Com 14 accounting cycle exercises i problem 3

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: looking for enthusiastic new colleagues with plenty of ideas who want to join RWE in changing the world. Visit us online to find out what we are offering and how we are working together to ensure the energy of the future. Download free ebooks at bookboon.com 15 Accounting Cycle Exercises I Problem 3: Solution Solution 3 BOLOGNA COMPANY Income Statement For the Year Ending December 31, 20X5 Revenues Services to customers $ 225,000 Expenses Wages $ 92,500 Utilities $ 15,000 Rent $ 25,000 Net income $ 132,500 $ 92,500 Beginning retained earnings $ 27,500 Plus: Net income $ 92,500 BOLOGNA COMPANY Statement of Retained Earnings For the Year Ending December 31, 20X5 $ 120,000 Less: Dividends $ 12,500 Ending retained earnings $ 107,500 BOLOGNA COMPANY Balance Sheet December 31, 20X5 Assets Cash $ 22,500 Accounts receivable $ 47,500 Equipment $ 200,000 Total assets $ 270,000 Liabilities Accounts payable $ 10,000 Notes payable $ 50,000 Total liabilities $ 60,000 Stockholders’ equity Capital stock $ 102,500 Retained earnings $ 107,500 Total stockholders’ equity $ 210,000 Total liabilities and equity $ 270,000 Download free ebooks at bookboon.com 16 Accounting Cycle Exercises I Problem 4: Worksheet Problem 4 Scream Clean Company provided the following very limited set of data. Use this information to determine net income for the years ending December 31, 20X6, 20X7, 20X8, and 20X9. The company was formed at the beginning of January, 20X6 by issuing $350,000 of capital stock. No additional shares were issued during the 4-year period. The company’s 20X9 dividends were equal to 50% of the 20X9 net income. Revenues, 20X7 $315.000 Dividends, 20X8 52.500 Total equity, December 31, 20X8 735.000 Total liabilities, December 31, 20X8 770.000 Retained earnings, December 31, 20X6 143.500 Expenses, 20X7 154.000 Retained earnings, December 31, 20X7 280.000 Dividends, 20X6 35.000 Total assets, December 31, 20X9 1.750.000 Increase in liabilities, 20X9 175.000 Worksheet 4 • 20X6 • 20X7 • 20X8 • 20X9 Download free ebooks at bookboon.com 17 Accounting Cycle Exercises I Problem 4: Solution Solution 4 • 20X6 Retained earnings, December 31, 20X6 $ Plus: Dividends paid during 20X6 143,500 35,000 Net income for the year ending December 31, 20X6 $ 178,500 Revenues for the year ending December 31, 20X7 $ 315,000 • 20X7 Less: Expenses for the year ending December 31, 20X7 154,000 Net income for the year ending December 31, 20X7 $ 161,000 Total equity, December 31, 20X8 $ 735,000 • 20X8 Less: Capital stock 350,000 Retained earnings, December 31, 20X8 $ Less: Retained earnings, December 31, 20X7 385,000 280,000 Increase in retained earnings during 20X8 $ Plus: Dividends paid during 20X8 105,000 52,500 Net income for the year ending December 31, 20X8 $ Total liabilities, December 31, 20X8 $ 157,500 • 20X9 Plus: Increase in liabilities during 20X9 770,000 175,000 Total liabilities, December 31, 20X9 $ $ Total assets, December 31, 20X9 945,000 - $ 1,750,000 Less: Total liabilities, December 31, 20X9 945,000 Total equity, December 31, 20X9 $ Less: Capital stock 805,000 350,000 Retained earnings, December 31, 20X9 $ Less: Retained earnings, December 31, 20X8 455,000 385,000 Increase in retained earnings during 20X9 $ 70,000 The 20X9 net income was $140,000 Proof: Dividends = Net Income X 50% Increase in Retained Earnings = Net Income - Dividends thus: $70,000 = Net income - (Net income X 50%) $70,000 = 0.5 X Net Income Net Income = $140,000 Download free ebooks at bookboon.com 18 Accounting Cycle Exercises I Problem 5 Problem 5 Rajagopul Corporation is a newly formed company. Below are the first 10 transactions that Rajagopul encountered. Prepare an income statement, statement of retained earnings, and balance sheet immediately following each of these consecutive transactions. 1) 2) Issued capital stock for $100,000 cash. Purchased building for $240,000, making a $40,000 down payment and signing a promissory note payable for the balance. 3) Paid wages expense of $10,000. 4) Provided services to customers for $30,000 cash. 5) Paid utilities expense of $4,000. 6) Reduced note payable with an $16,000 cash payment (ignore interest costs). 7) Provided services to customers on account, $20,000. 8) Incurred wages expense of $6,000, to be paid in the future. 9) Collected $8,000 on an outstanding account receivable. 10) Declared and paid dividend of $12,000. Please click the advert Who is your target group? And how can we reach them? At Bookboon, you can segment the exact right audience for your advertising campaign. Our eBooks offer in-book advertising spot to reach the right candidate. Contact us to hear more kbm@bookboon.com Download free ebooks at bookboon.com 19 Accounting Cycle Exercises I Problem 5: Worksheet Worksheet 5 RAJAGOPUL CORPORATION Income Statement For the Month (through transaction #1) Revenues Services to customers $ - Expenses Wages $ - Utilities - Net income $ - $ - RAJAGOPUL CORPORATION Statement of Retained Earni...
View Full Document

This homework help was uploaded on 02/26/2014 for the course ACCOUNTING PARCOR taught by Professor Proftamaray during the Spring '14 term at University of the East, Manila.

Ask a homework question - tutors are online