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3.To fully assess Fort Worth’s long-term viability, you would need the following infor-mation about the $30,000 note payable:When is it due?What is the interest rate?Is interest paid periodically or only at maturity?Have any assets been offered as collateral for the loan?
1-26FINANCIAL ACCOUNTING SOLUTIONS MANUALLO 2PROBLEM 1-7A CORRECTED FINANCIAL STATEMENTS1.HEIDI’S BAKERY INC.INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2007Revenues:Pastry cash sales$23,700Pastry credit sales22,100$45,800Expenses:Utilities$ 9,500Salaries and wages18,20027,700Net income$18,1002.HEIDI’S BAKERY INC.STATEMENT OF RETAINED EARNINGSFOR THE YEAR ENDED DECEMBER 31, 2007Beginning balance, January 1, 2007$39,900Add: Net income18,100Deduct: Cash dividends5,600Ending balance, December 31, 2007$52,4003.HEIDI’S BAKERY INC.BALANCE SHEETDECEMBER 31, 2007AssetsLiabilities and Stockholders’ EquityCash$3,700Accounts payable$6,800Accounts receivable15,500Notes payable40,000Building and equipment60,000Capital stock30,000Land50,000Retained earnings52,400Total liabilities and Total assets$129,200stockholders’ equity$129,200
CHAPTER 1 • ACCOUNTING AS A FORM OF COMMUNICATION1-27PROBLEM 1-7A (Concluded)4.Memorandum to the company president:TO:Company presidentFROM:Student’s nameDATE:January 1, 2008SUBJECT:Corrected income statementAttached please find the original income statement you prepared, along with a cor-rected version of that same statement. Fortunately, your disappointment with the2007 net income is not warranted, as you will see from my revised statement. Thedifference between the net loss on the original income statement of $900 and the re-vised net income of $18,100, or $19,000, can be explained as follows:1.Accounts receivable of $15,500 does not belong on the income statement; in-stead, services provided on account of $22,100 should be shown on the state-ment; the difference is $6,600.2.Dividends are not an expense and thus they do not belong on the income state-ment: $5,600.3.Accounts payable is a liability and appears on a balance sheet: $6,800.These corrections result in increased income of $19,000. Also note that notespayable should be reported on the balance sheet as a liability, not as an offset tobuilding and equipment. Please let me know if I can be of any further assistance ininterpreting the results of our operations for 2007.LO 2PROBLEM 1-8A STATEMENT OF RETAINED EARNINGS FOR BRUNSWICK COR-PORATION1.BRUNSWICK CORPORATIONSTATEMENT OF RETAINED EARNINGSFOR THE YEAR ENDED DECEMBER 31, 2004Beginning balance, December 31, 2003$1,202,000,000Add: 2004 net income269,800,000Deduct: 2004 dividends(58,100,000)Ending balance, December 31, 2004$1,413,700,0002.The statement of stockholders’ equity would include all changes in stockholders’equity such as issuances and retirements of stock in addition to the information nor-mally provided in a retained earnings statement.
1-28FINANCIAL ACCOUNTING SOLUTIONS MANUALLO 5PROBLEM 1-9A ROLE OF THE ACCOUNTANT IN VARIOUS ORGANIZATIONS1.Financial accountant2.Tax accountant3.Financial accountant4.Not an accounting position5.Managerial accountant6.Managerial accountant7.Not an accounting position8.Auditor9.Not an accounting position10.