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Part 1
- Please identify four of the financial statements a for-profit organization will compile, define them, and then describe how they interact with each other.
- Write a 2 page paper explaining how it works.
Part 2 Refer to attached documents and use the MS Word template for exercise results
- Exercise 3-9A on page 178
- Exercise 3-10A on page 178
- Exercise 3-15A on page 179
- Exercise 3-17A on page 180
- Problem 3-31A page 187
- Exercise 4-17A
EXERCISE 3-9A
a.
, e. & f.
Assets
=
Stockholders’ Equity
Cash
Accounts Rec.
Retained Earnings
b.
& g. NC = Net Change in Cash
Davos Company
Effect of Transactions on the Financial Statements for 2016 and 2017
Assets
=
Liab.
+
Stockholders’ Equity
Rev.
Exp.
=
Net Inc.
Cash Flows
No.
Cash
+
Acct. Rec.
=
+
Comm. Stock
+
Retained Earnings
2016
1.
NA
160,000
NA
NA
160,000
160,000
NA
160,000
NA
2.
Bal.
+
=
+
+
=
2017
3.
Bal.
160,000
+
-0-
=
+
+
=
EXERCISE 3-9A (cont.)
c.
d.
e.
f.
g.
h.
EXERCISE 3-10A
a. b. & e.
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts Rec.
Accounts Pay.
Retained Earnings
Debit
Credit
Debit
Credit
Debit
Credit
a1 25,000
cl 2,550
cl 25,000
Bal. 25,000
Bal. 22,450
Supplies
Service Revenue
Debit
Credit
Debit
Credit
EXERCISE 3-10A (cont.)
c. NC = Net Change in Cash
Chase Architectural Services
Effect of Transactions on the Financial Statements for 2016
Assets
=
Liab.
+
Stockholders’ Equity
Rev.
Exp.
=
Net Inc.
Cash Flows
No.
Accts. Rec.
+
Supplies
=
Accts. Pay.
+
Common Stock
+
Retained Earnings
a1.
25,000
NA
NA
NA
25,000
25,000
NA
25,000
NA
a2.
b.
Bal.
d.
EXERCISE 3-10A (cont.)
e.
General Journal
Date
Account Titles
Debit
Credit
Closing Entries
Dec. 31
Service Revenue
Retained Earnings
Dec. 31
Retained Earnings
Supplies Expense
Chase Architectural Services
Post-Closing Trial Balance
December 31, 2016
Account Titles
Debit
Credit
Accounts Receivable
Supplies
Accounts Payable
Retained Earnings
Totals
EXERCISE 3-15A
a. & b.
Cherokee Company
Journal Entries for 2016
Date
Account Titles
Debit
Credit
a. 3/1
Prepaid Rent (Lease)
Cash
b. 12/31
Rent Expense
Prepaid Rent
c. NC = Net Change in Cash
Cherokee Company
Horizontal Statements Model
Assets
Liab.
=
Stockholders’ Equity
Income Statement
Statement of
Cash
+
Prepaid Rent
=
Comm. Stock
+
Retained Earn.
Rev.
Exp.
=
Net Inc.
Cash
Flows
1.
2.
3.
adj
Bal.
118,000
+
10,000
=
NA
=
80,000
+
48,000
98,000
50,000
=
48,000
118,000 NC
EXERCISE 3-15A (cont.)
d. Revenue $
Expense ()
Net Income $
Cash Flows From Operating Activities:
Cash Received from Revenue $
Cash Payment for Expense ()
Net Cash Flow from Operating Activities $
e.
EXERCISE 3-17A
a.
Closing Entries
Debit
Credit
1.
Service Revenue
Retained Earnings
2.
Retained Earnings
Operating Expense
Rent Expense
Salaries Expense
Supplies Expense
3.
Retained Earnings
Dividends
b.
Retained Earnings, 2016
Beginning Retained Earnings
Add: Revenue
Less: Expenses
Less: Dividends
Ending Retained Earnings
PROBLEM 3-31A
Corrections:
Corrected Trial Balance:
Ricardo Company
Trial Balance
As of April 30, 2016
Account Titles
Debit
Credit
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Accounts Payable
Common Stock
Retained Earnings
Dividends
Service Revenue
Rent Expense ($9,600 + $500)
Salaries Expense ($31,500 $500)
Operating Expense
Totals
$197,710
$197,710
EXERCISE 4-17A
a.
Junker’s Stash
Financial Statements Model
Event
No.
Cash
+
Accts.
Rec
+
Inv.
+
Land
=
Common
Stock
+
Retained
Earnings
Rev./
Gain
─
Exp./Loss
=
Net Inc.
Cash
Flow
Bal.
80,000
+
NA
+
15,000
+
11,000
=
70,000
+
36,000
n/a
─
n/a
=
n/a
n/a
1
2.
3a.
3b.
4a.
4b.
5.
6a.*
6b.
7.
8
Bal.
79,801
+
-0-
+
44,350
+
-0-
=
70,000
+
54,151
69,201
─
51,050
=
18,151
NC (199)
EXERCISE 4-17A (cont.)
b.
Junker’s Stash
Calculation of Net Sales
For the Year Ended December 31, 2016
Sales
Less: Sales Returns
Less: Sales Discounts
Net Sales
c.
Junkers’ Stash
Income Statement
For the Year Ended December 31, 2016
Net Sales
100.0%
Cost of Goods Sold*
58.7
Gross Margin
41.3
Operating Expenses
Selling and Adm. Expenses
9.9
Transportation-Out
2.4
Total Operating Expenses
12.3
Operating Income
29.0
Non-Operating Items
Loss on Sale of Land
2.7
Net Income
$18,151
26.3
EXERCISE 4-17A (cont.)
d.
e.
