Short Problems
1.Given below are several accounts from Kramer Company’s accounting records.
Cash $11,500
Accumulated depreciation 8,000
Retained earnings, beginning of year17,000
Contributed capital14,000
Patents3,000
Dividends 2,000
Net income for the year was $20,000. How much is total shareholders’ equity at the end of the year?
2
.Below are several amounts from Netcom Company’s accounting records. Answer the questions that follow.
Total assets, end of year$190,000
Total liabilities, end of year30,000
Contributed capital, end of year 20,000
Retained earnings, beginning of year65,000
Dividends for the period15,000
Net income32,000
A.Calculate the amount of retained earnings at the end of the year.
B.If revenue amounts to $220,000, how much is ‘total expenses’?
C.How do you know the company has been profitable since it began operations?
3.Following are several items from Arbor Company’s financial statements. Use this information to calculate the amounts for the questions that follow.
Cost of goods sold$2,300
Sales revenue8,400
Operating expenses500
Income taxes600
Dividends400
Accounts receivable800
A.Calculate the dollar amount of net income.
B.How much is inventory expense?
C.Was the company profitable during the current year? How do you know?
4.At the beginning of 2010, Kristol Company sold stock and began operations. Information from Kristol’s accounting records for the year ending December 31, 2010, follows:
Sales$500,000
Selling expenses240,000
Cost of goods sold180,000
Dividends100,000
General and administrative expenses50,000
Contributed capital60,000
A.Circle the names of any accounts above that
would not
be reported on the income statement.
B.Determine the amount of net income.
5.The following are account balances of Phineas Company on 12/31/10.
Accounts payable
|
$ 1,000
|
Accounts receivable
|
6,000
|
Buildings and equipment
|
54,000
|
Contributed capital
|
20,000
|
Bonds payable
|
15,000
|
Cash
|
8,500
|
Retained earnings
|
17,000
|
Accumulated depreciation
|
24,000
|
Inventory
|
5,500
|
Patents
|
3,000
|
Prepare a classified balance sheet for Phineas Company on December 31, 2010.