Chapter 1 Introduction to Accounting and Business

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EX 1-15  Net income and stockholders’ equity for four businesses OBJ. 5
Kilo: Net income, Four different corporations, Juliet, Kilo, Lima, and Mike, show the same balance sheet data
$230,000 at the beginning and end of a year. These data, exclusive of the amount of stockholders’
equity, are summarized as follows:
Total Assets Total Liabilities
Beginning of the year $  600,000 $150,000
End of the year 1,125,000 500,000

On the basis of the above data and the following additional information for the year,
determine the net income (or loss) of each company for the year. (Hint: First determine
the amount of increase or decrease in stockholders’ equity during the year.)
Juliet: No additional capital stock was issued, and no dividends were paid.
Kilo: No additional capital stock was issued, but dividends of $55,000 were paid.
Lima: Additional capital stock of $100,000 was issued, but no dividends were paid.
Mike: Additional capital stock of $100,000 was issued, and dividends of $55,000 were paid.

EX 1-16  Balance sheet items OBJ. 5

From the following list of selected items taken from the records of Hoosier Appliance
Service as of a specific date, identify those that would appear on the balance sheet:
  1. Accounts Receivable   6. Supplies
  2. Cash   7. Supplies Expense
  3. Fees Earned   8. Utilities Expense
  4. Land   9. Wages Expense
  5. Capital Stock 10. Wages Payable

EX 1-17  Income statement items OBJ. 5

Based on the data presented in Exercise 1-16, identify those items that would appear on
the income statement.

EX 1-18  Retained earnings statement OBJ. 5

Retained earnings, Financial information related to Infra-Systems Company for the month ended November
November 30, 2014: 30, 2014, is as follows:
$635,000
Net income for November $275,000
Dividends paid during November 40,000
Retained earnings, November 1, 2014 400,000

a. Prepare a retained earnngs statement for the month ended November 30, 2014.
b. Why is the retained earnings statement prepared before the November 30, 2014, bal-
ance sheet?

EX 1-19  Income statement OBJ. 5

Net income: Exploration Services was organized on March 1, 2014. A summary of the revenue and
$284,000 expense transactions for March follows:
Fees earned $1,100,000
Wages expense 715,000
Rent expense 80,000
Supplies expense 9,000
Miscellaneous expense 12,000
Prepare an income statement for the month ended March 31.