To fully assess Fort Worths long term viability you would need the following

To fully assess fort worths long term viability you

This preview shows page 26 - 30 out of 38 pages.

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?
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1-26 FINANCIAL ACCOUNTING SOLUTIONS MANUAL LO 2 PROBLEM 1-7A CORRECTED FINANCIAL STATEMENTS 1. HEIDI’S BAKERY INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2007 Revenues: Pastry cash sales $23,700 Pastry credit sales 22,100 $45,800 Expenses: Utilities $ 9,500 Salaries and wages 18,200 27,700 Net income $18,100 2. HEIDI’S BAKERY INC. STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2007 Beginning balance, January 1, 2007 $39,900 Add: Net income 18,100 Deduct: Cash dividends 5,600 Ending balance, December 31, 2007 $52,400 3. HEIDI’S BAKERY INC. BALANCE SHEET DECEMBER 31, 2007 Assets Liabilities and Stockholders’ Equity Cash $ 3,700 Accounts payable $ 6,800 Accounts receivable 15,500 Notes payable 40,000 Building and equipment 60,000 Capital stock 30,000 Land 50,000 Retained earnings 52,400 Total liabilities and Total assets $129,200 stockholders’ equity $129,200
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CHAPTER 1 • ACCOUNTING AS A FORM OF COMMUNICATION 1-27 PROBLEM 1-7A (Concluded) 4. Memorandum to the company president: TO: Company president FROM: Student’s name DATE: January 1, 2008 SUBJECT: Corrected income statement Attached please find the original income statement you prepared, along with a cor- rected version of that same statement. Fortunately, your disappointment with the 2007 net income is not warranted, as you will see from my revised statement. The difference 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 notes payable should be reported on the balance sheet as a liability, not as an offset to building and equipment. Please let me know if I can be of any further assistance in interpreting the results of our operations for 2007. LO 2 PROBLEM 1-8A STATEMENT OF RETAINED EARNINGS FOR BRUNSWICK COR- PORATION 1. BRUNSWICK CORPORATION STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2004 Beginning balance, December 31, 2003 $1,202,000,000 Add: 2004 net income 269,800,000 Deduct: 2004 dividends (58,100,000 ) Ending balance, December 31, 2004 $1,413,700,000 2. 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.
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1-28 FINANCIAL ACCOUNTING SOLUTIONS MANUAL LO 5 PROBLEM 1-9A ROLE OF THE ACCOUNTANT IN VARIOUS ORGANIZATIONS 1. Financial accountant 2. Tax accountant 3. Financial accountant 4. Not an accounting position 5. Managerial accountant 6. Managerial accountant 7. Not an accounting position 8. Auditor 9. Not an accounting position 10.
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