Problem 1: Determining Retained Earnings and Net Income Using the Balance Sheet
The following information is reported for Kinney Corporation at the end of 2013.
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Accounts Receivable
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823,000
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Retained Earnings
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$?
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Accounts Payable
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11,000
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Supplies Inventory
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9,000
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Cash
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8,000
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Equipment
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138,000
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Common Stock
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110,000
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a. Compute the amount of retained earnings at the end of 2013.
b. If the amount of retained earnings at the beginning of 2013 was $30,000, and $12,000 in cash dividends were declared and paid during 2013, what was its net income for 2013?
Problem 2:
Analyzing Transactions Using the Financial Statement Effects Template
Record the effect of each of the following independent transactions using the financial statements effects template provided. Confirm that Assets = Liabilities + Equity for each transaction.
Problem 3:
Identifying and Classifying Financial Statement Items
For each of the following items, identify whether they would most likely be reported in the balance sheet (B) or income statement (I).
(a) Machinery
(b) Supplies Expense
(c) Prepaid Advertising
(d) Advertising Expense
(e) Common Stock
(f) Factory Buildings
(g) Receivables
(h) Taxes Payable
(i) Taxes Expense
(j) Cost of Goods Sold
(k) Long-Term Debt
(I) Treasury Stock
that Assets = Liabilities + Equity for each transaction.
Problem 4:
Analyzing Transactions using the Financial Statement Effects Template
Report the effects for each of the following independent transactions using the financial statement effects template provided.
Journalizing Business Transactions
Prepare journal entries for each of the following transactions.
(a) Issue stock for $1,000 cash
(b) Purchase inventory for $500 cash
(c) Sell inventory from (b) for $2,000 on credit
(d) Record $500 for cost of inventory sold in (c)
(e) Receive $2,000 cash on receivable from (c)