1 EXERCISES Ex. 4–1 e, c, g, b, f, a, d Ex. 4–2 a. Income statement: 4, 8, 9 b. Balance sheet: 1, 2, 3, 5, 6, 7, 10 Ex. 4–3 a. Asset: 1, 4, 5, 6, 10 b. Liability: 9, 12 c. Revenue: 2, 7 d. Expense: 3, 8, 11 Ex. 4–6 ITHACA SERVICES CO. Work Sheet For the Year Ended January 31, 2006 Adjusted Income Balance Trial Balance Statement Sheet Account Title Dr. Cr. Dr. Cr. Dr. Cr. 1 Cash 8 8 1 2 Accounts Receivable 57 57 2 3 Supplies 3 3 3 4 Prepaid Insurance 6 6 4 5 Land 50 50 5 6 Equipment 32 32 6 7 Accum. Depr.—Equip. 7 7 7 8 Accounts Payable 26 26 8 9 Wages Payable 1 1 9 10 Capital Stock 20 20 10 11 Retained Earnings 92 92 112 12 Dividends 8 8 12 13 Fees Earned 67 67 13 14 Wages Expense 17 17 14 15 Rent Expense 8 8 15 16 Insurance Expense 6 6 16 17 Utilities Expense 6 6 17 18 Depreciation Expense 5 5 18 19 Supplies Expense 5 5 19 20 Miscellaneous Expense 2 2 20 21 Totals 213 213 49 67 164 146 21 21 Net income (loss) 18 18 21 22 67 67 164 164 223 Ex. 4–7 ITHACA SERVICES CO. Income Statement For the Year Ended January 31, 2006 Fees earned ........................................................................ $67 Expenses: Wages expense ........................................................... $17 Rent expense............................................................... 8 Insurance expense...................................................... 6 Utilities expense.......................................................... 6 Depreciation expense................................................. 5 Supplies expense........................................................ 5 Miscellaneous expense .............................................. 2 Total expenses ........................................................ 49 Net income.......................................................................... $18 ITHACA SERVICES CO. Retained Earnings Statement For the Year Ended January 31, 2006 Retained earnings, February 1, 2005................................ $ 92 Net income for the year ..................................................... $18 Less dividends ................................................................... 8 Increase in retained earnings ........................................... 10 Retained earnings, January 31, 2006 ............................... $102 ITHACA SERVICES CO. Balance Sheet January 31, 2006 Assets Liabilities Current assets: Current liabilities: Cash ............................. $ 8 Accounts payable..... $26 Accounts receivable ... 57 Wages payable.......... 1 Supplies ....................... 3 Total liabilities ...... $ 27 Prepaid insurance....... 6 Total current assets . $ 74 Property, plant, and Stockholders’ Equity equipment: Capital stock ................. $ 20 Retained earnings ........ 102 122 Land.............................. $50 Equipment.................... $32 Less accum. depr........ 7 25 Total property, plant, and equipment 75 Total liabilities and Total assets ..................... $149 stockholders’ equity $1494 Ex. 4–8 2006 Jan. 31 Accounts Receivable.......................................... 7 Fees Earned................................................... 7 31 Supplies Expense............................................... 5 Supplies ......................................................... 5 31 Insurance Expense............................................. 6 Prepaid Insurance ......................................... 6 31 Depreciation Expense ........................................ 5 Accumulated Depreciation—Equipment ..... 5 31 Wages Expense .................................................. 1 Wages Payable .............................................. 1 Ex. 4–9 2006 Jan. 31 Fees Earned ........................................................ 67 Income Summary........................................... 67 31 Income Summary................................................ 49 Wages Expense............................................. 17 Rent Expense................................................. 8 Insurance Expense........................................ 6 Utilities Expense............................................ 6 Depreciation Expense................................... 5 Supplies Expense.......................................... 5 Miscellaneous Expense ................................ 2 31 Income Summary................................................ 18 Retained Earnings......................................... 18 31 Retained Earnings .............................................. 8 Dividends ....................................................... 85 Ex. 4–10 LARYNX MESSENGER SERVICE Income Statement For the Year Ended June 30, 2006 Fees earned ........................................................................ $273,700 Operating expenses: Salaries expense......................................................... $77,100 Rent expense............................................................... 22,500 Utilities expense.......................................................... 6,500 Depreciation expense................................................. 5,200 Supplies expense........................................................ 2,750 Insurance expense...................................................... 1,500 Miscellaneous expense .............................................. 1,350 Total operating expenses ....................................... 116,900 Net income.......................................................................... $156,800 Ex. 4–11 SIROCCO SERVICES CO. Income Statement For the Year