Mgmt_200_Spring_2008_solutions_1-9-08(1,11)

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Management 200 – Introductory Financial Accounting– Spring 2008 Krannert School of Management - Purdue University Solutions to class assignment for January 9, 2008 E1–5. 1. READ MORE STORE Balance Sheet at December 31, 2006 ASSETS LIABILITIES Cash $48,900 Accounts payable $7,000 Accounts receivable 25,000 Note payable 3,000 Store and office equipment 49,000 Interest payable 120 Total liabilities $10,120 STOCKHOLDERS’ EQUITY Contributed capital $100,000 Retained earnings 12,780 Total stockholders’ equity 112,780 Total assets $122,900 Total liabilities and stockholders' equity $122,900 2. Net income for the year was $12,780. This is the first year of operations and no dividends were declared or paid to stockholders; therefore the retained earnings, $12,780,
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Unformatted text preview: represent income for one year. E1–8. HOME REALTY, INCORPORATED Income Statement for the Year Ended December 31, 2008 Revenue: Commissions earned ($150,000+$16,000) $166,000 Rental service fees 20,000 Total revenues $186,000 Expenses: Salaries expense $ 62,000 Commission expense 35,000 Payroll tax expense 2,500 Rent expense ($2,200+$200)* 2,400 Utilities expense 1,600 Promotion and advertising expense 8,000 Miscellaneous expenses 500 Total expenses (excluding income taxes) 112,000 Pretax income $74,000 Income tax expense 18,500 Net Income $55,500 *$2,200 has been paid for 11 months ($200 per month) plus $200 owed for December....
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This note was uploaded on 11/22/2009 for the course MGMT 200 taught by Professor Greigg during the Spring '08 term at Purdue.

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