1. On which financial statement will a decision maker find each of the following account balances? a. ____ Sales revenue b. ____ Cash c. ____ Gain on sale of building d. ____ Retained earnings e. ____ Salary expense f. ____ Salary payable g. ____ Capital stock h. ____ Dividends paid i. ____ Loss on the sale of land j. ____ Income tax expense k. ____ Net income
2. The following relate to the Farr Corporation for the month of April: Sales Revenue $170,000 Gain on the Sale of Land $20,000 Equipment $125,000 Tax Expense $14,000 Inventory $10,000 Dividends Paid $7,000 Loss on Lawsuit $24,000 Cost of Goods Sold $82,000 Advertising Expense $15,000
a. Determine Farr’s gross profit for the month of April.
b. Determine Farr’s net income for the month of April.
c. If retained earnings at the beginning of April is reported as $800,000, what should retained earnings be reported as at the end of April?
3. The Maverick Company has the following account balances at the end of December. Show that Maverick’s balance sheet does balance using the accounting equation. Cash $8,000 Capital Stock $120,000 Inventory $16,000 Note Payable $45,000 Retained Earnings $29,000 Building $158,000 Equipment $30,000 Accounts Payable $11,000 Salary Payable $7,000
4. The Ramond Company has hired you to prepare financial statements for the year ending December 31 of the current year. On your first day of work, your assistant uncovers several items that could be classified as expenses or could be classified as assets. The assistant has asked for your help. Determine whether the following items should be recorded as an expense or an asset within the financial statements currently being prepared. a. On December 31, Ramond paid $14,000 to rent office space for the next twelve months. b. On October 1, Ramond paid $40,000 for fire insurance that covered the company’s property for the last quarter of the year. c. On July 1, Ramond purchased $27,000 in supplies, all of which were used by the end of the year. d. On December 31, Ramond purchased $5,000 worth of supplies for the coming month