Problem 1: Income Statement, Statement of Retained Earnings, and Balance Sheet
The following list, in alphabetical order, shows the various items that regularly appear on the financial statement of Maple Park Theatres Corp. The amounts shown for balance sheet items are balances as of September 30, 2014 (With the exception of retained earnings, which is the balance on September 1, 2014), and the amounts shown for income statement items are balances for the month ended September 30,2014.
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Accounts Payable
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$17,600
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Furniture and fixture
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$34,000
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|
Accounts receivable
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6,410
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Land
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26,000
|
|
Advertising expense
|
14,500
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Notes payable
|
20,000
|
|
Buildings
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60,000
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Projection equipment
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25,000
|
|
Capital stock
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50,000
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Rent expense-movies
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50,600
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Cash
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15,230
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Retained earnings
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73,780
|
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Concessions revenue
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60,300
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Salaries and wages expense
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46,490
|
|
Cost of concessions sold
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23,450
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Ticket sales
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95,100
|
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Dividends paid during the month
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8,400
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Water, gas, and electricity
|
6,700
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Required:
1. Prepare an income statement for the month ended September 30, 2014
2. Prepare a statement of retained earnings for the month ended September 30, 2014.
3. Prepare a balance sheet at September 30, 2014.
4. You have $1,000 to invest. On the basis of the statements you prepared, would you use it to buy stock in Maple Park? Explain. What other information would you want before making a final decision?
Problem 2: Classification of Financial Statement Items
Carnival Corporation & plc is one of the largest cruise companies in the world with such well-known brands as Carnival Cruise Lines, Holland America Line, and Princess Cruises. Classify each of the following items found on the company's balance sheet included in the Form 10-K for the fiscal year ended November 30, 2011 as a current assets (CA), noncurrent assets (NCA), current liability (CL), long-term liability (LTL), or stockholders equity (SE) item.
1. Trade and other receivables, net
2. Common stock of Carnival Corporation
3. Short-term borrowings
4. Inventories
5. Property and equipment, net
6. Prepaid expenses and other
7. Accounts payable
8. Goodwill
9. Retained earnings
10. Long-term debt
Problem 3: Baldwin Corp. reported the following current accounts at the end of two recent years:
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December 31, 2014
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December 31, 2013
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Cash
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$3,000
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$6,000
|
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Accounts receivable
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15,000
|
10,000
|
|
Inventory
|
12,000
|
8,000
|
|
Accounts payable
|
12,000
|
7,000
|
|
Wages payable
|
2,000
|
1,000
|
|
Notes payable
|
6,000
|
4,000
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Required:
1. Compute Baldwin's current ratio at the end of each of the two years.
2. How has Baldwin's liquidity changed at the end of 014 compared to the end of 2013?
3. Comment on the relative composition of Baldwin's current assets at the end of 2014 compared to the end of 2013