basic - DOC

							Problem 1
A company starts with $40,000 cash and receives 2,000 shares of common stock. The first year
of operations ended on December 31st, with additional financial items given below. No
dividends were declared or paid during the year. Complete the balance sheet as of the end of
the year. Then determine the amount of net income.
        Cash: $22,100
        Amount due from customers: $8,000
        Office supplies and equipment: $25,000
        Amounts owed: $7,000
        One-year note payable to bank: $1,000

                                             Balance Sheet
                                                                st
                                           At December 31


           Assets                                       Liabilities
 Cash                                     Accounts payable
 Accounts receivable                      Note payable
 Office supplies & equipment              Interest payable                               70
                                            Total Liabilities


                                                  Stockholders’ Equity
                                          Contributed Capital
                                          Retained Earnings                            7,030
                                          Total stockholders’ equity
  Total Assets                              Total liabilities & stockholders’ equity




Problem 2
Compute the missing amounts in the table below.
              Total         Total           Net            Total           Total         Stockholder's
 Company     Revenue     Expenses         Income           Assets        Liabilities        Equity
     1           $122,740      $145,200                  $217,200        $84,200
     2                         144,810     47,950        401,000                               67,500
     3            24,770                   7,840                         159,170               45,000
Problem 3
The end of the first year financial data for a company is shown below. Construct a summarized
income statement for the year, a statement of retained earnings for the year, and a balance
sheet at December 31st of that year.
 Cash                                                                            $34,300
 Receivables from customers                                                       15,120
 Inventory                                                                       113,400
 Equipment owned, at cost less used portion                                       56,980
 Accounts payable                                                                 64,596
 Salary payable for the year                                                        2,520
 Revenue from sales                                                              176,400
 Expenses (excluding income taxes)                                               112,280
 30% Income tax expense
 Contributed capital                                                             121,800
 Dividends declared                                                               14,000




Problem 4
Given the following, calculate the income and cash inflow.
(a) $27,000 for services performed for customers; $9,000 remained uncollected at the end of
    the quarter
(b) Cash borrowed from a bank, $42,500 (one-year note)
(c) Wages earned by employees, $15,000, of which one-third remained unpaid at the end of
    the quarter
(d) $5,000 worth of equipment purchased at the end of the quarter to be used starting next
    year
(e) Other operating expenses, $21,000, of which $4,500 remains unpaid at the end of the
    quarter