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MGAB01H3 Lecture Notes - Issued Shares, Retained Earnings, Income Statement

Financial Accounting
Course Code
Douglas Kong

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a)the company borrows 1000 from its local bank, signing a note to be paid in two years
cash (+A) 1000
long term borrowings (+L) 1000
b)for the expansion, nestle opened a new production facility. The company purchased 2200 of
equipment paying 1500 in cash and signing a note for 700, payable to the equipment manufacture in
two years
equipment (+A) 2200
cash (-A) 1500
Long term borrowings (+L) 700
c)nestle purchases shares issued by another company as a long term investment, paying 3000 in cash.
The number of shares purchased allows nestle to exert significant influence over decisions made by that
investment in associates (+A) 3000
cash(-A) 3000
d)nestle's board of directors declares cash dividends of 200 for shareholders. The dividends are
immediately paid
retained earnings(-SE) 200
cash(-A) 200
pg 119-121
revenues-cost of goods sold=gross profit
gross profit-total operating expenses=operating profit
operating profit +other revenues and gains=profit before income taxes
Consolidatd income statement pg 122
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