NP 10e Ch01 Solutions - P1-2 Missing Amounts1. Complete...

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Unformatted text preview: P1-2 Missing Amounts1. Complete Financial StatementsIncome StatementSet ASet BSet CRevenue$5,320 $8,600 $2,460 Expenses$4,810 $7,000 $2,010 Net income$510 $1,600 $450 Statement of Retained EarningsBeginning balance$1,780 $15,400 $200 Net income$510 $1,600 $450 Less dividends$190 $1,000 $100 Ending balance$2,100 $16,000 $550 Balance SheetTotal assets$2,700 $26,000 $1,900 Liabilities$400 $2,000 $1,300 Stockholders' equityCommon stock$200 $8,000 $50 Retained earnings$2,100 $16,000 $550 Total liabilities & stockholders' equity$2,700 $26,000 $1,900 2. CommentIt is necessary to prepare an income statement before a balance sheet because net incomeis derived from the income statement. Net income is required to calculate the ending balanceof retained earnings which is part of the balance sheet.P1-4 Unique Ad, Inc.1. Financial StatementsUnique Ad, Inc.Income StatementFor the Year Ended January 31, 2010RevenueAdvertising Service Revenue$165,200 ExpensesSalaries expense$86,000 Equipment rental expense$37,200 Supplies expense$19,100 Office rent expense$13,500 Marketing expense$6,800 Total expenses$162,600 Income before income taxes$2,600 Income tax expense$560 Net income$2,040 Unique Ad, Inc.Statement of Retained EarningsFor the Year Ended January 31, 2010Retained earnings, January 31, 2009$- Net income$2,040 Less: Dividends$- Retained earnings, January 31, 2010$2,040 Unique Ad, Inc.Balance SheetJanuary 31, 2010Cash$1,800 Accounts receivable$24,900 Supplies$1,600 Total assets$28,300 Accounts payable$19,400 Salaries payable$1,300 Income taxes payable$560 Total liabilities$21,260 Common stock$5,000 Retained earnings$2,040 Total stockholders' equity$7,040 Total liabilities & stockholders' equity$28,300 2. CommentsUnique Ad was profitable during 2010 but faces certain challenges. Profitability was fairly low net income being slightly more than 1.2% of revenue. Expenses seem to be high relative to revenue....
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NP 10e Ch01 Solutions - P1-2 Missing Amounts1. Complete...

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