Question

11) From the account balances below, create a proper balance sheet and income statement with proper headings for ACME, Incorporated for the period ending 12-31-2010. This was the entity's first year of operations. All items are expressed in thousands of dollars. Classify your balance sheet. CL=Current Liability, LTL = long term liability. PP&E = long term asset. 100 100 20 28 20 20 116 30 Property, Plant & Equipment (PP&E) Sales Notes payable (CL) Accounts receivable Inventory Depreciation expense Mortgages owed (LTL) Cash Taxes payable Accumulated depreciation Rent expense Cost of goods sold Retained earnings Conferences attended expense Interest expense Auto expense Messenger service expense

Answer 1

1) $15 $20 ACME Balance Sheet December 31, 2010 (Million) Liabilities & Shareholders' Equity Current Liabilities: $30 Taxes Payable $28 Short-Term Note Payable $20 Total Current Liabilities $78 Long-term Liabilities: Mortgage Payable $100 Total Liabilities $20 Shareholders' Equity: $80 Retained Earnings $158 Total Liabilities & Shareholders' equity Assets Current Assets: Cash Accounts receivable Inventory Total Current Assets Property, Plant & Equipment: Property, Plant & Equipment Less: Accumulated Depreciation Plant, Property & Equipment, Net Total Assets $35 $116 $151 $7 $158

ACME Income Statement For The Year Ended December 31, 2010 Million) Sales Revenue $100 Cost of goods sold $45 Gross profit $55 Operating expenses: Messenger service exp. Rent expense Auto expense $5 Conf. attend expense Depreciation expense Total operating expenses -$41 Operating Income $14 Other revenues and expenses: Interest expense Net Income $10 $4 $20