MGAB01H3 Lecture Notes - Lecture 2: Promissory Note, Retained Earnings, Bayer
Get access
Related Documents
Related Questions
Listed below are account balances (in $millions) taken from therecords of Symphony Stores. All of these are permanent accounts,except the last two that have yet to be closed. The installmentreceivables are current. Symphony uses a perpetual inventorysystem.
Debit | Credit | ||
---|---|---|---|
Accounts receivable-trade | 680 | ||
Building and equipment | 920 | ||
Cash-checking | 34 | ||
Installment receivables | 50 | ||
Interest receivable | 30 | ||
Inventory | 16 | ||
Land | 150 | ||
Note receivable Long-term | 450 | ||
Petty cash funds | 5 | ||
Prepaid expenses (for coming year) | 20 | ||
Supplies | 8 | ||
Trademark | 40 | ||
Accounts payable-trade | 560 | ||
Accumulated depreciation | 80 | ||
Additional paid-in capital, common | 485 | ||
Allowance for uncollectable accounts | 20 | ||
Cash dividends payable | 30 | ||
Common stock, at par | 15 | ||
Income tax payable | 65 | ||
Notes payable (long-term) | 800 | ||
Retained earnings | 48 | ||
Unearned revenues | 40 | ||
Cash dividends declared-common | 120 | ||
Income summary | 380 | ||
TOTALS | 2523 | 2523 |
What would Symphony report as total assets? Hint: Don t forgetto deduct the contra assets.
What would Symphony report as total shareholders' equity? Hint:You will need to deduct dividends.
Forten Company, a merchandiser, recently completed itscalendar-year 2015 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The company's incomestatement and balance sheets follow.
FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014 | ||||||
2015 | 2014 | |||||
Assets | ||||||
Cash | $ | 49,800 | $ | 74,000 | ||
Accounts receivable | 65,900 | 59,000 | ||||
Inventory | 277,000 | 252,500 | ||||
Prepaid expenses | 1,500 | 1,700 | ||||
Total current assets | 394,200 | 387,200 | ||||
Equipment | 158,500 | 106,500 | ||||
Accum. depreciation—Equipment | (36,375) | (46,000) | ||||
Total assets | $ | 516,325 | $ | 447,700 | ||
Liabilities and Equity | ||||||
Accounts payable | $ | 54,325 | $ | 113,000 | ||
Short-term notes payable | 9,000 | 8,000 | ||||
Total current liabilities | 63,325 | 121,000 | ||||
Long-term notes payable | 65,000 | 48,000 | ||||
Total liabilities | 128,325 | 169,000 | ||||
Equity | ||||||
Common stock, $5 par value | 162,500 | 150,750 | ||||
Paid-in capital in excess of par, common stock | 35,250 | 0 | ||||
Retained earnings | 190,250 | 127,950 | ||||
Total liabilities and equity | $ | 516,325 | $ | 447,700 | ||
FORTEN COMPANY Income Statement For Year Ended December 31, 2015 | |||||
Sales | $ | 582,500 | |||
Costof goods sold | 287,000 | ||||
Gross profit | 295,500 | ||||
Operating expenses | |||||
Depreciation expense | $ | 20,000 | |||
Other expenses | 132,000 | 152,000 | |||
Other gains (losses) | |||||
Loss on sale ofequipment | (5,250) | ||||
Income before taxes | 138,250 | ||||
Income taxes expense | 24,250 | ||||
Netincome | $ | 114,000 | |||
Additional Information on Year 2015Transactions |
a. | Net income was$114,000. |
b. | Accountsreceivable increased. |
c. | Inventoryincreased. |
d. | Prepaid expensesdecreased. |
e. | Accounts payabledecreased. |
f. | Depreciationexpense was $20,000. |
g. | Sold equipment costing $46,500, with accumulated depreciation of$29,625, for $11,625 cash. This yielded a loss of $5,250. |
h. | Purchased equipment costing $98,500 by paying $25,000 cash and(i.) by signing a long-term note payable for thebalance. |
j. | Borrowed $1,000cash by signing a short-term note payable. |
k. | Paid $56,500cash to reduce the long-term notes payable. |
l. | Issued 2,350shares of common stock for $20 cash per share. |
m. | Declared andpaid cash dividends of $51,700. |
Required: |
Prepare a complete statement of cash flows using a spreadsheet;report its operating activities using the indirect method.(Enter all amounts as positive values.) |
|