IS: Income statement
1. Use the following abbreviations to indicate on which statement you would find each item below. Some items may appear on more than one statement. Include all abbreviations that would apply.
◦ IS: Income statement
◦ SRE: Statement of retained earnings
◦ BS: Balance sheet
a. ____ Sales
b. ____ Cash
c. ____ Gain on sale of building
d. ____ Retained earnings
e. ____ Salary expense
f. ____ Capital stock
g. ____ Dividends paid
h. ____ Loss on sale of investment
i. ____ Income tax expense
j. ____ Net income
2. The following relate to Farr Corporation for the month of April:
Sales Revenue $140,000
Gain on the Sale of Land $20,000
Cost of Goods Sold $75,000
Tax Expense $14,000
Advertising Expense $10,000
Dividends Paid $7,000
Loss on Lawsuit $24,000
a. Determine Farr’s gross profit for the month of April.
b. Determine Farr’s net income for the month of April.
c. If retained earnings at the beginning of April were $1,500,000, what would retained earnings be at the end of April?
3. Maverick Company has the following account balances at the end of December. Show that Maverick’s balance sheet would balance using the accounting equation.
Cash $8,000
Capital Stock $120,000
Inventory $16,000
Note Payable $45,000
Retained Earnings $29,000
Building $150,000
Equipment $20,000