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business
principles of financial accounting

Financial Accounting 1st Edition Michael J. Jones - Solutions

As a team, select an industry to analyze. A list of companies classified by industry can be obtained by accessing www.fpinfomart.ca and then choosing "Companies by Industry." You can also find a list
Pedro Gonzalez owns and operates Pedro's Shop (a sole proprietorship). An employee prepares a financial report for the business at each year-end. This report lists all of the resources (assets) owned
On June 1, 2012, Bland Corporation prepared a statement of financial position just prior to going out of business. The totals for the three main components showed the following:Assets (no
Cadbury plc and of Cadbury plc online. Nestlé uses the Swiss franc (CHF) in preparing its financial statements whereas Cadbury reports its financial information by using the pound sterling ( \(£\)
Finding Financial Information Refer to the financial statements of Cadbury plc online.Required:1 What is the amount of profit for the current fiscal year?2 What amount of revenue was earned in the
Finding Financial Information Required:Look at the income statement, statement of financial position, and statement of cash flows closely and attempt to infer the types of information they report.
Analyzing a Student's Business and Preparing an Income Statement and a Statement of Financial Position (P1-2)Upon graduation from high school, John Abel immediately accepted a job as an electrician's
Preparing an Income Statement and a Statement of Financial Position Assume that you are the president of McClaren Corporation. At June 30, 2012, the end of the first year of operations, the following
Using Financial Reports: Identifying and Correcting Deficiencies in an Income Statement and a Statement of Financial Position Performance Corporation was organized on January 1, 2011. At the end of
Comparing Profit with Cash Flow (A Challenging Problem)New Delivery Company was organized on January 1, 2012. At the end of the first quarter (three months) of operations, the owner prepared a
Analyzing a Student's Business and Preparing an Income Statement and a Statement of Financial Position While pursuing her undergraduate studies, Brigitte Lebeau needed to earn sufficient money for
Preparing an Income Statement and a Statement of Financial Position Assume that you are the president of Nuclear Company. At December 31, 2011, the end of the first year of operations, the following
Comparing Income and Cash Flows from Operations (A Challenging Exercise)Paul's Painters, a service organization, prepared the following special report for the month of January 2012 :Required:1.The
Focusing on Cash Flows: Matching Cash Flow Items to Categories Dell Computer is a leading designer and manufacturer of personal computers. The following items were taken from its recent statement of
Analyzing and Interpreting an Income Statement and the Price/Earnings Ratio Pest Away Corporation was organized by three individuals on January 1, 2011, to provide insect extermination services. At
Computing Ending Balance of Retained Earnings Sultan Inc. was organized on January 1, 2011. It reported the following for its first two years of operations:Required:Compute the ending balance of
Preparing an Income Statement and a Statement of Financial Position Ducharme Corporation was organized by five individuals on January 1, 2011. At the end of January 2011, the following monthly
Inferring Values by Using the Income Statement and Statement of Financial Position Equations Review the chapter explanations of the income statement and the statement of financial position equations.
Analyzing Revenues and Expenses and Completing an Income Statement Home Realty Incorporated has been operating for three years and is owned by three investors. J. Doe owns 60 percent of the 9,000
Preparing an Income Statement and Inferring Missing Values Geox S.p.A. is an Italian-based international company that produces and distributes footwear and apparel products for men, women, and
Analyzing Revenues and Expenses and Preparing an Income Statement Assume that you are the owner of The University Shop, which specializes in items that interest students. At the end of September
Briefly define profit and loss.
Explain why the income statement and statement of cash flows are dated "For the Year Ended December 31, 2011," whereas the statement of financial position is dated "At December 31, 2011."
What are the purposes of the (a) income statement, (b) statement of financial position, (c) statement of cash flows, and (d) statement of changes in equity?
Assuming a single journal entry is made to adjust Quinn Company's accounting records at January 31, the journal entry includes:a. A debit to Rent Expense for $90.b. A credit to Accounts Receivable,
What is the total amount of outstanding checks at January 31?a. $1,048.b. $868.c. $1,900.d. $1,720.Quinn Company's bank statement at January 31 shows a balance of \($13,360\), while the ledger
Compare and contrast the main features of the Anglo-American and continental account¬ ing systems.
Discuss the view that the accounts of partnerships are much like those of sole traders except for the need to share out the capital and profit between more than one partner.
State whether the following are true or false. If false, explain why.(a) Drawings are an expense recorded in the partners’ trading, profit and loss and appropriation account.(b) Partner’s current
Two partners, Peter Tom and Sheila Thumb, have the following details of their accounts for the year ended 31 December 2005.Required: Prepare the relevant trading, profit and loss and appropriation
J- Waite and p- Watcher’s trial balance as at 30 November 2005 is set out below.1. Closing stock is £15,000.2. Salaries are £18,000 for Waite and £16,000 for Watcher.3. There is £300 owing for
Cherie and Tony’s trial balance as at 31 December 2005 is set out below.1. Closing stock is £12,000.2. £197 of the other expenses was prepaid and £200 is owed for the telephone.3. Salaries will
Sister and Sledge are trading in partnership, sharing profits and losses in the ratio of 2:1, respectively. The partners are entitled to salaries of Sister £6,000 per annum and Sledge £5,000 per
Red Devils Ltd has the following extracts from its accounts.1. An audit fee is to be provided of £7,500.2. The debenture interest for the year has not been paid.3. The directors propose the
Superprofit Ltd1. Closing stock is £26.2. The following had not yet been recorded in the trial balance:(a) Dividends payable on ordinary shares £9 and on preference shares £3 (b) Taxation payable
Lindesay Trading pic1. Closing inventory is £13.2. The following are not recorded in the trial balance:(a) Taxation payable £58.3. Authorised share capital was £500 for ordinary share capital and
The following trial balance was extracted from the hooks of Leisureplay pic for the year ended 31 December 2005.(a) Inventory as at 31 December 2005 is £12,000 (b) Depreciation is to be charged as
You have the following summarised trial balance for Stock High pic as at 31 March 2006. Further details are provided in the notes.1. At the balance sheet date £8 is owing for taxation.2.
The direct method of preparing the cash flow statement is the easiest to understand, but most companies use the indirect method. Why do you think this might be so?
Preparing a cash flow statement using the indirect method is like being an accounting detective. Discuss this view.
State whether the following are true or false. If false, explain why.(a) Depreciation and profit from sale of fixed assets are both non-cash flow items and must be added back to operating profit to
Bingo has the following items in its accounts:(a) Dividends payable(b) Cash from loan(c) Sale of goods on credit(d) Purchase of goods for cash(e) Cash purchase of fixed assets(f) Cash on sale of
The cash flows below were extracted from the accounts of Peter Piper, a music shop owner.Required: Prepare a cash flow statement using the direct method for the year ended 31 December 2005. Loan
The cash flows below were extracted from the accounts of Picasso and Partners, a painting and decorating businessRequired: Prepare a cash flow statement under the indirect method for the year ended
Brian Ridge Ltd, a construction company, has extracted the following cash flows from its books as at 30 November 2005.Required: Prepare a cash flow statement using the indirect method. The operating
You have the following extracts from the profit and loss account and balance sheets for Grow Hire Ltd, a transport company.There were no sales of fixed assets during the year.Required: Prepare a cash
You have the following information regarding dividends and taxation for Brain and Co., a software house.Required: Calculate tax paid and dividends paid. Profit and Loss Account (Extract from Year to
A construction company, Expenso pic, has the following summaries from the profit and loss accounts and balance sheets for the year ended 30 September 2005.1. There were no sales of fixed assets
The information below is from the accounts of John Parry, a sole trader.Trading and Profit and Loss Account Year Ended 31 December 2005Required: Calculate the following profitability and efficiency
Henry Mellett has the following extracts from his balance sheet as at 31 March 2005. Current Assets Stock Debtors Cash Current Liabilities Creditors Long-term Creditors Total net assets Required:
Jane Edwards Ltd has prepared her cash flow statement under the direct method. She has the following main cash flows.Required: Calculate the cash flow ratio. Cash from customers 125,000 Dividends
From the following information for Clatworthy pic calculate the investment ratios as indicated.Market price ordinary shares £1.25. Number of ordinary shares in issue are 500,000.Required:(a)
The abridged accounts for N.O. Hope pic are given below.1. Retained earnings were after taking dividends of £46,000 for 2004 and £45,000 for 2005 into account.Required: Prepare a horizontal and
The following two non-listed companies Alpha Industries and Beta Industries operate in the same industrial sector. You have extracted the following ratios from their accounts.Required: Compare the
Anteater pic has produced the following summary accounts. Sales Cost of sales Income Statement for the Year Ended 31 December 2005 Gross Profit Administrative expenses (includes debenture interest
You are an employee of a medium-sized, light engineering company. Your managing director, Sara Potter, asks you to analyse the accounts of your company, Turn-a-Screw Ltd, with a competitor,
You have been employed temporarily by a rich local businessman, Mr Long Pocket, as his assistant. He has been told at the golf club that Sunbright Enterprises pic, a locally based company, would be a
State whether the following statements are true or false. If false, explain why.(a) Long-term sources of finance are usually used to finance working capital.(b) A debtors collection model seeks the
A bookshop, Bookworm, buys 2,500 copies of the book, Deep Heat, per year. It costs the bookshop £0.80 per annum to carry the book in stock and £20 to prepare a new order.Required:(i) The total
Winter Brollies wishes to revise its credit collection policy. Currently it has £500,000 sales, a credit policy of 25 days and an average collection period of 20 days. 1 % of debtors default. Credit
Albatross pic has the following information about its capital.Q4 Albatross pic has the following information about its capital.Required: What is Albatross’s weighted average cost of capital? Source
Why do many UK companies revalue their fixed assets? How might this affect profit? Why is this practice unusual internationally?
You are the financial accountant of Twister pic. The managing director has the following draft accounts. She is not happy.1. The company’s sales policy is to record sales prudently, one month after
Why is the profit and loss account such an important and useful financial statement to such a variety of users?
Over time, with the decline of the manufacturing company and rise of the service company, stock, cost of sales and gross profit are becoming less important. Discuss.
State which of the following statements is true and which false? If false, explain why.(a) Profit is income earned less expenses paid.(b) Sales less cost of sales less expenses will give net
Joan Smith has the following details from her accounts year ended 31 December 2005Required: Draw up Joan Smith’s trading and profit and loss account for the year ended 31 December 2005. Sales
Dale Reynolds has the following details from his accounts for the year ended 31 December 2005.Required: Draw up Dale Reynolds trading account for the year ended 31 December 2005. Opening stock 5,000
Mary Scott has the following details for the year to 31 December 2005.Required: Draw up Mary Scott’s trading and profit and loss account for the year ended 31 December 2005. Sales 200,000 Income
Given the following different scenarios, calculate sales, gross profit and cost of sales from the information available.(a) Sales £100,000, gross margin 25 %.(b) Sales £200,000, mark-up 30 %.(c)
The balance sheet and profit and loss account (income statement) provide complementary, but contrasting information. Discuss.
What are the main limitations of the balance sheet and how can they be overcome?
Is the balance sheet of any use?
Are the different elements of the balance sheet changing over time, for example, as manufacturing industry gives way to service industry?
State whether the following are true or false. If false, explain why.(a) A balance sheet is a collection of assets, liabilities and capital.(b) Stock, bank and creditors are all current assets.(c)
The following financial details are for Jane Bricker as at 31 December 2005.Required: Jane Bricker’s capital employed as at 31 December 2005 Capital 1 January 2005 5,000 Profit Drawings 7,000
Alpa Shah has the following financial details as at 30 June 2005.Required: Alpa Shah’s total net assets as at 30 June 2005. Fixed assets 100,000 Current liabilities 30,000 Current assets 50,000
Jill Jenkins has the following financial details as at 31 December 2005.Required: Jill Jenkins’ net current assets as at 31 December 2005. Stock 18,000 Cash 4,000 Debtors 8,000 Creditors 12,000
Janet Richards has the following financial details as at 31 December 2005.Required: Janet Richards’ balance sheet as at 31 December 2005. Land and buildings 100,000 Creditors 15,000 Plant and
‘Profit is the figure which links the profit and loss account and the balance sheet.’ Discuss.
Michael Anet has the following trial balanceRequired: Prepare Michael Anet’s trading and profit and loss account for the year ended 31 December 2005 and balance sheet as at 31 December 2005. M.
Paul Icasso has the following trial balance.Required: Prepare Paul Icasso’s trading and profit and loss account for the year ended 31 March 2006 and a balance sheet as at 31 March 2006. P. Icasso
Rose Ubens, buys and sells goods. Her trial balance is presented below.Required: Prepare Rose Ubens trading and profit and loss account for the year ended 31 December 2005 and a balance sheet as at
Vincent Gogh, a shopkeeper, has the following trial balance.You also have the following additional information.1. Closing stock as at 31 December 2005 is £9,000.2. V. Gogh owes £350 for
Leonardo Da Vinci, who sells computers, has extracted the following balances from the accounts.You have the following additional information.1. Closing stock of computers as at 30 September 2005 is
Helen Ogarth is preparing her accounts for the year to 31 December 2005. On 1 January 2005 she purchased the following fixed assets.She wishes to write off the following amounts for
Michael Atisse, a carpenter, has the following trial balance as at 31 December 2005.Required: Prepare M. Atisse’s trading and profit and loss account for the year ended 31 December 2005 and the
Clare Analetto, an antique dealer, has the following trial balance as at 31 December 2005.You also have the following notes to the accounts.1. Closing stock of antiques is £7,000.2. Depreciation for
Michelle Angelo has debtors of £40,000 at the year end. However, she feels that £4,000 are bad.Required: Prepare the appropriate balance sheet and trading and profit and loss account extracts.
Simon Eurat, who runs a taxi business, has the following trial balance.You have the following additional information.1. 10 % of the debtors are considered bad.2. £800 of the insurance is prepaid.3.
Rebecca Odin has the following details of her fixed assets.She charges depreciation at 2 % per annum on cost for buildings, 10 % per annum on cost for machinery, 25 % per annum on cost for the motor
Deborah Urer owns a small bar. Her trial balance as at 30 June 2005 is set out below. Debit Credit Takings from sales 145,150 Purchases of beer, wine and spirits 83,250 Discounts receivable 450
Can you think of three items of accounting information that shareholders might find useful in making investment decisions?
What is financial accounting and why is its study important?
'The objective of financial statements is to provide information about the financial position, performance and change in financial position of an enterprise that is useful to a wide range of users in
Classify the following as an income, an expense, an asset, or a liability: (a) Friend owes business money (b) Football club's gate receipts (c) Petrol used by a car (d) Photocopier (e) Sales (f)
State whether the following are true or false. If false, explain why. (a) Assets and liabilities show how much the business owns and owes. (b) The profit and loss account shows the income, expenses
Sharon Taylor has the following financial details:Required: Prepare Sharon Taylor’s (a) Profit and loss account (b) Balance sheet (c) Cash flow statement Sales 8,000 Assets 15,000 General expenses
Priya Patel is an overseas student studying at a British University. Priya has the following financial details:Required: Priya’s:(a) Profit and loss account (income and expenditure account)(b)
Computerisation means that there is no need to understand double-entry bookkeep¬ ing. Discuss.

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