113. Using the income statement model and the balance sheet model, fill-in the missing amounts for each independent case below. Assume the amounts given are at the end of the company’s first year of operation.
| Company Name | Total Revenue | Total Assets | Total Expenses | Total Liabilities | Net Income (Loss) | Stockholders’ Equity |
| Randolph | $600,000 | $350,000 | $450,000 | $130,000 | ||
| Newman | $125,000 | $90,000 | $20,000 | $55,000 | ||
| Wiseman | $160,000 | $90,000 | ($20,000) | $110,000 | ||
| Martin | $150,000 | $275,000 | $125,000 | $50,000 | ||
| VanTassel | $80,000 | $55,000 | $13,000 | $73,000 |
120. Capitol Shops, Inc., reported the following amounts on its balance sheet on December 31, 20B:
| Inventory | $ 950,000 |
| Notes payable | 200,000 |
| Cash | 250,000 |
| Contributed capital | 1,000,000 |
| Net property, plant and equipment | 480,000 |
| Accounts receivable | 95,000 |
| Accounts payable | 145,000 |
| Retained earnings | ? |
Required:
- What is the amount of Capitol’s total assets at the end of 20B?
- Identify the items listed above that are liabilities.
- What is the amount of Capitol’s retained earnings at the end of 20B?
- Prepare a balance sheet for Capitol Shops as of December 31, 20B.
- Capitol Shops wishes to purchase merchandise from your company on account. The amount of the purchases would probably be about $10,000 per month, and the terms would require Capitol to make payment in full within 30 days. Would you recommend that your company grant credit to Capitol under these terms? Explain the reasoning for your response.
123. Fulton Company was established at the beginning of 20D when several investors paid a total of $200,000 to purchase Fulton stock. No additional investments in stock were made during the year. By the end of that year, Fulton had cash on hand of $45,000, office equipment (net) of $40,000, inventories of $156,000, and accounts payable of $10,000. Sales for the year were $812,000. Of this amount, customers still owed $20,000. Fulton paid dividends of $25,000 to its investors.
Required:
- Based on the information above, prepare a balance sheet for Fulton Company as of December 31, 20D. In the process of preparing the balance sheet, you must calculate the ending balance in retained earnings.
- Prepare a statement of retained earnings. (The beginning amount of retained earnings was $0.)
- What was the amount of Fulton’s net income for the year?
- Was Fulton successful during its first year in operation?
124. For Glad Rags Shops, the following information is available for the year ended December 31, 20C:
| Sales revenue | $6,800,000 |
| Cost of goods sold | 3,500,000 |
| Salaries expense | 1,200,000 |
| Rent expense | 800,000 |
| Administrative expense | 450,000 |
The income tax rate is 30%.
Required:
Prepare an income statement for Glad Rags Shops.
127. Mallard Corp. has just published their financial information for the year on the company’s website. Their reported earnings are $30.0 million and average common shares outstanding are 3.0 million. Answer the following:
- How much is earnings per share on the common stock?
- If the website shows the common stock is currently trading at $140 per share, what is the price earnings (P/E) ratio?
- A group of investors is seeking to buy all the Mallard shares. Using the above information, determine an offering price.
129. Match each definition with its related term or abbreviation by entering the appropriate letter in the space provided.
____ 1. Accounting
____ 2. Separate entity
____ 3. Audit report
____ 4. Cost principle
____ 5. Unit of measure
____ 6. Publicly traded
Term or Abbreviation Definition
- A system that collects and processes financial information about an organization and reports that information to decision makers.
- Measurement of information about an entity in the monetary unit—dollars or other national currency.
- An unincorporated business owned by two or more persons.
- The organization for which financial data are to be collected (separate and distinct from its owners).
- An incorporated entity that issues share of stock as evidence of ownership.
- Initial recording of financial statement elements at acquisition cost.
- An examination of the financial reports to assure that they represent what they claim and conform with generally accepted accounting principles.
- Certified Public Accountant.
- An unincorporated business owned by one person.
- A report that describes the auditors’ opinion of the fairness of the financial statement presentations and the evidence gathered to support that opinion.
- Securities and Exchange Commission.
- Financial Accounting Standards Board.
- Company that can be bought and sold by investors on established stock exchanges.
- Generally accepted accounting principles.
- American Institute of Certified Public Accountants.
131. Match the characteristics with the type of business by inserting the proper letter in the space to the left.
- Ownership is limited to one person.
- Ownership is represented by shares of capital stock.
- Each owner is responsible for the debts of the entity.
_____ 1. Corporation
_____ 2. Sole proprietorship
_____ 3. Partnership
132. Match the definition with the form of organization by inserting the proper letter in the space to the left.
- The owners are known as stockholders and enjoy limited liability.
- The manager is often the owner and does not enjoy limited liability.
- Each owner has unlimited liability for the debts of the entity.
____ 1. Partnership
____ 2. Corporation
____ 3. Sole proprietorship
133. Match each element with its financial statement by entering the appropriate letter in the space provided.
Financial Statement
- Balance Sheet
- Income Statement
- Statement of Cash Flows
- Statement of Retained Earnings
Element
____ 1. Cash flow from operations
____ 2. Liabilities
____ 3. Revenues
____ 4. Assets
____ 5. Cash flow from investments
____ 6. Expenses
____ 7. Stockholders’ Equity
____ 8. Cash flow from financing
____ 9. Dividends
