— S 7. Insurance expense— G&A * 8. Supplies expense— G&A * 9. Utilities expense— G&A * *Each of these could be classified as a selling expense if the cost is related in some way to the sales function; e.g., insurance on cars driven by salespeople could be classified as a selling expense.
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LO 6 EXERCISE 2-4 INCOME STATEMENT RATIO Profit margin: Net income/Revenues = $45,000*/$134,800 = 33.4 % *$134,800 – $38,310 – $36,990 – $580 – $13,920 = $45,000 Other information needed would be ratios for prior years and ratios for other companies in same industry. LO 3 PROBLEM 2-3 CLASSIFIED BALANCE SHEET [GRADED] 1. Classified balance sheet: RUTH CORPORATION BALANCE SHEET DECEMBER 31, 2007 Assets Current assets: Cash $ 13,230 Accounts receivable 69,180 Prepaid rent 1,500 Office supplies 2,340 Total current assets $ 86,250 Long-term investments 85,000 Property, plant, and equipment: Land $250,000 Automobiles $112,500 Less: Accumulated depreciation 22,500 90,000 Buildings $200,000 Less: Accumulated depreciation 40,000 160,000
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