BE4-1 Starr Co. had Sales revenue $540,000 in 2012.

Starr Company
Other items recorded during the year were: Single-step Income Stat
Cost of goods sold $330,000.00 For year ended 201
Salaries and wages expense $120,000.00 Sales revenue
Income tax expense $25,000.00 Cost of goods sold
Increase in value of company reputation $15,000.00 Gross Profit
Other operating expenses $10,000.00 Operating Expenses
Unrealized gain on value of patents $20,000.00 Salaries and wages expense
Prepare a single-step income statement for Starr for 2012. Other operating expenses
Starr has 100,000 shares of stock outstanding Income before Interest & Tax
Income tax expense
Net Income
EPS

E4-1 (Computation of Net Income) Presented below are changes in all the account balances of Jackson
Furniture Co. during the current year, except for retained earnings.
Increase Increase
(Decrease) (Decrease)
Cash $69,000 Accounts Payable ($51,000)
Accounts Receivable (net) 45,000 Bonds Payable 82,000
Inventory 127,000 Common Stock 125,000
Retained
Dividend
Investments -47,000 Paid-in Capital 13,000 Earnings
Total 194,000 Total 169,000 25,000 $24,000
Instructions
Compute the net income for the current year, assuming that there were no entries in the Retained Earnings
account except for net income and a dividend declaration of $24,000 which was paid in the current year.
 Starr Company
Single-step Income Statement
For year ended 2012
$540,000
$330,000
$210,000

and wages expense $120,000

perating expenses $10,000 $130,000
efore Interest & Tax $80,000
$25,000
$55,000
$0.55

ces of Jackson

Net Income

49,000

the Retained Earnings

s paid in the current year.
P4-2 (Single-Step Income, Retained Earnings, Periodic Inventory, Balance Sheet)
Presented below is the trial balance of Thompson Corporation at December 31, 2012.
THOMPSON CORPORATION THOMPSON CORPORATION
TRIAL BALANCE TRIAL BALANCE
Monday, December 31, 2012 Monday, December 31, 201
Debits Credits
Purchase Discounts $10,000 Cash
Cash $189,700 Accounts Receivable
Accounts Receivable $105,000 Allowance for Doubtful Accounts
Rent Revenue $18,000 Notes Receivable
Retained Earnings $160,000 Inventory
Salaries and Wages Payable $18,000 Supplies
Sales Revenue $1,100,000 Buildings
Notes Receivable $110,000 Accumulated Depreciation—Buildings
Accounts Payable $49,000 Equipment
Accumulated Depreciation—Equipment $28,000 Accumulated Depreciation—Equipment
Sales Discounts $14,500 Land
Sales Returns and Allowances $17,500 Accounts Payable
Notes Payable $70,000 Notes Payable
Selling Expenses $232,000 Salaries and Wages Payable
Administrative Expenses $99,000 Bonds Payable
Common Stock $300,000 Common Stock
Income Tax Expense $53,900 Retained Earnings
Cash Dividends $45,000 Cash Dividends
Allowance for Doubtful Accounts $5,000 Sales Revenue
Supplies $14,000 Sales Discounts
Freight-in $20,000 Sales Returns and Allowances
Land $70,000 Rent Revenue
Equipment $140,000 Gain on Sale of Land
Bonds Payable $100,000 Purchases
Gain on Sale of Land $30,000 Purchase Discounts
Accumulated Depreciation—Buildings $19,600 Freight-in
Inventory $89,000 Selling Expenses
Buildings $98,000 Administrative Expenses
Purchases $610,000 Income Tax Expense
Totals $1,907,600 $1,907,600 Totals
A physical count of inventory on December 31 resulted in an inventory amount of $64,000

Instructions
Prepare a single-step income statement, a retained earnings
statement and Balance Sheet. Assume that the only changes in
retained earnings during the current year were from net income
and dividends. 30 000 shares of common stock were outstanding
the entire year.
THOMPSON CORPORATION THOMPSON CORPORATION
TRIAL BALANCE Income Statement
Monday, December 31, 2012 For year ended December 31, 2012
Debits Credits Sales Revenue $1,100,000
$189,700 Sales Discounts $14,500
$105,000 Sales Returns and Allowances $17,500 $32,000
tful Accounts $5,000 Net Sales $1,068,000
$110,000 Cost of Goods Sold 89,000 $620,000 $64,000 $645,000
$89,000 Gross Profit $423,000
$14,000 Selling Expenses $232,000
$98,000 Administrative Expenses $99,000 $331,000
ciation—Buildings $19,600 Operating Income $92,000
$140,000 Other Income & Expenses
ciation—Equipment $28,000 Rent Revenue $18,000
$70,000 Gain on Sale of Land $30,000 $48,000
$49,000 Income Before Tax $140,000
$70,000 Income Tax Expense $53,900
$18,000 Net Income $86,100
$100,000 EPS ($86100/30000) $2.870
$300,000 Retained Earning Statement
$160,000 Retained Earnings 160,000
$45,000 Net Income $86,100
$1,100,000 Cash Dividends 45,000
$14,500 Retained Earnings $201,100
$17,500 THOMPSON CORPORATION
$18,000 Balance Sheet
$30,000 Monday, December 31, 2012
$610,000 Cash $189,700
$10,000 Accounts Receivable $105,000
$20,000 Allowance for Doubtful Accounts $5,000
$232,000 Notes Receivable $110,000
$99,000 Inventory $64,000
$53,900 Supplies $14,000
$1,907,600 $1,907,600 Buildings $98,000
Accumulated Depreciation—Buildings $19,600
Equipment $140,000
Accumulated Depreciation—Equipment $28,000
Land $70,000
Accounts Payable $49,000
Notes Payable $70,000
Salaries and Wages Payable $18,000
Bonds Payable $100,000
Common Stock $300,000
Retained Earnings $201,100
Totals $738,100 $738,100
E5-5 (Preparation of a Corrected Balance Sheet) Bruno Company has decided to expand its operations.
The bookkeeper recently completed the balance sheet presented on the next page in order to obtain
additional funds for expansion
BRUNO COMPANY
BALANCE SHEET
31-Dec-12
Current assets Current assets
Cash $260,000 Cash
Accounts receivable (net) $340,000 Equity investments (tradin
Inventories (lower-of-average-cost-or-market) $401,000 Accounts receivable (net)
Equity investments (trading)—at cost (fair value $120,000) $140,000 Allowance for doubtfull
Property, plant, and equipment Inventories (lower-of-aver
Buildings $570,000 Prepaid expenses
Office equipment $160,000 Property, plant, and equipm
Land held for future use $175,000 Buildings
Intangible assets Accumulated Depr.-Bui
Goodwill $80,000 Office equipment
Cash surrender value of life insurance $90,000 Accumulated Depr.- Equ
Prepaid expenses $12,000 Long trem Investment
Current liabilities Land held for future use
Accounts payable $135,000 Intangible assets
Notes payable (due next year) $125,000 Goodwill
Pension obligation $82,000 Cash surrender value of lif
Rent payable $49,000 Current liabilities
Premium on bonds payable $53,000 Accounts payable
Long-term liabilities Notes payable (due next y
Bonds payable $500,000 Rent payable
Stockholders’ equity Long-term liabilities
Common stock, $1 par, authorized 400,000 shares, issued 290,000 $290,000 Bonds payable
Additional paid-in capital $180,000 Premium on bonds payabl
Retained earnings Pension obligation
$2,228,000 $1,414,000 Stockholders’ equity
Instructions Common stock, $1 par, autho
Prepare a revised balance sheet given the available information. Assume that the Additional paid-in capital
accumulated depreciation balance for the buildings is $160,000 and for the office Retained earnings
equipment, $105,000. The allowance for doubtfulaccounts has a balance of $17,000.
The pension obligation is considered a long-term liability
 BRUNO COMPANY
BALANCE SHEET
Monday, December 31, 2012

$260,000
uity investments (trading)—at cost (fair value $120,000) $140,000
counts receivable (net) $340,000
Allowance for doubtfull accounts $17,000 $323,000
ventories (lower-of-average-cost-or-market) $401,000
epaid expenses $12,000
erty, plant, and equipment
$570,000
Accumulated Depr.-Buildings $160,000 $410,000
ffice equipment $160,000
Accumulated Depr.- Equipment $105,000 $55,000
trem Investment
nd held for future use $175,000
ngible assets
$80,000
sh surrender value of life insurance $90,000 $170,000
ent liabilities
counts payable $135,000
tes payable (due next year) $125,000
$49,000
-term liabilities
nds payable $500,000
emium on bonds payable $53,000 $553,000
nsion obligation $82,000
kholders’ equity
mmon stock, $1 par, authorized 400,000 shares, issued 290,000 $290,000
ditional paid-in capital $180,000
ained earnings $532,000
Total $1,946,000 $1,946,000
E5-16 (Preparation of a Statement of Cash Flows)
A comparative balance sheet for Orozco Corporation is presented below.
12/31/2024
Assets 2012 2011
Cash $63,000 $22,000 $41,000
Accounts receivable $82,000 $66,000
Inventory $180,000 $189,000
Land $71,000 $110,000
Equipment $270,000 $200,000
Accum. depreciation—equipment -$69,000 -$42,000
Total $597,000 $545,000
Liabilities and Stockholders’ Equity
Accounts payable $34,000 $47,000
Bonds payable $150,000 $200,000
Common stock ($1 par) $214,000 $164,000
Retained earnings $199,000 $134,000
Total $597,000 $545,000
Additional information:
1. Net income for 2012 was $105,000.
2. Cash dividends of $40,000 were declared and paid.
3. Bonds payable amounting to $50,000 were retired through issuance of common stock.
Instructions
(a) Prepare a statement of cash flows for 2012 for Orozco Corporation.
(b) Determine Orozco Corporation’s current cash debt coverage ratio, cash debt
coverage ratio, & free cash flow. Comment on its liquidity & financial flexibility
Cash from operation
Net Income $105,000.00
Add Depreciation expense $27,000.00
Adjustment for CA and CL changes
-$16,000 $9,000 -$13,000 -$20,000.00
$112,000.00
Cash for investing
Land sold $39,000
Equipment bought -$70,000 -$31,000
Cash for financing
Bond Paid -$50,000
Common Stock issued $50,000
Dividend paid -40000 -$40,000
$41,000