ACC 312 Midterm: Profit and loss and the balance sheet

23 views2 pages

greenwalrus59

29 Nov 2017

School

Department

Course

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

The profit and loss account and the balance sheet are linked in two ways: The cumulative balance on the profit and loss account is reflected within the e(cid:395)uity, o(cid:396) the sha(cid:396)eholde(cid:396)s" funds (cid:272)atego(cid:396)y of the (cid:271)alan(cid:272)e sheet representing the increase in the wealth of the business. Some of the items contained in the profit and loss account are also all reflected in some way within one or more balance sheet categories. The balance sheet at the end of a period may be derived from considering each element in the profit and loss account for the period, and movements between accounts within the balance sheet: Sales to customers on credit are the starting point for the profit and loss account, which also increase debtors. Cash received from customers increases cash and reduces debtors. Purchases of goods on credit for resale increase stock and increase creditors. Cash paid to creditors reduces cash and reduces creditors.

Related Questions

The comparative balance sheet of Whitman Co. at December 31,2016 and 2015, is as follows:

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$918,260.00	$965,110.00
4	Accounts receivable (net)	â828,050.00	761,830.00
5	Inventories	1,268,550.00	1,163,510.00
6	Prepaid expenses	28,760.00	35,720.00
7	Land	315,810.00	479,900.00
8	Buildings	1,463,300.00	900,740.00
9	Accumulated depreciation-buildings	(408,350.00)	(381,910.00)
10	Equipment	512,470.00	454,060.00
11	Accumulated depreciation-equipment	(142,270.00)	(159,730.00)
12	Total assets	$4,784,580.00	$4,219,230.00
13	Liabilities and Stockholdersâ Equity
14	Accounts payable (merchandise creditors)	$922,360.00	$957,810.00
15	Bonds payable	270,000.00	0.00
16	Common stock, $25 par	316,000.00	116,000.00
17	Paid-in capital: Excess of issue price over parâcommon stock	775,000.00	559,000.00
18	Retained earnings	2,501,220.00	2,586,420.00
19	Total liabilities and stockholdersâ equity	$4,784,580.00	$4,219,230.00

The noncurrent asset, noncurrent liability, and stockholdersâequity accounts for 2016 are as follows:

ACCOUNT Land

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance			479,900
Apr.	20	Realized $152,430 cash from sale		164,090	315,810

ACCOUNT Buildings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance			900,740
Apr.	20	Acquired for cash	562,560		1,463,300

ACCOUNT Accumulated DepreciationââBuildings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				381,910
Dec.	31	Depreciation for year		26,440		408,350

ACCOUNT Equipment

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance			454,060
	26	Discarded, no salvage		47,260	406,800
Aug.	11	Purchased for cash	105,670		512,470

ACCOUNT Accumulated Depreciation ââEquipment

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				159,730
	26	Equipment discarded	47,260			112,470
Dec.	31	Depreciation for year		29,800		142,270

ACCOUNT Bonds Payable

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
May	1	Issued 20-year bonds		270,000		270,000

ACCOUNT Common Stock $25 par

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				116,000
Dec.	7	Issued 8,000 shares of common stock for $52 per share		200,000		316,000

ACCOUNT Paid-In Capital in Excess of ParââCommonStock

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				559,000
Dec.	7	Issued 8,000 shares of common stock for $52 per share		216,000		775,000

ACCOUNT Retained Earnings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
2016
Jan.	1	Balance				2,586,420
Dec.	31	Net loss	53,460			2,532,960
	31	Cash dividends	31,740			2,501,220

Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities. Refer to theLabels and Amount Descriptions list provided for the exact wordingof the answer choices for text entries. Be sure to complete theheading of the statement. In the operating activities section, usethe minus sign to indicate cash outflows, decreases in cash and anet cash outflow, if required. In the investing and financingactivities section, use a minus sign only to indicate a NET cashoutflow for the section.

Labels and Amount Descriptions

Labels andAmount Descriptions
Cash paid for acquisition ofbuilding
Cash paid for dividends
Cash paid for merchandise
Cash paid for purchase ofequipment
Cash received from customers
Cash received from issuance ofbonds payable
Cash received from issuance ofcommon stock
Cash received from land sold
December 31, 2016
Decrease in accounts payable
Decrease in accountsreceivable
Decrease in cash
Decrease in inventories
Decrease in prepaid expenses
Decrease in salaries payable
Depreciation
For the Year Ended December 31,2016
Gain on sale of investments
Gain on sale of land
Increase in accounts payable
Increase in accountsreceivable
Increase in cash
Increase in inventories
Increase in prepaid expenses
Increase in salaries payable
Issuance of common stock foracquisition of building
Issuance of common stock forpurchase of equipment
Issuance of common stock to retirebonds
Loss on sale of investments
Loss on sale of land
Net cash flow from financingactivities
Net cash flow from investingactivities
Net cash flow from operatingactivities
Net cash flow used for financingactivities
Net cash flow used for investingactivities
Net cash flow used for operatingactivities
Net income
Net loss

Statement of Cash Flows

Whitman Co.

Statement of Cash Flows

1	Cash flows from operating activities:
2
3	Adjustments to reconcile net loss to net cash flow fromoperating activities:
4
5
6	Changes in current operating assets and liabilities:
7
8
9
10
11
12
13	Cash flows from investing activities:
14
15
16
17
18
19	Cash flows from financing activities:
20
21
22
23
24
25	Cash at the beginning of the year
26	Cash at the end of the year

olivedonkey543

The comparative balance sheet of Whitman Co. at December 31,20Y2 and 20Y1, is as follows:

1		Dec. 31, 20Y2	Dec. 31, 20Y1
2	Assets
3	Cash	$918,000.00	$964,800.00
4	Accounts receivable (net)	ââ828,900.00	761,940.00
5	Inventories	1,268,460.00	1,162,980.00
6	Prepaid expenses	29,340.00	35,100.00
7	Land	315,900.00	479,700.00
8	Buildings	1,462,500.00	900,900.00
9	Accumulated depreciation-buildings	(408,600.00)	(382,320.00)
10	Equipment	512,280.00	454,680.00
11	Accumulated depreciation-equipment	(141,300.00)	(158,760.00)
12	Total assets	$4,785,480.00	$4,219,020.00
13	Liabilities and Stockholdersâ Equity
14	Accounts payable (merchandise creditors)	$922,500.00	$958,320.00
15	Bonds payable	270,000.00	0.00
16	Common stock, $25 par	â317,000.00	117,000.00
17	Paid-in capital: Excess of issue price over parâcommon stock	758,000.00	558,000.00
18	Retained earnings	2,517,980.00	2,585,700.00
19	Total liabilities and stockholdersâ equity	$4,785,480.00	$4,219,020.00

The noncurrent asset, noncurrent liability, and stockholdersâequity accounts for 20Y2 are as follows:

ACCOUNT Land

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance			479,700
Apr.	20	Realized $151,200 cash fromsale		163,800	315,900

ACCOUNT Buildings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance			900,900
Apr.	20	Acquired for cash	561,600		1,462,500

ACCOUNT Accumulated DepreciationââBuildings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance				382,320
Dec.	31	Depreciation for year		26,280		408,600

ACCOUNT Equipment

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance			454,680
	26	Discarded, no salvage		46,800	407,880
Aug.	11	Purchased for cash	104,400		512,280

ACCOUNT Accumulated Depreciation ââEquipment

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance				158,760
	26	Equipment discarded	46,800			111,960
Dec.	31	Depreciation for year		29,340		141,300

ACCOUNT Bonds Payable

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
May	1	Issued 20-year bonds		270,000		270,000

ACCOUNT Common Stock $25 par

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance				117,000
Dec.	7	Issued 8,000 shares of commonstock for $50 per share		200,000		317,000

ACCOUNT Paid-In Capital in Excess of ParââCommonStock

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance				558,000
Dec.	7	Issued 8,000 shares of commonstock for $50 per share		200,000		758,000

ACCOUNT Retained Earnings

					ACCOUNT NO.
					Balance
Date		Item	Debit	Credit	Debit	Credit
20Y2
Jan.	1	Balance				2,585,700
Dec.	31	Net loss	35,320			2,550,380
	31	Cash dividends	32,400			2,517,980

Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities. Refer to theLabels and Amount Descriptions list provided for the exact wordingof the answer choices for text entries. Be sure to complete theheading of the statement. Use the minus sign to indicate net loss,cash outflows, cash payments, decreases in cash, or any negativeadjustments.

Labels and AmountDescriptions
Cash paid for acquisition ofbuilding
Cash paid for dividends
Cash paid formerchandise
Cash paid for purchase ofequipment
Cash received fromcustomers
Cash received from issuanceof bonds payable
Cash received from issuanceof common stock
Cash received from landsold
Change in cash
December 31, 20Y2
Decrease in accountspayable
Decrease in accountsreceivable
Decrease in inventories
Decrease in prepaidexpenses
Decrease in salariespayable
Depreciation
For the Year Ended December31, 20Y2
Gain on sale ofinvestments
Gain on sale of land
Increase in accountspayable
Increase in accountsreceivable
Increase in inventories
Increase in prepaidexpenses
Increase in salariespayable
Issuance of common stock foracquisition of building
Issuance of common stock forpurchase of equipment
Issuance of common stock toretire bonds
Loss on sale ofinvestments
Loss on sale of land
Net cash flow from financingactivities
Net cash flow from investingactivities
Net cash flow from operatingactivities
Net cash flow used forfinancing activities
Net cash flow used forinvesting activities
Net cash flow used foroperating activities
Net income
Net loss

skysnake640

QUESTION 1

The ownership of a corporation is represented by:

		shares of stock.
		the owner's capital account.
		the revenue account.
		cash in bank account.

QUESTION 2

How many classifications does a Capital Stock Account have?

		One
		Two
		Three
		Four

QUESTION 3

The equity contributed by stockholders and equity earned throughbusiness profits represent the stockholders' equity for a:

		partnership firm.
		sole proprietorship.
		corporation.
		none of these.

QUESTION 4

Retained earnings are a part of a/an:

		asset account.
		permanent account.
		stockholders' equity account.
		temporary account.

QUESTION 5

How many sections does an Income Statement have?

		Two
		Three
		Four
		Five

QUESTION 6

Net sales are related to the:

		net income section.
		gross profit on sales section.
		revenue section.
		cost of merchandise sold section.

QUESTION 7

Sales discount and sales return and allowance are:

		revenue accounts.
		contra revenue accounts.
		permanent accounts.
		contra expenses accounts.

QUESTION 8

The total cost related to merchandise purchases during anaccounting period is the:

		net purchase.
		cost of merchandise sold.
		cost of merchandise available for sale.
		beginning merchandise inventory.

QUESTION 9

The gross profit on sale is $65,000, and operating expenses is$35,000. What will be the operating profit?

		$65,000
		$35,000
		$100,000
		$30,000

QUESTION 10

A balance sheet has the following sections:

		Assets, liabilities, and stockholders' equity.
		Income, expenses, and stockholders' equity.
		Assets, liabilities, and income.
		Operating income, operating expenses, and stockholders'equity.

QUESTION 11

A cash flow statement is used to assess the:

		net increase or decrease of cash.
		net increases of cash only.
		net decrease of cash only.
		net profit or loss of business.

ACC 312 Midterm: Profit and loss and the balance sheet

Document Summary

Get access

Related Documents

ACC 312 Study Guide - Midterm Guide: Cash Flow, Discounted Cash Flow, Net Present Value

ACC 312 Study Guide - Midterm Guide: Cash Flow Statement, Financial Statement, Financial Reporting Council

ACC 312 Study Guide - Midterm Guide: International Accounting Standards Board, International Financial Reporting Standards, Cash Flow Statement

Related Questions