Question

1. Home Realty, Incorporated, has been operating for three years and is owned by three investors. J. Doe owns 60 percent of the total outstanding stock of 9,000 shares and is the managing executive in charge. On December 31, the following financial items for the entire year were determined: sales revenue, $186,000; salaries and wages expense, $101,000; interest expense, $6,700; advertising expenses, $9,225; and income tax expense, $18,900. Also during the year, the company declared and paid the owners dividends amounting to $16,000.

Prepare the company’s income statement.

HOME REALTY, INCORPORATED Income Statement %24

2. Items from the income statement, statement of retained earnings, and balance sheet are listed below in alphabetical order. For the companies shown in each column, solve for the missing amounts.

3. If Blair Industries had $28 million in revenue and net income of $17 million, then its:

4. At the end of last year, the company's assets totaled $867,000 and its liabilities totaled $743,500. During the current year, the company's total assets increased by $58,700 and its total liabilities increased by $24,350. At the end of the current year, stockholders' equity was:

5.

Robin Hood's statement of cash flows contained the following:

• Cash flows from operating activities in the amount of $30,500
• Cash flows from investing activities in the amount of $31,500
• Cash flows from (used by) financing activities in the amount of ($43,500)

What was Robin Hood's change in cash for the period?

6. Coast Company has 11,600 items of building supplies on hand that cost $348,000; a bill from the vendor for $260,000 of these supplies has not yet been paid. The company expects to earn $816,000 for its services when it uses the building supplies. The company’s balance sheet would include an asset, Supplies, in the amount of:

7. A company began the year with assets of $115,000, liabilities of $27,500, and stockholders' equity of $87,500. During the year assets increased $56,500 and stockholders' equity increased $23,000. What was the change in liabilities for the year?

Answer 1

1. Income statement:

HOME REALTY, INCORPORATE
Income Statement
Revenues:
Sales revenue	$186,000
Total Revenues (i)	$186,000
Expenses:
Salaries and wages expense	$101,000
Interest expense	$6,700
Advertising expense	$9,225
Income Tax expense	$18,900
Total expenses (ii)	$135,825
Net income (i-ii)	$50,175

2.

	Amazin' Corp.	Best Tech, Inc.	Colossal Corp.
Common stock	$8	$18	$115
Dividends	$13	$6	$65
Net income	$20	$35	$115
Retained Earnings, Beginning of Year	$45	$0	$215
Retained Earnings, End of Year	$52	$29	$265
Total assets	$105	$92	$745
Total expenses	$70	$45	$215
Total Liabilities	$45	$45	$365
Total Revenues	$90	$80	$330

Formula used to get the answers:

Net income = Total revenues - Total expenses

Retained Earnings, End of Year = Retained earnings, Beginning of Year + Net income - Dividends

Total Assets = Total liabilities + Common stock + Retained Earnings, End of Year

3.Answer: $11 million

Revenues	$28 million
Less: Net income	$17 million
Expenses	$11 million

4.Answer: $157,850

Total Assets = Total liabilities + Stockholder's equity

($867,000+$58,700) = ($743,500+$24,350)+Stockholder's equity

$925,700 = $767,850 + Stockholder's equity

Stockholder's equity = 925,700-767,850

Stockholder's equity = $157,850

5.Answer: $18,500 increase

Cash flows from operating activities	$30,500
Cash flows from investing activities	$31,500
Cash flows from financing activities	($43,500)
Increase(Decrease) in cash	$18,500

6.Answer: $348,000

No change in supplies

7.Answer: Increase of $33,500

Total Assets = Total liabilities + Stockholder's equity

($115,000+$56,500) = ($27,500 + X) + ($87,500 + $23,000)

$171,500 = $138,000 + X

X = $33,500