Atkins_Accounting (1) - Michael Atkins_x000D_November 29,...

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Michael Atkins_x000D_November 29, 2010 Unit 1 Assignment_x000D_GB518 Principles of Accounting Page 1 of 26 Exercise 1-1 Users of Accounting Information and Their Needs Company management Banker Stockholder Supplier Securities and Exchange Commission Labor Union Internal Revenue Service User Group Needs Information About Company management The profitability of each division in the company Stockholder The prospects for future dividend payments Labor Union The profitability of the company since the last contract with the workforce was signed SEC The financial status of a company issuing securities to the public for the first time Banker The prospects that a company will be able to meet its interest payments on time Supplier The prospects that a company will be able to pay for its purchases on time Internal Revenue Service The profitability of the company based on the tax code Problem 1-4 Corrected Balance Sheet Assets Liabilities and Stockholder's Equity Accounts payable $13,000.00 Accounts receivab $16,000.00 Cash $21,000.00 Capital stock $20,000.00 Cash dividends pa $16,000.00 Net income for 20 $72,000.00 $43,000.00 Supplies $9,000.00 Total Assets $93,000.00 $117,000.00 Required 1. Prepare a corrected balance sheet. Assets Liabilities and Stockholder's Equity Accounts receivab $16,000.00 Accounts payable $13,000.00 Cash $21,000.00 Capital stock $20,000.00 $43,000.00 Retained earnings $56,000.00 Supplies $9,000.00 Total Assets $89,000.00 $89,000.00 2. Draft a memo explaining the major differences between the balance sheet Dave’s assistant prepared and the one you prepared. Problem 2-7 Multiple-Step Income Statement and Profit Margin 1. Prepare a multiple-step income statement for the year ended December 31, 2008. Sales $48,300.00 Cost of goods sold $29,200.00 Gross profit $19,100.00 Operating Expenses Selling expenses Advertising expense $1,500.00 Commissions expense $2,415.00 Insurance expense - salesperson auto $2,250.00 Total selling expenses $6,165.00 General and administrative expenses Depreciation expense - office building $2,900.00 Salaries and wages expense - office $12,560.00 Supplies expense - office $890.00 Total general and administrative expenses $16,350.00 Total operating expenses $22,515.00 Income from operations ($3,415.00) Other revenues and expenses Interest revenue $1,340.00 Interest expense $1,400.00 Rent revenue $6,700.00 Excess of other revenues over other expenses $6,640.00 Income before income taxes $3,225.00 Income tax expense $1,540.00 Net income $1,685.00 2. What advantages do you see in this form for the income statement? 3. Compute Shaw’s profit margin. Profit margin = net income net sales = $1,685.00 $48,300.00 = 0.03 4. Comment on Shaw’s profitability. What other factors need to be taken into account to assess Shaw’s profitability? Listed below are a number of the important users of accounting information.
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This note was uploaded on 01/26/2012 for the course BUSINESS Accounting taught by Professor N/a during the Spring '11 term at Kaplan University.

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Atkins_Accounting (1) - Michael Atkins_x000D_November 29,...

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