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Application 1 (Basic Steps in Accounting)

The document provides information and questions to practice preparing financial statements, including: 1) A balance sheet for retail company ABC for year-end 2014 using provided account balances. 2) A multi-step income statement for ABC for 2014 using additional financial information. 3) Questions about whether certain items belong on an income statement or balance sheet, and calculating profits from an income statement.

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Maria Nezka Advincula
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2K views

Application 1 (Basic Steps in Accounting)

The document provides information and questions to practice preparing financial statements, including: 1) A balance sheet for retail company ABC for year-end 2014 using provided account balances. 2) A multi-step income statement for ABC for 2014 using additional financial information. 3) Questions about whether certain items belong on an income statement or balance sheet, and calculating profits from an income statement.

Uploaded by

Maria Nezka Advincula
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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LET’S REFLECT - APPLICATION

(BASIC STEPS IN ACCOUNTING

1. Using the following (scrambled) accounts, prepare a balance sheet for ABC, a retail company, for
the year ending in December 31, 2014. Assume that these are the only Balance Sheet Accounts.

Accounts Payable Php. 39,000


Accrued Expenses 8,000
Accumulated Depreciation 51,000
Additional Paid-In Capital 86,000
Allowance for Doubtful Accounts 2,000
Cash 23,000
Common Stock (Php. .20 par) 45,000
Current Portion of LT. Debt 6,000
Gross Accounts Receivable 40,000
Gross Fixed Assets 486,000
Inventories 54,000
Long-Term Debt 210,000
Net Accounts Receivable 38,000
Net Fixed Assets 435,000
Retained Earnings 138,000
Short-Term Bank Loan (Notes Payable) 18,000

2. Prepare a multi-step income statement for the retail company, ABC, for the year ending December
31, 2014 given the information below:

Advertising Expenditures Php. 68,000


Beginning Inventory 256,000
Depreciation 78,000
Ending Inventory 248,000
Gross Sales 3,210,000
Interest Expense 64,000
Lease Payments 52,000
Management Salaries 240,000
Materials Purchases 2,425,000
R&D Expenditures 35,000
Repairs and Maintenance Costs 22,000
Returns and Allowances 48,000
Taxes 51,000
APPLICATION 1 Cont.

1. Indicate whether the following items would appear on the income statement (IS), or balance sheet
(BS)

A. Office Supplies
B. Accounts Payable
C. Computer Equipment
D. Commission Fees Earned
E. Salaries Expense
F. B. So, Capital
G. Accounts Receivable

2. Using the following accounts from the retail store, A-Mart Incorporated’s income statement for
the year ending in December 31, 2013, answer the questions below. Note that all figures are in
millions.

Cost of goods sold Php. 600


Lease payments 30
Advertising 20
Taxes 35
Repairs and maintenance expenses 40
Management salaries 100
Net sales 1,000
Depreciation 60

A. A-Mart’s gross profit is Php. .


B. A- Mart’s operating profits is Php. .
C. A- Mart’s net profit is Php. .

3. Using the following accounts from the A-Mart, Incorporated’s balance sheet for the year
ending December 31, 2013, answer the questions below. Use cash as a plug figure. Note that all
figures are in millions.

Current portion of LT. Php. 60


Debt
Leasehold improvements 300
Accrued expenses 40
Accumulated depreciation 200
Gross Fixed assets 900
Accounts payable 90
Inventories 190
Common stock (Php.1.00 400
par)
Short-term bank loan 20
Net accounts receivable 100
Long-term bank loan 600
Retained earnings 200
Cash ???

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