Chapter 1 Problems: P1-1,

P1-1 Income Statement, Retained Earnings Statement, and Balance

The amounts of the assets and liabilities of Utah Travel Service as of April 30, 20Y6, the en
its revenue and expenses for the year are listed below. The retained earnings were $300,0
was $90,000 as of May 1, 20Y5, the beginning of the current year. Dividends of $75,000 w
current year.
Accounts payable
$
71,500
Accounts receivable
188,100
Cash
428,300
Fees earned
1,594,200
Miscellaneous expense
16,000
Rent expense
226,800
Supplies
20,100
Supplies expense
42,600
Taxes expense
33,600
Utilities expense
135,000
Wages expense
890,200

Instructions
1. Prepare an income statement for the current year ended April 30, 20Y6.
2. Prepare a retained earnings statement for the current year ended April 30, 20Y6.
3. Prepare a balance sheet as of April 30, 20Y6.

Chapter 1 Problems: P1-2,

P1-1 Missing amount from financial ststements

The financial statements at the end of Paradise Realtys first month of operations are show
PARADISE REALTY
Income Statement
For the Month Ended November 30, 20Y3
Fees earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Wages expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PARADISE REALTY
Retained Earnings Statement
For the Month Ended November 30, 20Y3
Net income for November. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings, November 30, 20Y3. . . . . . . . . . . . . . . . . . .
PARADISE REALTY
Balance Sheet
November 30, 20Y3

Assets
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liabilities
Note payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stockholders' Equity
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders equity. . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders equity. . . . . . . . . . . . . . . . . .
PARADISE REALTY
Statement o Cash Flows
For the Month Ended November 30, 20Y3
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deduct cash payments for expenses and payments to creditors . . . . .
Net cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows used for investing activities:
Cash payments or acquisition o land . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
Cash received rom issuing capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deduct dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flow and November 30, 20Y3, cash balance . . . . . . . . . . . . . . . . . . . .

Instructions

1. Would you classify a realty business such as Hamel Realty as a manufacturing, merchan
2. By analyzing the interrelationships among the financial statements, determine the prop

Chapter 1 Problems: P1-3,

P1-3 Income Statement, Retained Earnings Statement, and Balance

The following financial data were adapted from a recent annual report of Target Corporati
January 28, 20Y2.
In millions
Accounts payable (BS)
$ 6,857
Capital stock (BS)
2,862
Cash (BS)
794
Cost of goods sold (IS)
47,860
Debt and other borrowings (BS)
17,483
Income tax expense (IS)
1,527
Interest expense (IS)
866
Inventories (BS)
7,918
Other assets (BS)
2,842
Other expenses (IS)
2,577
Other liabilities (BS)
6,469
Other credit card revenue (IS)
1,399
Property, plant, and equipment (BS)
29,149
Receivables (BS)
5,927
Sales (IS)
68,466
Selling, general, and administrative expense (IS)
14,106

Instructions

1. Prepare Targets income statement for the year ending January 28, 20Y2.
2. Prepare Targets retained earnings statement for the year ending January 29, 20Y2. (No
at January 29, 20Y1, was $12,698. During the year, Target paid dividends and had other re
earnings of $2,668.)
3. Prepare a balance sheet as of January 28, 20Y2, for Target.

Chapter 1 Problems: P1-4,

P1-4 Statement of cash flows

The following cash data were adapted from a recent annual report of Google Inc. for the ye
ended December 31, 20Y1. The cash balance as of January 1, 20Y1, was $13,630 (in millio

Receipts from issuing debt, etc.

Purchases of property, plant, and equipment, etc.
Receipts from sale o investments (net)
Net cash flows from operating activities

Instructions
Prepare Googles statement of cash flows for the year ended December 31, 20Y1.

P1-3 INCOME STATEMENT OF TARGET COMPANY

AMT
REVENUE
SALES
(LESS) COST OF GOODS SOLD
GROSS PROFIT
OPERATING EXPENSE
SELL,GENERAL & ADMIN EXP
INTEREST EXP
TOTAL OF OPERATING EXP

AMT

68466
47860
20606
14106
866
14972

OPERATING INCOME
(ADD) CREDIT CARD REVENUE
(LESS) OTHER EXP
NET PROFIT BEFORE TAX
(LESS) TAX
NET PROFIT AFTER TAX

5634
1399
2577
4456
1527
2929

RETAINED EARNINGS STATEMENT OF TARGET COMPANY

BALANCE AS ON JAN 29 2011
(ADD)NET INCOME
(LESS)DIVIDENDS PAID
NET RETAINED EARNING FOR THE YEAR

12698
2929
15627
2668

ment, and Balance Sheet

of April 30, 20Y6, the end of the current year, and

ed earnings were $300,000, and the capital stock
Dividends of $75,000 were paid during the

ed April 30, 20Y6.

h of operations are shown below.

Y
nt
mber 30, 20Y3
$149,300
$ 29,850
14,400
12,000
8,100
4,950
$

69,300
80,000

Y
tement
mber 30, 20Y3
80000

36000
44000

TY

Y3

$ 99,200
6,000
216000
321200

s
$

7,200

Equity
270000
44000
314000
321200

Y
h Flows
mber 30, 20Y3

.........
...
......
ng activities:
............
g activities:
..........
...........
.......
..........

149300
68,100
81200
-216,000
$ 270,000
36,000
234000
99200

manufacturing, merchandising, or service business?

ents, determine the proper amounts for (a) through (o).

servicing business
done

ment, and Balance Sheet

port of Target Corporation for the year ending

28, 20Y2.
g January 29, 20Y2. (Note: The retained earnings
vidends and had other reductions in retained

t of Google Inc. for the year

1, was $13,630 (in millions).
In millions
$ 829
67,787
48,746
14,565

ember 31, 20Y1.

MPANY

12959

cing business