Question

Henry Josstick has just started his first accounting course and has prepared the following balance sheet and income statement for Omega Corp. Unfortunately, although the data for the individual items are correct, he is very confused as to whether an item should go in the balance sheet or income statement and whether it is an asset or liability. $50 35 Payables Less accumulated depreciation Total current assets Long-term debt Property, plant, and equipment Net fixed assets Total assets BALANCE SHEET $ 35 Inventories 120 Receivables Total current liabilities $350 Interest expense 520 Total liabilities Shareholders' equity Total liabilities and shareholders' equity $25 $90 $ 700 580 20 INCOME STATEMENT Net sales Cost of goods sold Selling, general, and administrative expenses EBIT Debt due for repayment Cash Taxable income Taxes Depreciation Net income $ 25 15

Answer 1

ANSWER: Assets Cash Receivables Inventories Total Current Assets BALANCE SHEET Liabilities and shareholders' equity 15 Payables 35 Debt due for repayment 50 100 Total Current Liabilities Property, plant and Equipments Less: Accumulated Depreciation Net Fixed Assets 520 Long-term debt 120 Total Liabilities 400 Shareholders' Equity 350 410 90 Total Assets 500 Total Liabilities and shareholders' equity $ 500 700 INCOME STATEMENT Net Sales Less: Cost of goods sold Selling, general and administrative expenses Depreciation EBIT Less: Interest Expenses Taxable income Less: Taxes Net Income