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    Exercises Financial Statements

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    Naresh Sehdev
    The document provides financial information for a manufacturing company as of December 31, 2018. It asks to prepare three statements: [1] a classified balance sheet, [2] an income statement using the cost of sales method, and [3] an income statement using the nature of expenses method. The balance sheet shows total assets of €125,800 including non-current assets of €69,500 and current assets of €56,300. Total liabilities are €47,500 and stockholders' equity is €58,300. The income statements using the two different methods both show net income of €53,410.

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    Exercises Financial Statements

    Uploaded by

    Naresh Sehdev
    1K views3 pages
    The document provides financial information for a manufacturing company as of December 31, 2018. It asks to prepare three statements: [1] a classified balance sheet, [2] an income statement using the cost of sales method, and [3] an income statement using the nature of expenses method. The balance sheet shows total assets of €125,800 including non-current assets of €69,500 and current assets of €56,300. Total liabilities are €47,500 and stockholders' equity is €58,300. The income statements using the two different methods both show net income of €53,410.

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    Munich University

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    The document provides financial information for a manufacturing company as of December 31, 2018. It asks to prepare three statements: [1] a classified balance sheet, [2] an income statement using the cost of sales method, and [3] an income statement using the nature of expenses method. The balance sheet shows total assets of €125,800 including non-current assets of €69,500 and current assets of €56,300. Total liabilities are €47,500 and stockholders' equity is €58,300. The income statements using the two different methods both show net income of €53,410.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    1K views3 pages

    Exercises Financial Statements

    Uploaded by

    Naresh Sehdev
    The document provides financial information for a manufacturing company as of December 31, 2018. It asks to prepare three statements: [1] a classified balance sheet, [2] an income statement using the cost of sales method, and [3] an income statement using the nature of expenses method. The balance sheet shows total assets of €125,800 including non-current assets of €69,500 and current assets of €56,300. Total liabilities are €47,500 and stockholders' equity is €58,300. The income statements using the two different methods both show net income of €53,410.

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    Exercises Financial Statements

    Given are the following positions of a Manufacturing Company on the December 31, 2018.
    (Hint: Not all positions will be needed in a statement)

    Interest Expense € 2,000


    Administrative Expenses 27,000
    Beginning Retained Earnings 16.890
    Depreciation Expense 5,200
    Cash 26,900
    Trade Payable 3,300
    Decrease in Finished Goods 49,700
    Goodwill 20,000
    Rent Expense 7,200
    Research & Development Exp. 15,000
    Wage Expense 59,200
    Prepaid Rent 1,400
    Paid-in Capital 29,000
    Material Expenses 45,000
    Trade Receivable 13,600
    Wages Payable 3,200
    Equipment 49,500
    Sales 249,600
    Selling Expenses 35,000
    Inventory 14,400
    Long-term Debt 20,000
    Utility Expenses 5,000
    Dividends Declared 21,000
    Cost of Sales 94,300
    Dividends Payable 21,000
    Taxes 30%

    1. Prepare a classified Balance Sheet for the company.


    2. Prepare a Income Statement using the “Cost of Sales”-Method
    3. Prepare a Income Statement using the “Nature of Expense”-Method
    Solution

    1) Balance Sheet
    December 31, 2018

    Non-Current Assets:
    Goodwill €20,000
    Equipment 49,500 69,500
    Current Assets:
    Inventory 14,400
    Trade Receivable 13,600
    Prepaid Rent 1,400
    Cash €26,900
    Total Current Assets €56,300
    Total Assets €125,800

    Stockholders' Equity:
    Paid-in Capital 29,000
    Retained Earnings 49,300
    Total Stockholders' Equity 58,300
    Non-Current Liabilities:
    Long-term Debt 20,000
    Current Liabilities:
    Trade Payable € 3,300
    Dividends Payable 21,000
    Wages Payable 3,200
    Total Current Liabilities €27,500
    Total liabilities 47,500
    Total Liabilities and Stockholders' Equity €125,800
    2) Income Statement (Cost of Sales Method)
    December 31, 2018

    Sales €249,600
    Cost of Sales 94,300
    Gross Profit 155,300
    Selling Expenses 35,000
    Administrative Exp. 27,000
    Research & Development Exp. 15,000
    Operative Profit 78,300
    Interest Expenses 2,000
    Taxes 22,890
    Net Income 53410

    Income Statement (Nature of Expenses Method)


    December 31, 2018

    Sales €249,600
    Decrease in Finished Goods 49,700
    Material Expenses 45,000
    Wage Expense 59,200
    Depreciation Expense 5,200
    Rent Expense 7,200
    Utility Expenses 5,000
    Operative Profit 78,300
    Interest Expenses 2,000
    Taxes 22,890
    Net Income 53,410

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