Question

Chapter Assignments 43 1 L06 Preparation and Interpretation of Financial Statements P 7. Below are the financial accounts of Dodge Realty. The company has just completed its 10th year of operations ended December 31, 20x8. Accounts Payable Accounts Receivable Commissions Payable Commission Sales Revenue Equipment Marketing Expense Office Rent Expense 3,600 4,500 91,600 225,000 22,700 450,000 59,900 29,200 36,000 Supplies Expense T. Dodge, Capital, December 31, 20x7 Telephone and Computer Expenses Wages Expense Withdrawals 50,300 5,100 32,000 40,000 Required 1. Prepare the income statement, statement of owner's equity, and balance sheet for Dodge Realty. There were no investments by the owner during the year. nsight2. The owner is considering expansion. What other statement would be useful to the owner in assessing whether the company's operations are generating sufficient funds to support the expenses? Why would it be useful Preparation and Interpretation of Financial Statements 4 L06 P8. The following are the accounts of Creative Advertising, an agency owned by Art Francis that develops marketing materials for print, radio, and television. The agency's first year of operations ended on January 31, 20x7. Accounts Payable Accounts Receivable Advertising Service Revenue A. Francis, Capital $ 19,400 24,600 159,200 1,800 37,200 .4,500 Equipment Rental Expense

Answer 1

Requirement 1

Income Statement Service Revenue Expenses Wages Expense Commission Expense Marketing Expense Office Rent Expense Supplies Expense Telephone & Computer Expense Total Expense Net Income 450,000 32,000 225,000 29,200 36,000 2,600 5,100 329,900 120,100 Statement of owner's equity owner's Capital, Beginning Add: Net Income Less: Withdrawals owner's Capital, Ending 50,300 120,100 40,000 130,400 Balance Sheet Assets Cash Accounts Receivable Supplies Current Assets $91,600 4,500 700 96,800 59,900 Equipment Property Plant & Equipment (Net) 59,900 Total Assets 156,700 Accounts Payable Salaries Payable Current Liabilities 3,600 22,700 26,300 Owner's Equity Owners, Capital Total Liabilities & owner's Equity 130,400 156,700

Requirement 2