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Ms 2025 Assignment 02

The document outlines an assignment for a Financial Accounting course, focusing on the DEF Company and Benno's Hall of Mirrors. It requires students to analyze financial transactions, prepare financial statements, and solve for missing data in balance sheets and income statements. The assignment is due on January 23, 2025.

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62 views3 pages

Ms 2025 Assignment 02

The document outlines an assignment for a Financial Accounting course, focusing on the DEF Company and Benno's Hall of Mirrors. It requires students to analyze financial transactions, prepare financial statements, and solve for missing data in balance sheets and income statements. The assignment is due on January 23, 2025.

Uploaded by

613580
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Financial Accounting

Spring 2025
Professor Amir Ziv

Assignment #2

To be completed by Thursday, January 23, 2025

Question 1: The DEF Company

The DEF Company had started its operations in 2022. The balance sheet for December 31,
2022, showed the following accounts balances (there were no other accounts listed):
Accounts receivable 45, Advances from customers 40, Accumulated depreciation
10, Paid in capital 500, Retained earnings 57, Property plant and equipment
(gross) 200, Inventory 75, Accounts payable 40, Cash 309, Prepaid rent (?).

During the 2023 the following transactions occurred:


1. DEF purchased $375 worth of inventory on account.
2. Payments on Accounts payable were $365.
3. Cash sales were $260; credit sales were $360.
4. Ending inventory was $59.
5. Depreciation expense was $20.
6. Collections from customers (not including cash sales) were $312.
7. The Prepaid rent had expired during the year.
8. DEF hired one employee, who worked for the entire year at $4 per month. At the end of
the year DEF owes its employee $6.
9. Dividend of $24 was declared and paid during 2023.
10. On the last day of the year, DEF gave a loan of $50 to its twin sister company, ABC.
11. Advances from customers account remained intact during 2023.

Copyright © 2025
You may only share these materials with current term students.
Required:
a. What was the balance of the Prepaid rent account on December 31, 2022?
b. Record entries for all transactions occurred during 2023.
c. Prepare an Income Statement for the year ended December 31, 2023.
d. Prepare a Balance Sheet for December 31, 2023.
e. Prepare a Statement of Cash Flows for the year ended December 31, 2023.

Question 2: Benno's Hall of Mirrors

You are given incomplete beginning and ending balance sheets, an incomplete income statement,
and an incomplete statement of cash receipts and disbursements for Benno's Hall of Mirrors, Inc.
All property, plant, and equipment that is retired is fully depreciated.

Balance Sheets
Year 0 Year 1
Assets:
Cash 1,000 (a)
Accounts Receivable (b) 5,000
Inventory 6,000 2,000
PP&E 12,000 10,000
Less Acc. Depreciation (c) (d)
Net PPE 10,000 (e)
Total Assets (f) (g)
Liabilities:
Accounts Payable 5,000 (h)
Wages Payable 3,000 4,000
Bond Payable (i) 7,000
Total Liabilities (j) (k)
Shareholders Equity:
Common Stock 2,000 2,000
Retained Earnings (l) (m)
Total Shareholder Equity (n) 6,000
Total Liabilities and Equity (o) (p)
Income Statement (Year 1)

Sales Revenue 15,000


Less: Cost of Goods Sold 6,000
Wage Expense (q)
Interest Expense (r)
Depreciation Expense 1,000
Tax Expense 1,000
Net Income (s)

Cash Receipts and Expenditures (Year 1)

Receipts:
Collections of Accounts Receivable 12,000
Issuance of Bonds 1,000
Expenditures:
Payment of Accounts Payable 5,000
Wage Payments 3,000
Tax Payments (t)
Interest Payments 1,000
Dividend Payments (u)

Note: These are all the cash receipts and expenditures.

Required: Solve for the missing pieces of data.

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