Financial Accounting
5th Edition
ISBN: 9780134728643
Author: Robert Kemp; Jeffrey Waybright
Publisher: Pearson Education (US)
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 1, Problem 33AP
A Preparing the income statement, statement of
Resto Motors, Inc., restores antique automobiles. The retained earnings balance of the corporation was $22,400 at December 31, 2017. During 2018, the corporation paid $85,000 in dividends to its stockholders. At December 31,2018. the business s accounting records show these balances:
| $ 30,000 | Cash............................................. | $36,000 | |
| Notes Payable........................... | 15,000 | Accounts Payable.......................... | 19,000 |
| Retained Earnings.................... | ? | Advertising Expense.................... | 1,100 |
| Salaries Expense....................... | 33,400 | Service Revenue............................ | 50,000 |
| Equipment............................... | 57,000 | Common Stock............................ | 2,500 |
| Insurance Expense.................... | 3,300 | Rent Expense................................ | 2,200 |
| Utilities Expense........................ | 2,950 | Supplies....................................... | 40,000 |
Requirements
- 1. Identify each amount shown as an asset, liability, or
stockholders' equity - 2. Prepare the following financial statements for Resto Motors, inc.:
- a. Income statement for the year ended December 31, 2018
- b. Statement of retained earnings for the year ended December 31, 2018
- c. Balance sheet at December 31, 2018
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
(Learning Objective 2: Analyze accounts payable turnover) Barnacle Sales, Inc.’s,comparative income statements and balance sheets show the following selected information for2017 and 2018:2018$2,850,000$ 800,000$ 600,000$ 305,0002017$2,700,000$ 600,000$ 400,000$ 255,000Cost of goods sold.......................................................Ending inventory.........................................................Beginning inventory ....................................................Average accounts payable ...........................................Requirements1. Calculate the company’s accounts payable turnover and days’ payable outstanding (DPO)for 2017 and 2018.2. On the basis of this computation alone, has the company’s liquidity position improved ordeteriorated during 2018?
E1-24A. (Learning Objective 4: Construct a balance sheet) At December 31, 2018, LandyProducts has cash of $24,000, receivables of $18,000, and inventory of $80,000. The company’sequipment totals $182,000. Landy owes accounts payable of $22,000 and long-term notespayable of $172,000. Common stock is $34,500. Prepare Landy’s balance sheet at December 31,2018, complete with its proper heading. Use the accounting equation to compute retainedearnings.
E12-24B Vertical analysis (Learning Objective 2) 15-20 min.
Simpson Painting, Inc., requested that you perform a vertical analysis
of its balance sheet to determine the component percentages of its
assets, liabilities, and stockholders' equity. Round to the nearest tenth
of a percent.
P. Donnelly, Inc.
Comparative Income Statement
Years Ended December 31, 2018 and 2017
Revenue
Expenses:
Cost of Goods Sold
Selling and General Expenses
Interest Expense
Income Tax Expense
Total Expenses
Net Income
2018
$500,000
$245,000
111,000
10,000
54,700
420,700
$ 79,300
2017
$439,500
$236,000
103,500
6,500
44,400
390,400
$ 49,100
Chapter 1 Solutions
Financial Accounting
Ch. 1 - The text states that accounting is the "language...Ch. 1 - Would you describe accounting as primarily a...Ch. 1 - Prob. 3DQCh. 1 - What are some reasons why accounting has adopted...Ch. 1 - What are some of the uses of financial statements?Ch. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - How is the accounting equation affected by each of...Ch. 1 - In what order should the financial statements be...Ch. 1 - Which financial statement would be most useful to...
Ch. 1 - Prob. 1SCCh. 1 - Prob. 2SCCh. 1 - Which accounting principle specifically states...Ch. 1 - Wave Rider is famous for custom skateboards. At...Ch. 1 - Assume that Wave Rider sold skateboards to a...Ch. 1 - Assume that Wave Rider sold skateboards to another...Ch. 1 - Assume that Wave Rider paid expenses totaling...Ch. 1 - Consider the overall effects of the transactions...Ch. 1 - The balance sheet reports a. a businesss financial...Ch. 1 - The income statement reports a. a business's...Ch. 1 - Prob. 11SCCh. 1 - Prob. 12SCCh. 1 - Accounting principles (Learning Objective 4) 5-10...Ch. 1 - Accounting principles (Learning Objective 4) 5-10...Ch. 1 - Prob. 3SECh. 1 - Basic accounting equation (Learning Objective 5)...Ch. 1 - Prob. 5SECh. 1 - Prob. 6SECh. 1 - Prob. 7SECh. 1 - Entering transactions in the accounting equation...Ch. 1 - Prob. 9SECh. 1 - Prob. 10SECh. 1 - Entering transactions in the accounting equation...Ch. 1 - Transaction analysis (Learning Objective 5) 5-10...Ch. 1 - Transaction analysis (Learning Objective 5) 5-10...Ch. 1 - Prob. 14SECh. 1 - Basic accounting equation (Learning Objective 5)...Ch. 1 - Basic accounting equation (Learning Objective 5)...Ch. 1 - Prob. 17AECh. 1 - Using the accounting equation to determine net...Ch. 1 - Transaction analysis (Learning Objective 5) 15-20...Ch. 1 - Types of business organizations and balance sheet...Ch. 1 - Types of accounts and income statement preparation...Ch. 1 - Using the accounting equation to determine net...Ch. 1 - Basic accounting equation (Learning Objective 5)...Ch. 1 - Prob. 24BECh. 1 - Prob. 25BECh. 1 - Prob. 26BECh. 1 - Transaction analysis (Learning Objective 5) 15-20...Ch. 1 - Prob. 28BECh. 1 - Prob. 29BECh. 1 - Prob. 30BECh. 1 - Transaction analysis and the calculation of net...Ch. 1 - Prob. 32APCh. 1 - A Preparing the income statement, statement of...Ch. 1 - Preparing the income statement and balance sheet;...Ch. 1 - Prob. 35APCh. 1 - Transaction analysis and the calculation of net...Ch. 1 - Prob. 37BPCh. 1 - Prob. 38BPCh. 1 - Preparing the income statement and balance sheet;...Ch. 1 - Prob. 40BPCh. 1 - Prob. 1CECh. 1 - This problem is the first problem in a sequence...Ch. 1 - Prob. 1CFSAPCh. 1 - Prob. 1EIACh. 1 - Prob. 2EIACh. 1 - Prob. 1FACh. 1 - Industry Analysis Purpose: To help you understand...Ch. 1 - Prob. 1SBACh. 1 - Prob. 1WC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- E3-39B. (Learning Objective 6: Analyze and evaluate liquidity and debt-paying ability) BurnesConsulting Company reported these ratios at December 31, 2018 (dollar amounts in millions):Current ratio = $20 = 2.00 $10 $60 Debt ratio = = 0.50 $30Burnes Consulting completed these transactions during 2019:a. Purchased equipment on account, $4b. Paid long-term debt, $7c. Collected cash from customers in advance, $5d. Accrued interest expense, $6e. Made cash sales, $8Determine whether each transaction improved or hurt the company’s current ratio and debt ratio.arrow_forward(Learning Objectives 3, 4: Evaluate business operations; construct a statement ofcash flows) The following data come from the financial statements of Tidal Wave Companyfor the year ended March 31, 2019 (in millions):Purchases of property, plant,and equipment for cash.... $ 3,500Net income........................... 3,050Adjustments to reconcile netincome to net cash providedby operating activities ...... 2,380Revenues.............................. 59,400Cash, beginning of year........ 270end of year................. 1,900Other investing cashpayments............................ $ 200Accounts receivable................ 550Payment of dividends............. 360Common stock....................... 4,830Issuance of common stock...... 200Cash proceeds on sale ofproperty, plant, andequipment ......................... 60Cost of goods sold................ 37,410 Retained earnings................... 12,900Requirements1. Prepare Tidal Wave Company’s cash flow statement for the year ended March 31,…arrow_forwardP1-66A. (Learning Objectives 3, 4: Evaluate business operations; construct a statement ofcash flows) The following data come from the financial statements of Mitchell Company forthe year ended March 31, 2019 (in millions):Purchases of property,plant, and equipment for cash.... $ 2,640Net income..................................... 3,020Adjustments to reconcile netincome to net cash providedby operating activities ................ 2,420Revenues........................................ 60,100Cash, beginning of year.................. 220end of year........................... 2,775Other investing cashpayments....................................... $ 195Accounts receivable........................... 650Payment of dividends........................ 265Common stock.................................. 4,900Issuance of common stock................. 190Cash proceeds on sale ofproperty, plant, and equipment..... 25Retained earnings.............................. 12,830Cost of goods…arrow_forward
- E1-31A. (Learning Objective 4: Construct an income statement, statement of retainedearnings, and balance sheet) During 2018, Edwin Company earned revenues of $150million. Edwin incurred, during that same year, salary expense of $34 million, rent expenseof $23 million, and utilities expense of $16 million. Edwin declared and paid dividends of$16 million during the year. At December 31, 2018, Edwin had cash of $185 million, accountsreceivable of $70 million, property and equipment of $35 million, and other long-term assetsof $22 million. At December 31, 2018, the company owed accounts payable of $56 millionand had a long-term note payable of $26 million. Edwin began 2018 with a balance in retainedearnings of $73 million. At December 31, 2018, Edwin had total stockholders’ equity of$230 million, which consisted of common stock and retained earnings. Edwin has a year-end ofDecember 31. Prepare the following financial statements (with proper headings) for 2018:1. Income statement,2.…arrow_forward(Learning Objective 4: Construct the financial statements) Suppose Robin SportingGoods Company reported the following data at July 31, 2018, with amounts in thousands:Cost of goods sold................. $136,800Cash...................................... 50,000Property and equipment, net ... 19,400Common stock...................... 26,000Inventories ............................ 36,000Long-term liabilities.............. 11,700Dividends.............................. 0Retained earnings,July 31, 2017 ............ $ 31,500Accounts receivable....... 34,000Net revenues ................. 191,000Total current liabilities.. 80,000All other expenses......... 29,000Other current assets ...... 5,000Other assets................... 30,000Use these data to prepare Robin Sporting Goods Company’s single-step income statement forthe year ended July 31, 2018; statement of retained earnings for the year ended July 31, 2018;and classified balance sheet at July 31, 2018. Use the report format for the balance…arrow_forwardS1-12. (Learning Objective 4: Construct an income statement) MacKensie ServicesCorporation began 2018 with total assets of $230 million and ended 2018 with totalassets of $365 million. During 2018, MacKensie earned revenues of $394 million and hadexpenses of $171 million. MacKensie declared and paid dividends of $27 million in 2018.Prepare the company’s income statement for the year ended December 31, 2018, completewith an appropriate heading.arrow_forward
- S3-2. (Learning Objective 1: Explain how accrual accounting differs from cash-basisaccounting) Portage Corporation began 2018 owing notes payable of $4.0 million. During2018, Portage borrowed $1.9 million on notes payable and paid off $1.7 million of notespayable from prior years. Interest expense for the year was $1.1 million, including $0.2 millionof interest payable accrued at December 31, 2018.Show what Portage should report for these facts on the following financial statements:1. Income statement for 2018a. Interest expense2. Balance sheet as of December 31, 2018a. Notes payableb. Interest payablearrow_forwardQuestion (I got $44,000... correct?): Riley Company began operations on August 1, 2026 and entered into the following transactions during 2026: 1. On August 1, Riley Company sold common stock to owners in the amount of $60,000 and borrowed $48,000 from a local bank on a 10-month, 10% note payable. 2. On August 14, Riley Company purchased inventory for $42,000 cash. 3. On September 1, Riley Company purchased a 3-year insurance policy for $27,000 cash. 4. On September 19, Riley Company purchased land for $30,000 cash. 5. On October 28, Riley Company sold two-thirds of the inventory that was purchased on August 14 to a customer for $62,000 cash. 6. On December 3, Riley Company sold the land that was purchased on September 19 for $19,000 cash. 7. On December 31, Riley recorded all necessary adjusting entries. Calculate the amount of total expenses reported in Riley Company's 2026 income statement after all of the above transactions have been recorded and posted.arrow_forwardE6-17. Liquidity Analyses. [Learning Objective B] Use the following excerpt of Dragonfly Corporation's asset balances to compute Dragonfly's working capital and current ratio for 2023 and 2022. Comment on Dragonfly's liquidity and changes in liquidity from 2022 to 2023. Dragonfly's current liabilities are $89,754 million and $82,271 million in 2023 and 2022, respectively. Assets (dollars in millions) Current assets Cash and cash equivalents Marketable securities Accounts receivable trade-net Inventories Prepaid expenses and other receivables Total current assets Property, plant, and equipment-net Other assets Total assets 2023 $ 13,420 7623 22,120 47415 1,312 91,890 67045 3,773 $162,708 $ 19,355 2,394 20,872 45,630 1,264 89,515 65.762 3,770 $159.047arrow_forward
- (Learning Objective 6: Analyze and evaluate liquidity and debt-paying ability) LO 6McClain Company’s condensed and adapted balance sheet at December 31, 2018, follows:(In millions)Total current assets....................................................... $15.9Property, plant, equipment, and other assets................. 16.2$32.1Total current liabilities.................................................. $ 9.6Total long-term liabilities.............................................. 5.5Total shareholders’ equity............................................. 17.0$32.1Assume that during the first quarter of the following year, 2019, McClain completed the following transactions:a. Earned revenue of $2.8 million, on account.b. Borrowed $7.0 million in long-term debt.c. Paid half of the current liabilities.d. Paid selling expense of $0.6 million.e. Accrued general expense of $0.8 million. Credit General Expense Payable, a currentliability.f. Purchased equipment for $4.6 million, paying cash…arrow_forwardsignment #7 (Chapter 3) Due 7 April 2024 Saved Help $550,000; You are evaluating the balance sheet for SophieLex's Corporation. From the balance sheet you find the following balances: cash and marketable securities = $340,000; accounts receivable = $1,300,000; inventory = $2,200,000; accrued wages and taxes = accounts payable $850,000; and notes payable = $700,000. = Calculate SophieLex's current ratio, quick ratio, and cash ratio. Note: Round your answers to 2 decimal places. Current ratio Quick ratio Cash ratio times times times Warrow_forwardHelp please The following list of balances is from the ledger of Mrs. Graver a sole proprietor as at April 30, 2020. Purchases $61,420 Sales $127,245 Stock May 1, 2017 $7,940 Capital May 1, 2017 $25,200 Bank overdraft $2,490 Cash $140 Discount Allowed $2,480 Discount Received $62 Returns inwards $3,486 Returns outwards $1,356 Carriage outwards $3,210 Rent and insurance $8,870 Provision for doubtful debts $630 Fixtures and fittings $1,900 Van $5,600 Debtors $12,418 Creditors $11,400 Drawings $21,400 Wages and salaries $39,200 General office expenses $319 You are required to: Prepare a trial balance from the information provided Using the following additional information: Stock April 30, 2018 $6,805. Wages and salaries accrued at April 30, 2018 $3,500; Office expenses owing $16. Rent prepaid April 30, 2018 $600. Increase the provision for doubtful debts by $110. Provide for depreciation as follows: Fixtures and fittings $190;…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Consolidated financial statements; Author: The Finance Storyteller;https://www.youtube.com/watch?v=DTFD912ZJQg;License: Standard Youtube License