Chapter 1: Q26DQ (page 29)
What information is reported in a balance sheet?
A balance sheet shows the financial health of the business and it reports assets, liabilities, and stockholders’ equity of the business.
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Rivera Roofing Company, owned by Reyna Rivera, began operations in July and completed these transactions during that first month of operations.
July 1 Reyna Rivera invested \(80,000 cash in the company in exchange for its common stock.
2 The company rented office space and paid \)700 cash for the July rent.
3 The company purchased roofing equipment for \(5,000 by paying \)1,000 cash and agreeing to pay the \(4,000 balance in 30 days.
6 The company purchased office supplies for \)600 cash.
8 The company completed work for a customer and immediately collected \(7,600 cash for the work.
10 The company purchased \)2,300 of office equipment on credit.
15 The company completed work for a customer on credit in the amount of \(8,200.
17 The company purchased \)3,100 of office supplies on credit.
23 The company paid \(2,300 cash for the office equipment purchased on July 10.
25 The company billed a customer \)5,000 for work completed; the balance is due in 30 days.
28 The company received \(8,200 cash for the work completed on July 15.
30 The company paid an assistant’s salary of \)1,560 cash for this month.
31 The company paid \(295 cash for this month’s utility bill.
31 The company paid \)1,800 cash in dividends to the owner (sole shareholder).
Required 3. Prepare the statement of cash flows for the month of July.
Key financial figures for Apple’s fiscal year ended September 26, 2015, follow.
Key Figure \( Millions
Liabilities + Equity . . . . . . . . . . . \)290,479
Net income . . . . . . . . . . . . . . . . . 53,394
Revenues . . . . . . . . . . . . . . . . . . 233,715
Required 3. How much are total expenses for Apple for the year ended September 26, 2015?
Use the information in Exercise 1-15 to prepare an October 31 statement of cash flows for Ernst Consulting. Assume the following additional information.
a. The owner’s initial investment consists of \(38,000 cash and \)46,000 in land in exchange for its common stock.
b. The company’s \(18,000 equipment purchase is paid in cash.
c. The accounts payable balance of \)8,500 consists of the \(3,250 office supplies purchase and \)5,250 in employee salaries yet to be paid.
d. The company’s rent, telephone, and miscellaneous expenses are paid in cash.
e. No cash has been collected on the $14,000 consulting fees earned
What does the concept of objectivity imply for the information reported in financial statements? Why?
What do accountants mean by the term revenue?
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