25th of October, 2016

Accounting for Managers

Chapter 1 Libby Set B exercises
Instructor: Dr. M. Nagui Darwish

Nashwa Saad
Human Resources Manager
Ace Global Depository
Mob : +20 (109) 35 58 064
Chapter 01 - Financial Statements and Business Decisions

Chapter 1 Set B Exercises Libby 8e

E1-1B (similar to E 1-4) [LO 1] Preparing a Balance Sheet ABC Company has the following balance sheet. Solve for the
missing amount. (Hint: Exhibit 1.2 in the chapter provides a good model for completing this exercise.)
Cash and cash equivalents $ 377
Common Stock 1,984
Accounts payable and other current liabilities 3,322
Inventories 635
Investments 179
Long-term debt 2,061
Net property, plant, and equipment 7,626
Other assets 816
Other liabilities 3,393
Retained earnings 1,135
Total assets 11,895
Total liabilities and stockholders equity ?
Trade accounts, notes, and other receivables 2,262

The Answer:
ABC Company
Balance Sheet Statement
At : . / . / 20 .
Currency : USD $
Assets Liabilities
Cash & cash Equivalents 377 Accounts payable & other current liabilities 3,322
Inventories 635 Long term dept 2,061
Investments 179 Other liabilities 3,393
Net property, plant, and equipment 7,626 Stockholders' Equity
Other assets 816 Common Stock 1,984
Total accounts notes & other receivables 2,262 Retained earnings 1,135
Total Assets 11,895 Total Liabilities & Stockholders' Equity 11,895

E 1-2B (similar to E1-6) [LO 1] Analyzing Revenues and Expenses and Preparing an Income Statement
Assume that you are the owner of University Market, which specializes in items that interest students.
At the end of March 2014, you find (for March only) this information:
a. Sales, per the cash register tapes, of $150,000, plus one sale on credit (a special situation) of $5,000.
b. With the help of a friend (who majored in accounting), you determine that all of the goods sold during
March cost $60,000 to purchase.
c. During the month, according to the checkbook, you paid $32,000 for salaries, rent, supplies, advertising,
and other expenses; however, you have not yet paid the $1,100 monthly utilities for March on the store and
fixtures.
Required:
On the basis of the data given (disregard income taxes), what was the amount of net income for March? Show
computations. (Hint: A convenient form to use has the following major side captions: Revenue from Sales, Expenses,
and the differenceNet Income.)

The Answer:
University Market
Income Statement
1
2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Financial Statements and Business Decisions

For the period from ( 1 / 3 / 20 14 ) to ( 31 / 3 / 20 14 )

Currency : USD $
Revenues
Sales Revenue 155,000
Total Revenues 155,000
Expenses
Cost of Goods sold 60,000
Salaries, rent, supplies, advertising, and other expenses 32,000
Incurred expenses 1,100
Total Expenses 93,100
Net Income 61,900

E1-3B (similar to E1-9) [LO 1] Inferring Values Using the Income Statement and Balance Sheet Equations Review the
chapter explanations of the income statement and the balance sheet equations. Apply these equations in each
independent case to compute the two missing amounts for each case. Assume that it is the end of 2014, the first full
year of operations for the company. (Hint: Organize the listed items as they are presented in the balance sheet and
income statement equations and then compute the missing amounts.)

Independent Total Total Net Income Total Total Stockholders

Cases Revenues Expenses (Loss) Assets Liabilities Equity
A $89,700 $73,940 $ $134,200 $59,000 $
B 70,240 18,740 100,880 90,010
C 66,260 86,430 99,850 60,850
D 68,680 41,770 27,890 88,680
E 88,840 75,720 35,520 77,580

The Answer:
Independent Total Total Net Income Total Total Stockholders
Cases Revenues Expenses (Loss) Assets Liabilities Equity
A $89,700 $73,940 $15,760 $134,200 $59,000 $75,200
B $88,980 $70,240 $18,740 $100,880 $10,870 $90,010
C $66,260 $86,430 -$20,170 $99,850 $60,850 $39,000
D $68,680 $26,910 $41,770 $116,570 $27,890 $88,680
E $88,840 $75,720 $13,120 $113,100 $35,520 $77,580

E1-4B (similar to E1-10) [LO1] Inferring Values Using the Income Statement and Balance Sheet Equations Review
the chapter explanations of the income statement and the balance sheet equations. Apply these equations in each
independent case to compute the two missing amounts for each case. Assume that it is the end of 2014, the first full
year of operations for the company. (Hint: Organize the listed items as they are presented in the balance sheet and
income statement equations and then compute the missing amounts.)
Independent Total Total Net Income Total Total Stockholders
Cases Revenues Expenses (Loss) Assets Liabilities Equity
2
2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Financial Statements and Business Decisions

A $230,820 $176,700 $ $295,300 $95,000 $

B 165,780 32,920 580,000 358,400
C 70,990 89,890 268,200 195,760
D 43,590 11,840 198,675 99,525
E 220,130 210,600 193,850 316,240

The Answer:
Independent Total Total Net Income Total Total Stockholders
Cases Revenues Expenses (Loss) Assets Liabilities Equity
A $230,820 $176,700 $54,120 $295,300 $95,000 $200,300
B $198,700 $165,780 $32,920 $580,000 $221,600 $358,400
C $70,990 $89,890 -$18,900 $268,200 $195,760 $72,440
D $43,590 $31,750 $11,840 $298,200 $198,675 $99,525
E $220,130 $210,600 $9,530 $510,090 $193,850 $316,240

E1-5B (similar to E1-13) [LO 1] Preparing a Statement of Cash Flows The following items were taken from a recent
cash flow statement. Mark each item in the list as a cash flow from operating activities (O), investing activities (I),
financing activities (F), or (X) for none of the above. Also place parentheses around the letter only if it is a cash
outflow.
____ (1) Borrowed cash from a bank.
____(2) Purchased stock in another company for cash.
____ (3) Paid the utility bill.
____ (4) Paid the property tax bill.
____ (5) Sold equipment for cash.
____ (6) Issued additional shares of stock for cash.
____ (7) Sales from customers received as cash.
____ (8) Sales from customers on credit (no cash).

E1-6B (similar to E1-12) [LO 1] Preparing a Statement of Retained Earnings Barbaras Design Corporation was
organized on January 1, 2013. For its first two years of operations, it reported the following:
Net income for 2013 $ 39,000
Net income for 2014 40,000
Dividends for 2013 15,200
Dividends for 2014 19,700
Total assets at the end of 2013 150,000
Total assets at the end of 2014 320,000
Required:
On the basis of the data given, prepare a statement of retained earnings for 2014. Show computations.

The Answer:
Barbaras Design Corporation
Retained Earnings Statement
For The Business First Year Ended Dec, 31, 2013
Currency : USD $
Net Income 39000
3
2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Financial Statements and Business Decisions

Dividends 15200
Retained Earnings 23800
Barbaras Design Corporation
Retained Earnings Statement
For The Year Ended Dec, 31, 2014
Currency : USD $
Beginning Retained Earnings 23800
Net Income 40000
Dividends 19700
Retained Earnings 44100

E 1-7B (similar to E1-6) [LO 1] Analyzing Revenues and Expenses and Preparing an Income Statement
Assume that you are the owner of Fabulous Styles, which specializes in clothing for teens.
At the end of March 2013, you find (for March only) this information:
a. Sales, per the cash register tapes, of $180,000, plus one sale on credit (a special situation) of $4,000.
b. With the help of a friend (who majored in accounting), you determine that all of the goods sold during
March cost $90,000 to purchase.
c. During the month, according to the checkbook, you paid $22,000 for salaries, rent, supplies, advertising,
and other expenses; however, you have not yet paid the $1,000 monthly utilities for March on the store and
fixtures.
Required:
On the basis of the data given (disregard income taxes), what was the amount of net income for March? Show
computations. ( Hint: A convenient form to use has the following major side captions: Revenue from Sales, Expenses,
and the differenceNet Income.)

The Answer:
Fabulous Styles
Income Statement
For the period from ( 1 / 3 / 20 13 ) to ( 31 / 3 / 20 13 )
Currency : USD $
Revenues
Sales Revenue 184,000
Total Revenues 184,000
Expenses
Cost of Goods sold 90,000
Salaries, rent, supplies, advertising, and other expenses 22,000
Incurred expenses 1,000
Total Expenses 113,000
Net Income 71,000

E1-8B (similar to E1-9) [LO 1] Inferring Values Using the Income Statement and Balance Sheet Equations Review the
chapter explanations of the income statement and the balance sheet equations. Apply these equations in each
independent case to compute the two missing amounts for each case. Assume that it is the end of 2014, the first full
year of operations for the company. (Hint: Organize the listed items as they are presented in the balance sheet and
income statement equations and then compute the missing amounts.)
4
2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Financial Statements and Business Decisions

Independent Total Total Net Income Total Total Stockholders

Cases Revenues Expenses (Loss) Assets Liabilities Equity
A $91,700 $75,940 $ $136,200 $61,000 $
B 85,240 33,740 115,880 105,010
C 33,260 86,430 98,850 62,850
D 81,680 41,770 27,800 88,680
E 81,840 75,720 35,500 77,500

The Answer:
Independent Total Total Net Income Total Total Stockholders
Cases Revenues Expenses (Loss) Assets Liabilities Equity
A $91,700 $75,940 $15,760 $136,200 $61,000 $75,200
B $118,980 $85,240 $33,740 $115,880 $10,870 $105,010
C $33,260 $86,430 -$53,170 $98,850 $62,850 $36,000
D $81,680 $39,910 $41,770 $116,480 $27,800 $88,680
E $81,840 $75,720 $6,120 $113,000 $35,500 $77,500

E1-9B (similar to E1-10) [LO1] Inferring Values Using the Income Statement and Balance Sheet Equations Review
the chapter explanations of the income statement and the balance sheet equations. Apply these equations in each
independent case to compute the two missing amounts for each case. Assume that it is the end of 2014, the first full
year of operations for the company. (Hint: Organize the listed items as they are presented in the balance sheet and
income statement equations and then compute the missing amounts.)
Independent Total Total Net Income Total Total Stockholders
Cases Revenues Expenses (Loss) Assets Liabilities Equity
A $240,820 $176,700 $ $295,000 $95,000 $
B 165,700 32,020 585,000 365,400
C 67,990 89,890 288,200 195,760
D 43,590 15,840 218,675 99,525
E 225,130 210,600 195,800 316,200

The Answer:
Independent Total Total Net Income Total Total Stockholders
Cases Revenues Expenses (Loss) Assets Liabilities Equity
A $240,820 $176,700 $64,120 $295,000 $95,000 $200,000
B $197,720 $165,700 $32,020 $585,000 $219,600 $365,400
C $67,990 $89,890 -$21,900 $288,200 $195,760 $92,440
D $43,590 $27,750 $15,840 $318,200 $218,675 $99,525
E $225,130 $210,600 $14,530 $512,000 $195,800 $316,200

E1-10B (similar to E1-11) [L O 1] Preparing an Income Statement and Balance Sheet Christopher Corporation was
organized on January 1, 2014. At the end of January 2014, the following monthly financial data are available:

Total revenues $400,000

5
2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Financial Statements and Business Decisions

Total expenses (excluding income taxes) 142,000

Income tax expense (all unpaid as of January 31) 77,400
Cash balance, January 31, 2014 176,000
Receivables from customers (all considered collectible) 196,000
Merchandise inventory (by inventory count at cost) 70,000
Payables to suppliers for merchandise purchased from them 88,000
(Will be paid during February 2014)
Common stock (2,500 shares) 96,000

No dividends were declared or paid during 2014

Required:
Complete the following two statements.

Christopher Corporation
Income Statement
For the Month of January 2014

Total revenues $400,000

Less: Total expenses (excluding income tax) $142,000
Pretax income $258,000
Less: Income tax expense $77,000
Net income $181,000

Christopher Corporation
Balance Sheet
At January 31, 2014

Assets
Cash $176,000
Receivables from customers $196,000
Merchandise inventory $70,000
Total assets $449,000

Liabilities
Payables to suppliers $88,000
Income taxes payable $77,000
Total liabilities $165,000
Stockholders equity
Common stock $96,000
Retained earnings $188,000
Total stockholders equity $284,000
Total liabilities and stockholders equity $449,000

Thank You
Nashwa Saad
25 / 10 / 2016

6
2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.