Chapter_1_HW_Solution_final

# Chapter_1_HW_Solution_final - AEM 221 Financial Accounting...

• Homework Help
• 7

This preview shows pages 1–3. Sign up to view the full content.

AEM 221 Financial Accounting Spring 2007 Chapter 1 Homework Solution P1-1 Preparing an Income Statement, Statement of Retained Earnings, and Balance Sheet Assume that you are the president of Propane Company. At the end of the first year (December 31, 2006) of operations, the following financial data for the company are available: Cash \$ 22,500 Receivables from customers (all considered collectible) 10,800 Inventory of merchandise (based on physical count and priced at cost) 81,000 Equipment owned, at cost less used portion 40,500 Accounts payable owed to suppliers 42,633 Salary payable for 2006 (on December 31, 2006, this was owed to an employee who was away because of an emergency; will return around January 10, 2007, at which time the payment will be made) 1,800 Total sales revenue 126,000 Expenses, including the cost of the merchandise sold (excluding income taxes) 80,190 Income taxes expense at 30% × pretax income; all paid during 2006 ? Contributed capital, 7,000 shares outstanding 86,350 Dividends declared or paid during 2006. 8,050 Required: 1. Prepare a summarized income statement for the year 2006. 2. Prepare a Statement of Retained Earnings for the year 2006. 3. Prepare a balance sheet at December 31, 2006. 1. Propane Company 1

This preview has intentionally blurred sections. Sign up to view the full version.

Income Statement For Year Ended December 31, 2006 Total sales revenue \$ 126,000 Total expenses 80,190 Pretax income 45,810 Income tax expense 13,743
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern