Chapter 1: Q22DQ (page 29)
Identify the four basic financial statements of a business.
Financial statements are prepared to show the financial health of the business, and the four basic financial statements are—the income statement, statement of retained earnings, balance sheet, and statement of cash flow.
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Ski-Doo Company manufactures, markets, and sells snowmobiles and snowmobile equipment and accessories. The average total assets for Ski-Doo is \(3,000,000. In its most recent year, Ski-Doo reported net income of \)201,000 on revenues of $1,400,000.
Required 4. What is the average total amount of liabilities plus equity for Ski-Doo Company?
Nina Niko launched a new business Niko’s Maintenance Co. that began operations on June 1. The following transactions were completed by the company during that first month.
June
1 Nina Niko invested \(130000 cash in the company in exchange for its common stock.
2 The company rented a furnished office and paid \)6000 cash for June’s rent.
4 The company purchased \(2400 of equipment on credit.
6 The company paid \)1150 cash for this month’s advertising of the opening of the business.
8 The company completed maintenance services for a customer and immediately collected \(850 cash.
14 The company completed \)7500 of maintenance services for City Center on credit.
16 The company paid \(800 cash for an assistant’s salary for the first half of the month.
20 The company received \)7500 cash payment for services completed for City Center on June 14.
21 The company completed \(7900 of maintenance services for Paula’s Beauty Shop on credit.
24 The company completed \)675 of maintenance services for Build-It Coop on credit.
25 The company received \(7900 cash payment from Paula’s Beauty Shop for the work completed on June 21.
26 The company made payment of \)2400 cash for equipment purchased on June 4.
28 The company paid \(800 cash for an assistant’s salary for the second half of this month.
29 The company paid \)4000 cash in dividends to the owner (sole shareholder).
30 The company paid \(150 cash for this month’s telephone bill.
30 The company paid \)890 cash for this month’s utilities.
Required 3. Prepare the statement of cash flows for the month of June
As of December 31, 2017, Armani Company’s financial records show the following items and amounts.
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000
Retained earnings, Dec. 31, 2016 . . . . . . . . . . . . . . . . 4,000
Retained earnings, Dec. 31, 2017 . . . . . . . . . . . . . . . . 6,000
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000
Consulting revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000
Rental revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000
Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Selling and administrative expenses . . . . . . . . . . . . . . 8,000
Required Prepare the 2017 year-end income statement for Armani Company
Determine the missing amount from each of the separate situations a, b, and c below.
A B C Assets 1 2 3 4 (b) (a) ?\( (c) 154,000 100,000 \) 20,000 ? 34,000 $ 45,000 40,000
Explain why investing (assets) and financing (liabilities and equity) totals are always equal.
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