Financial Accounting
9th Edition
ISBN: 9781259738692
Author: Libby
Publisher: MCG
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Textbook Question
Chapter 1, Problem 1.4CP
Using Financial Reports: Identifying and Correcting Deficiencies in an Income Statement and
Performance Corporation was organized on January 1, 2015. At the end of 2015, the company had not yet completed an accountant: however, an employee who was “good with numbers” prepared the following statements at that date:
| PERFORMANCE CORPORATION December 31,2015 | |
| Income from sales of merchandise | $180,000 |
| Total amount paid for goods sold during 2015 | (90,000) |
| Selling costs | (25,000) |
| (12,000) | |
| Income from services rendered | 52,000 |
| Salaries and wages paid | (62,000) |
| PERFORMANCE CORPORATION December 31,2015 | ||
| Resources | ||
| Cash | $32,000 | |
| Merchandise inventory (held for resale) | 42,000 | |
| Service vehicles | 50,000 | |
| 32,250 | ||
| Grand total | $156,250 | |
| Debts | ||
| Payables to suppliers | $ 17,750 | |
| Note owed to bank | 25,000 | |
| Due from customers | 13,000 | |
| Total | $55,750 | |
| Supplies on hand (to be used in rendering services) | $15,000 | |
| 12,000 | ||
| Common stock, 6,500 shares | 65,000 | |
| Total | 92,000 | |
| Grand total | $147,750 | |
| *This represents the portion of the service vehicles that has been used up to date. | ||
Required:
- 1. List all deficiencies that you can identify in these statements. Give a brief explanation of each one.
- 2. Prepare a proper income statement (correct net income is $32,250 and income tax expense $10,750) and balance sheet (correct total assets are $140,000).
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Income Statement
For the Year Ended August 31, 2019
Sales .....
$8,595,000
Cost of merchandise sold
6,110,000
Income from operations
$2,485,000
Expenses:
Selling expenses
Administrative expenses..
Delivery expense....
Total expenses .
$800,000
...
575,000
425,000
1,800,000
$ 685,000
Other expense:
Interest revenue
45,000
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$ 640,000
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Chapter 1 Solutions
Financial Accounting
Ch. 1 - Define accounting.Ch. 1 - Briefly distinguish financial accounting from...Ch. 1 - Prob. 3QCh. 1 - Prob. 4QCh. 1 - Prob. 5QCh. 1 - Complete the following: Name of Statement...Ch. 1 - What information should be included in the heading...Ch. 1 - What are the purposes of (a) the income statement,...Ch. 1 - Explain why the income statement and the statement...Ch. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - Explain the equation for the income statement....Ch. 1 - Explain the equation for the balance sheet. Define...Ch. 1 - Explain the equation for the statement of cash...Ch. 1 - Explain the equation for retained earnings....Ch. 1 - The financial statements discussed in this chapter...Ch. 1 - Prob. 17QCh. 1 - Prob. 18QCh. 1 - (Supplement A) Briefly differentiate between a...Ch. 1 - Prob. 20QCh. 1 - Which of the following is not one of the four...Ch. 1 - Prob. 2MCQCh. 1 - Prob. 3MCQCh. 1 - Which of the following regarding retained earnings...Ch. 1 - Which of the following is not one of the four...Ch. 1 - Prob. 6MCQCh. 1 - Prob. 7MCQCh. 1 - Which of the following is true regarding the...Ch. 1 - Prob. 9MCQCh. 1 - Prob. 10MCQCh. 1 - Matching Elements with Financial Statements M1-1...Ch. 1 - Matching Financial Statement Items to Financial...Ch. 1 - Prob. 1.3MECh. 1 - Prob. 1.1ECh. 1 - Matching Financial Statement Items to Financial...Ch. 1 - Matching Financial Statement Items to Financial...Ch. 1 - Preparing a Balance Sheet Honda Motor Corporation...Ch. 1 - Completing a Balance Sheet and Inferring Net...Ch. 1 - Prob. 1.6ECh. 1 - Preparing an Income Statement and Inferring...Ch. 1 - Prob. 1.8ECh. 1 - Inferring Values Using the Income Statement and...Ch. 1 - Inferring Values Using the Income Statement and...Ch. 1 - Preparing an Income Statement and Balance Sheet...Ch. 1 - Preparing an Income Statement and Balance Sheet...Ch. 1 - Preparing a Statement of Stockholders Equity...Ch. 1 - Focus on Cash Flows: Matching Cash Flow Statement...Ch. 1 - Preparing an Income Statement, Statement of...Ch. 1 - Analyzing a Student's Business and Preparing an...Ch. 1 - Comparing Income with Cash Flow (Challenging)...Ch. 1 - Evaluating Data to Support a Loan Application...Ch. 1 - Preparing an Income Statement, Statement of...Ch. 1 - Analyzing a Students Business and Preparing an...Ch. 1 - Prob. 1.3APCh. 1 - Prob. 1.1CONCh. 1 - Finding Financial Information LO1-1 Refer to the...Ch. 1 - Prob. 1.2CPCh. 1 - Comparing Companies within an Industry Refer to...Ch. 1 - Using Financial Reports: Identifying and...Ch. 1 - Prob. 1.5CPCh. 1 - Prob. 1.6CPCh. 1 - Prob. 1.7CP
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