Mid Term Tutorial Solutions

Mid Term Tutorial Solutions - Tutorial Solutions Chapter 1...

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Tutorial Solutions Chapter 1 and 2 2-33 a ) To identify the income statement accounts and calculate net income, an income statement for Minute Print Company is presented below. Minute Print Company Income Statement For the year ended December 31, 2008 Sales $486,000 Less expenses: Supplies used $215,500 Wages 62,000 Interest charges 2,500 Amortization 30,000 Rent 24,000 Other expenses 9,000 Total expenses 343,000 Net Income $143,000 b) Net Income $143,000 Less dividends declared 3,000 Retained earnings at Dec 31, 2008 $140,000
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c) Minute Print Company Balance Sheet As at December 31, 2008 ASSETS Current assets Cash $ 34,000 Accounts receivable 10,000 Supplies 18,000 Prepaid rent 2,000 Total current assets $64,000 Non-current assets Equipment 220,000 Total Assets $284,000 Current liabilities Accounts payable $ 8,000 Wages payable 4,500 Dividends payable 1,500 Non-current liabilities Loan payable 30,000 Total liabilities $44,000 Shareholders’ equity Common shares $100,000 Retained earnings 140,000 Total shareholders’ equity 240,000 Total Liabilities and Shareholders’ equity $284,000
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2-38 a) Assets = Liabilities ++ + Shareholders’ Equity 1. +$450,000 (cash) = ++ + +$450,000 (common shares) 2. +$50,000 (land) +$150,000 (building) -$50,000 (cash) + +$150,000 (common shares) 3. +$24,000 (cash) = +$6,000 (unearned rent) + +$18,000 [retained earnings (rental revenue)] 4a +$100,000 (equipment) -$60,000 (cash) = +$40,000 (notes payable) 4b = +$2,000 (interest payable) + + -$2,000* [retained earnings (interest expense)] 5. +$225,000 (inventory) = +$225,000 (accounts payable) 6. +$75,000 (cash) +$200,000 (accounts receivable) = + $275,000 [retained earnings (sales revenue)] 7. -$180,000 (inventory) = + + -$180,000 [retained earnings (cost of goods sold)] 8. -$195,000 (cash) = -$195,000 (accounts payable)
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9. +$185,000 (cash) -$185,000 (accounts receivable) 10. 11. 12. -$40,000 (cash) -$7,000 (building) -$4,800 (equipment) = = = + + + -$40,000 [retained earnings (Operating expense)] -$7,000** [retained earnings (amortization expense)] -$4,800*** [retained earnings (amortization expense)] 13. -$9,000 (cash) = +$8,760 (taxes payable) + -$17,760**** [retained earnings (inc. tax exp.)] 14. -$11,000 (cash) = +$1,000 (dividends payable) + + -$12,000 (retained earnings) *$40,000 x .10 x 1/2 = $2,000 **($150,000 – 10,000) ÷ 20 = $7,000 ***$(100,000 – 4,000) ÷ 10 x 1/2 = $4,800 ****See income statement for calculation
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b) A.J. Smith Company Income Statement For the year ended December 31, 2008 Sales $275,000 Rent revenue 18,000 Total revenues $293,000 Expenses Cost of goods sold $180,000 Amortization expense 11,800 Interest expense 2,000 Operating 40,000 233,800 Income before income taxes 59,200 Income taxes ($59,200 x 30%) 17,760 Net income $41,440 A.J. Smith Company Balance Sheet As at December 31, 2008 Assets Cash $369,000 Accounts receivable 15,000 Inventory 45,000 Land
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This note was uploaded on 12/08/2009 for the course TEFLER ADM1300 taught by Professor Koppel during the Fall '09 term at University of Ottawa.

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Mid Term Tutorial Solutions - Tutorial Solutions Chapter 1...

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