# basic - DOC

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```							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

```
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