Connect Access Card for Financial Accounting
9th Edition
ISBN: 9781259738678
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Chapter 1, Problem 1.2AP
Analyzing a Student’s Business and Preparing an Income Statement
Upon graduation from high school, Sam List immediately accepted a job as an electrician’s assistant for a large local electrical repair company. After three years of hard work, Sam received an electrician’s license and decided to start his own business. He had saved $12,000, which he invested in the business. First, he transferred this amount from his savings account to a business bank account for List Electric Repair Company, Incorporated. His lawyer had advised him to start as a corporation. He then purchased a used panel truck for $9,000 cash and secondhand tools for $1,500; rented space in a small building; inserted an ad in the local paper, and opened the doors on October 1. Immediately, Sam was very busy; after one month, he employed an assistant.
Although Sam knew practically nothing about the financial side of the business, he realized that a number of reports were required and that costs and collections had to be controlled carefully. At the end of the year, prompted in part by concern about his income tax situation (previously he had to report only salary). Sam recognized the need for financial statements. His wife Janet developed some financial statements for the business. On December 31, with the help of a friend, she gathered the following data for the three months just ended. Bank account deposits of collections for electric repair services totaled $32,000. The following checks had been written: electrician’s assistant, $7,500; payroll taxes, $175; supplies purchased and used on jobs, $9,500; oil, gas, and maintenance on truck, $1,200: insurance, $700; rent, $500; utilities and telephone, $825: and miscellaneous expenses (including advertising), $600. Also, uncollected bills to customers for electric repair services amounted to $3,500. The $250 rent for December had not been paid. Sam estimated the cost of using the truck and tools (depreciation) during the three months to be $1,200. Income taxes for the three-month period were $3,930.
Required:
- 1. Prepare a quarterly income statement for last Electric Repair for the three months October through December. Use the following main captions: Revenues from Services. Expenses. Pretax Income, and Net Income.
- 2. Do you think that Sam may need one or more additional financial reports for the quarter and thereafter? Explain.
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D
Although William knew practically nothing about the financial side of the business, he realized that a number of reports were required
and that expenses and collections from clients had to be controlled…
Upon graduation from high school, William Nitter accepted a job as a plumber's assistant for a large local plumbing company. After
three years of hard work, William received a plumbing licence and decided to start his own business. He had saved $31,000, which he
Invested in the business. His lawyer had advised him to start as a corporation. First, he transferred the $31,000 from his savings
account to a business bank account for William's Plumbing Services Inc. and was issued shares. He then purchased a used panel truck
for $21,500 cash and second hand tools for $3,700, rented space in a small building, Inserted an advertisement in the local paper, and
opened his business on July 1 of the current year. Immediately. William was very busy, after one month, he employed an assistant
A
Although William knew practically nothing about the financial side of the business, he realized that a number of reports were required
and that expenses and collections from clients had to be controlled…
Several years ago, your brother opened Niagara Appliance Repairs. He made a small initial investment and added money from his personal bank account as needed. He withdrew money for living expenses at irregular intervals. As the business grew, he hired an assistant. He is now considering adding more employees, purchasing addi- tional service trucks, and purchasing the building he now rents. To secure funds for the expansion, your brother submitted a loan application to the bank and included the most recent financial statements (shown below) prepared from accounts maintained by a part-time bookkeeper.
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Chapter 1 Solutions
Connect Access Card for Financial Accounting
Ch. 1 - Define accounting.Ch. 1 - Briefly distinguish financial accounting from...Ch. 1 - Prob. 3QCh. 1 - Prob. 4QCh. 1 - Prob. 5QCh. 1 - Complete the following: Name of Statement...Ch. 1 - What information should be included in the heading...Ch. 1 - What are the purposes of (a) the income statement,...Ch. 1 - Explain why the income statement and the statement...Ch. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - Explain the equation for the income statement....Ch. 1 - Explain the equation for the balance sheet. Define...Ch. 1 - Explain the equation for the statement of cash...Ch. 1 - Explain the equation for retained earnings....Ch. 1 - The financial statements discussed in this chapter...Ch. 1 - Prob. 17QCh. 1 - Prob. 18QCh. 1 - (Supplement A) Briefly differentiate between a...Ch. 1 - Prob. 20QCh. 1 - Which of the following is not one of the four...Ch. 1 - Prob. 2MCQCh. 1 - Prob. 3MCQCh. 1 - Which of the following regarding retained earnings...Ch. 1 - Which of the following is not one of the four...Ch. 1 - Prob. 6MCQCh. 1 - Prob. 7MCQCh. 1 - Which of the following is true regarding the...Ch. 1 - Prob. 9MCQCh. 1 - Prob. 10MCQCh. 1 - Matching Elements with Financial Statements M1-1...Ch. 1 - Matching Financial Statement Items to Financial...Ch. 1 - Prob. 1.3MECh. 1 - Prob. 1.1ECh. 1 - Matching Financial Statement Items to Financial...Ch. 1 - Matching Financial Statement Items to Financial...Ch. 1 - Preparing a Balance Sheet Honda Motor Corporation...Ch. 1 - Completing a Balance Sheet and Inferring Net...Ch. 1 - Prob. 1.6ECh. 1 - Preparing an Income Statement and Inferring...Ch. 1 - Prob. 1.8ECh. 1 - Inferring Values Using the Income Statement and...Ch. 1 - Inferring Values Using the Income Statement and...Ch. 1 - Preparing an Income Statement and Balance Sheet...Ch. 1 - Preparing an Income Statement and Balance Sheet...Ch. 1 - Preparing a Statement of Stockholders Equity...Ch. 1 - Focus on Cash Flows: Matching Cash Flow Statement...Ch. 1 - Preparing an Income Statement, Statement of...Ch. 1 - Analyzing a Student's Business and Preparing an...Ch. 1 - Comparing Income with Cash Flow (Challenging)...Ch. 1 - Evaluating Data to Support a Loan Application...Ch. 1 - Preparing an Income Statement, Statement of...Ch. 1 - Analyzing a Students Business and Preparing an...Ch. 1 - Prob. 1.3APCh. 1 - Prob. 1.1CONCh. 1 - Finding Financial Information LO1-1 Refer to the...Ch. 1 - Prob. 1.2CPCh. 1 - Comparing Companies within an Industry Refer to...Ch. 1 - Using Financial Reports: Identifying and...Ch. 1 - Prob. 1.5CPCh. 1 - Prob. 1.6CPCh. 1 - Prob. 1.7CP
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