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Chapter 1 LAB Practice

M1-4 through M1-10 Make index cards, list Account Name on one side and the solution on the other . For example, exercises M1-4 through M1-8, ask you to classify as an Asset, Liability, Stockholders’ Equity, Revenue or Expense. M1-4 1. Accounts Payable- Liability. You can eliminate the duplicates. The point of these short exercises is to build your recognition of account name titles and their classification. This is used throughout the course and you won’t have a card to remind you.

M1-14 Preparing an Income Statement, Statement of Retained Earnings, and Balance Sheet

The following accounts are taken from the December 31, 2007, financial statements of Southwest Airlines, Inc. See page 30 for numbers

Prepare an income statement for the year ended December 31, 2007.

Revenues
Revenues

1. Prepare a statement of retained earnings for the period ended December 31, 2007

of retained earnings for the period ended December 31, 2007 2. Prepare a balance sheet at
of retained earnings for the period ended December 31, 2007 2. Prepare a balance sheet at
of retained earnings for the period ended December 31, 2007 2. Prepare a balance sheet at
of retained earnings for the period ended December 31, 2007 2. Prepare a balance sheet at
of retained earnings for the period ended December 31, 2007 2. Prepare a balance sheet at
of retained earnings for the period ended December 31, 2007 2. Prepare a balance sheet at
of retained earnings for the period ended December 31, 2007 2. Prepare a balance sheet at
of retained earnings for the period ended December 31, 2007 2. Prepare a balance sheet at

2. Prepare a balance sheet at December 31, 2007.

Assets Liabilities Total Liabilities Stockholders Equity Total Equity Total Liab & Equity
Assets
Liabilities
Total Liabilities
Stockholders Equity
Total Equity
Total Liab & Equity

E1-3 Preparing a Balance Sheet P31

Required: 1. Prepare the balance sheet as of November 1, 2008, solving for the missing amount.

Assets Liabilities Total Liabilities Stockholders Equity Total Equity Total Liab & Equity
Assets
Liabilities
Total Liabilities
Stockholders Equity
Total Equity
Total Liab & Equity

E1-4 Completing a Balance Sheet and Inferring Net Income p. 31

Required: 1. Complete the following balance sheet as December 31, 2009

Assets Liabilities Total Liabilities Stockholders Equity Total Equity Total Liabilities & Equity
Assets
Liabilities
Total Liabilities
Stockholders Equity
Total Equity
Total Liabilities & Equity

2. Using the retained earnings equation and an opening balance of $0, compute the amount of net income for the

year ended December 31, 2009.

amount of net income for the year ended December 31, 2009. 4. Assuming that Reader Direct
amount of net income for the year ended December 31, 2009. 4. Assuming that Reader Direct
amount of net income for the year ended December 31, 2009. 4. Assuming that Reader Direct
amount of net income for the year ended December 31, 2009. 4. Assuming that Reader Direct
amount of net income for the year ended December 31, 2009. 4. Assuming that Reader Direct
amount of net income for the year ended December 31, 2009. 4. Assuming that Reader Direct
amount of net income for the year ended December 31, 2009. 4. Assuming that Reader Direct
amount of net income for the year ended December 31, 2009. 4. Assuming that Reader Direct

4. Assuming that Reader Direct generates net income of $3,000 and pays dividends of $2,000 in 2010, what is

the ending retained earnings balance at December 31, 2010?

the ending retained earnings balance at December 31, 2010? E1-5 Labeling and Classifying Business Transactions. The
the ending retained earnings balance at December 31, 2010? E1-5 Labeling and Classifying Business Transactions. The
the ending retained earnings balance at December 31, 2010? E1-5 Labeling and Classifying Business Transactions. The
the ending retained earnings balance at December 31, 2010? E1-5 Labeling and Classifying Business Transactions. The
the ending retained earnings balance at December 31, 2010? E1-5 Labeling and Classifying Business Transactions. The
the ending retained earnings balance at December 31, 2010? E1-5 Labeling and Classifying Business Transactions. The
the ending retained earnings balance at December 31, 2010? E1-5 Labeling and Classifying Business Transactions. The
the ending retained earnings balance at December 31, 2010? E1-5 Labeling and Classifying Business Transactions. The

E1-5 Labeling and Classifying Business Transactions.

The following items relate to business transactions involving K Swiss, Inc. Identify the account title for each item and classify the item as Asset, Liability, Stockholders’ Equity, Revenue or Expense

Description

Account Title

Classification

Coins and Currency

   

Amounts K Swiss owes its suppliers

   

Amounts K Swiss can collect from customers

   

Amounts owed to bank for a loan to buy a building

   

Property on which buildings will be built

   

Amounts distributed from profits to stockholders

   

Amounts earned by K-Swiss by selling watches

   

Unused paper in K-Swiss head office

   

Cost of paper used up during month

   

Amounts contributed to K-Swiss by stockholders

   

E 1-9 Preparing an Income Statement and Balance Sheet p33

Revenues Expenses
Revenues
Expenses
Assets Liabilities Total Liabilities Stockholders Equity Total Equity Total Liabilities & Equity
Assets
Liabilities
Total Liabilities
Stockholders Equity
Total Equity
Total Liabilities & Equity

CP1-1 Preparing an Income Statement, Statement of Retained Earnings, and Balance Sheet p 36

1. Prepare an income statement for the year 2009.

TIP: Begin by classifying each account as asset, liability, stockholders' equity, revenue, or expense. Then

use the format shown in the chapter for presenting an income statement.

Revenues Expenses
Revenues
Expenses

2. Prepare a statement of retained earnings for the year ended December 31, 2009.

TIP: Because this is the first year of operations, the beginning balance in retained earnings will be zero.

the beginning balance in retained earnings will be zero. 3. Prepare a balance sheet at December
the beginning balance in retained earnings will be zero. 3. Prepare a balance sheet at December
the beginning balance in retained earnings will be zero. 3. Prepare a balance sheet at December
the beginning balance in retained earnings will be zero. 3. Prepare a balance sheet at December
the beginning balance in retained earnings will be zero. 3. Prepare a balance sheet at December
the beginning balance in retained earnings will be zero. 3. Prepare a balance sheet at December
the beginning balance in retained earnings will be zero. 3. Prepare a balance sheet at December
the beginning balance in retained earnings will be zero. 3. Prepare a balance sheet at December

3. Prepare a balance sheet at December 31, 2009.

TIP: The balance sheet reports the ending retained earnings balance from the statement of retained earnings.

Assets Liabilities Total Liabilities Stockholders Equity Total Equity Total Liab & Equity
Assets
Liabilities
Total Liabilities
Stockholders Equity
Total Equity
Total Liab & Equity

CP1-2 Interpreting the Financial Statements Refer to CP1-1.

1. Evaluate whether the company was profitable.

2. Evaluate whether the company could have paid a greater amount for dividends.

3. Evaluate whether the company is financed mainly by creditors or stockholders.

PA1-1 Preparing an Income Statement, Statement of Retained Earnings, and Balance Sheet

1. Prepare an income statement for the year 2010.

Revenues Expenses
Revenues
Expenses

2. Prepare a statement of retained earnings for the year ended December 31, 2010.

of retained earnings for the year ended December 31, 2010. 3. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2010. 3. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2010. 3. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2010. 3. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2010. 3. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2010. 3. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2010. 3. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2010. 3. Prepare a balance sheet at

3. Prepare a balance sheet at December 31, 2010.

Assets Liabilities Total Liabilities Stockholders Equity Total Equity Total Liabilities & Equity
Assets
Liabilities
Total Liabilities
Stockholders Equity
Total Equity
Total Liabilities & Equity

PA1-2 Interpreting the Financial Statements

Refer to PA1-1. Required:

1. Evaluate whether the company was profitable.

2. Evaluate whether the company could have paid a greater amount for dividends.

3. Evaluate whether the company is financed mainly by creditors or stockholders.

PA1-3 Preparing an Income Statement, Statement of Retained Earnings, and Balance Sheet

1. Prepare an income statement for the year 2006.

Revenues Expenses
Revenues
Expenses

2.

Prepare a statement of retained earnings for the year ended December 31, 2006

2. Prepare a statement of retained earnings for the year ended December 31, 2006
2. Prepare a statement of retained earnings for the year ended December 31, 2006
2. Prepare a statement of retained earnings for the year ended December 31, 2006
2. Prepare a statement of retained earnings for the year ended December 31, 2006
2. Prepare a statement of retained earnings for the year ended December 31, 2006
2. Prepare a statement of retained earnings for the year ended December 31, 2006
2. Prepare a statement of retained earnings for the year ended December 31, 2006
2. Prepare a statement of retained earnings for the year ended December 31, 2006

3. Prepare a balance sheet at December 31, 2006.

Assets Liabilities Total Liabilities Stockholders Equity Total Equity Total Liabilities & Equity
Assets
Liabilities
Total Liabilities
Stockholders Equity
Total Equity
Total Liabilities & Equity

4. Statement of cash flows will be covered in Chapter 12

PB1-1 Preparing an Income Statement & Balance Sheet (On your Own) Follow PA-1 as a guide

Revenues Expenses
Revenues
Expenses

1. Prepare a statement of retained earnings for the year ended December 31, 2008.

of retained earnings for the year ended December 31, 2008. 2. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2008. 2. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2008. 2. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2008. 2. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2008. 2. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2008. 2. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2008. 2. Prepare a balance sheet at
of retained earnings for the year ended December 31, 2008. 2. Prepare a balance sheet at

2. Prepare a balance sheet at December 31, 2008.

Assets Liabilities Total Liabilities Stockholders Equity Total Equity Total Liabilities & Equity
Assets
Liabilities
Total Liabilities
Stockholders Equity
Total Equity
Total Liabilities & Equity