Accounting Intrermediate

ACCT 3110

Review of Basics of Accounting Solution to Exercises 1. The balance of accounts for Moon Manufacturing Company for year ended December 31, 2014 is as follows: Prepare Income Statement (multi-step), Statement of Retained Earnings, and Balance Sheet (classified).

Sales Office Equipment Common Stock (par $1) Cost of Goods Sold Salaries Expense Work-in-Process Inventory Accumulated Dep.—Office Equip Retained Earnings, Jan. 1 Notes Payable (due in 3 years) Accounts Payable 165 100 80 58 35 30 28 28 26 24 Accounts Receivable Preferred Stock (Par $2, 10%) Land Rent Expense Dividends Finished Goods Inventory Cash Sales Return Raw Material Inventory Supplies 20 20 20 20 15 15 10 10 10 8 Depreciation Expense Income Tax Expense Taxes Payable Sales Discount Interest Revenue Supplies Expense Interest Expense Treasury Stock 8 8 5 5 5 4 3 2

Q2.

Moon Manufacturing Company Income Statement For year ended Dec. 31, 2014 165 -5 -10 -15 150 -58 92

Sales Less: Sales Discount Sales Return Net Sales CGS Gross Profit/Margin Operating Expenses: Depreciation Expense Rent Expense Supplies Expense Salaries Expense Total Operating Expenses Operating Income Other Revenues & Expenses: Interest Revenue Interest Expense Net of Other Revenues & Expenses Income before taxes Income Tax Expense Net Income Statement of Retained Earnings For year ended Dec. 31, 2014 Statement of Retained Earning Retained Earnings, Jan. 1 28 Add: Net Income 19 Less: Dividends -15 Retained Earnings, Dec. 31 32

8 20 4 35 -67 25 5 -3 2 27 -8 19

Balance Sheet As of Dec. 31, 2014 Current Assets: Cash Accounts Receivable Raw Material Inventory Work-in-Process Inventory Finished Goods Inventory Supplies Total current assets Property, Plant, and Equipment Office Equipment Accumulated Dep.—Office Equip Land Total PPE Total Assets Current Liabilities: Accounts Payable Taxes Payable Total Current liabilities Long-term liabilities Notes Payable (due in 3 years) Total liabilities Stockholders Equity Paid...