ch02 - CHAPTER 2 THE FINANCIAL STATEMENTS BRIEF EXERCISES...

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CHAPTER 2 THE FINANCIAL STATEMENTS BRIEF EXERCISES BE2–1 2006 2006 2006 Beginning Ending Retained 2006 2006 2006 Retained Earnings + Revenues Expenses Dividends = Earnings $21.1 + $35 $29.4 X = $24.8 X = $1.9 2006 Dividends as a percentage of 2006 net income: 2006 Dividends = $ 1.9 = 33.9% 2006 Net income ($35-$29.4) $ 5.6 EXERCISES E2–2 Operating, Investing, or Financing Balance Sheet Income Statement Statement of Cash Flows Statement of Shareholders Equity 1 Financing Yes No Yes No 2 Operating Yes No No No 3 Operating Yes Yes Yes Yes 4 Operating Yes Yes No Yes 5 Investing Yes No Yes No 6 Investing Yes Cannot tell Yes Cannot tell 7 Financing Yes No Yes No 8 Operating Yes No Yes No E2–3 a. Balance sheet g. Balance sheet m. Balance sheet b. Income statement h. Balance sheet n. Balance sheet c. Balance sheet i. Balance sheet o. Balance sheet d. Income statement j. Balance sheet p. Income statement e. Balance sheet k. Income statement q. Balance sheet f. Income statement l. Income statement r. Balance sheet 1
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E2–10 Statement of Cash Flows For the Year Ended Cash flows from operating activities: Cash collection from services provided. ....................................... $4,000 Cash payment for expenses. ........................................................ (3,000 ) Net cash increase (decrease) from operating activities. ........ $1,000 Cash flows from investing activities: Purchase of machinery. ................................................................ $(3,000 ) Net cash increase (decrease) from investing activities. ......... (3,000) Cash flows from financing activities: Proceeds from stockholders’ contributions. .................................. $7,000 Payment of dividends. .................................................................. (1,500 ) Net cash increase (decrease) from financing activities. ......... 5,500 Increase (decrease) in cash balance. ................................................. $ 3,500 Beginning cash balance. ..................................................................... 13,000 Ending cash balance. .......................................................................... $ 16,500 Based on just one year’s statement of cash flows it is difficult to comment adequately on Lana & Son’s cash management activities. However, one can observe that most of the cash during the year
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This note was uploaded on 09/06/2010 for the course BUSINESS ACG 6025 taught by Professor Karenlivingstone during the Fall '10 term at University of South Florida - Tampa.

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ch02 - CHAPTER 2 THE FINANCIAL STATEMENTS BRIEF EXERCISES...

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