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Beginning of the year cash at end of the year 1069

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Unformatted text preview: s the ending balance in cash on the balance sheet. Chapter One Slide 28 Relationship Among the Statements B/S: Assets = Liabilities + Stockholders’ Equity Cash + Other assets = Liab + (Cont. Capital + Retained Earnings) Oth Li (C ΔCash + ΔOther Assets = ΔLiab + (ΔCont.Capital + ΔRE) SCF: CFO + CFI + CFF = ΔCash SRE: Beg. RE + NI – Dividends = End. RE ΔRE = NI – Dividends I/S: Revenue – Expense = Net Income Chapter One Slide 29 Footnotes • Supplemental info about the financial condition of a company without which the financial statements cannot be fully understood fully understood. • Three types of footnotes: – Accounting Rules – Details about a line on the F/S – Items not listed on the statements. Chapter One Slide 30 Footnotes Chapter One Slide 31 Footnotes Chapter One Slide 32 Footnotes Chapter One Slide 33 Footnotes Chapter One Slide 34 Generally Accepted Accounting Principles – GAAP (Government agency) Security Act of 1933, the Securities Securities Exchange Act of 1934 1929 SEC (SFC in HK) Completely independent (private sector) Investors Managers 3 from auditing firms FASB 2 from corporations (IASB) 1 from academia Lobby Labor Union Politicians 1 analyst Corporations Auditors Banks … GAAP (IFRS) Chapter One Slide 35 Practice Problem • Prepare income statement, statement of retained earnings and balance sheet for Propane Company. At the end of the first year (December 31, 2009) of operation, the following financial data for the company are available: Account Name Name Amount 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 40,700 Accounts payable owed to suppliers 46,140 Salary payable for 2009 (owed to an employee who was away) Total sales revenue Expenses, including the cost of the merchandises sold (excluding income tax) Income taxes expenses at 30% x pretax income, all paid during 2009 1,800 126,000 80,200 ? Contributed capital, 7,000 shares outstanding Chapter One 87,000 Dividends declared and paid during 2009 12,000 Slide 36 Practice Problem Propane Company Income Statement For the Year Ended December 31, 2009 Total Revenue 126,000 Expenses 80,200 Pretax Income 45,800 Income Tax Ta 13,740 Net Income 32,060 Chapter One Slide 37 Practice Problem Propane Company Statement of Retained Earnings For the Year Ended December 31, 2009 Retained earnings, January 1, 2009 $0 Net income for 2009 Dividends for 2009 12,000 Retained earnings, December 31, 2009 31 2009 Chapter One 32,060 20,060 Slide 38 Practice Problem Propane Company Balance Sheet At December 31, 2009 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 Total Asset Accounts payable owed to suppliers Salary payable for 2009 (owed to an employee who was away) Total Liabilities 40,700 155,000 46,140 1,800 47,940 Contributed capital, 7,000 shares outstanding 87,000 Retained Earnings 20,060 Total Shareholders’ Equity Total Liabilities and Shareholders’ Equity Chapter One 107,060 155,000 Slide 39...
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This note was uploaded on 12/20/2011 for the course ACCT/MGMT 2010 taught by Professor A during the Spring '11 term at HKUST.

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