Equipment 320,000
Operating expenses 1,000,000
Cash 280,000
Dividends 80,000
Supplies 40,000
Accounts payable 160,000
Accounts receivable 400,000
Retained earnings, 1/1/22 600,000
Benedict’s retained earnings on December 31, 2022 are
a. $600,000.
b. $720,000.
c. $640,000.
d. $ 40,000.
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting
Solution: $600,000 + ($1,120,000 - $1,000,000) - $80,000 = $640,000
(Beg. R/E + (ser. rev. – oper. exp.) – div.)
158. Benedict Company compiled the following financial information as of December 31, 2022:
Service revenue $1,120,000
Common stock 240,000
Equipment 320,000
Operating expenses 1,000,000
Cash 280,000
Dividends 80,000
Supplies 40,000
Accounts payable 160,000
Accounts receivable 400,000
Retained earnings, 1/1/22 600,000
Benedict’s stockholders’ equity on December 31, 2022 is
a. $840,000.
b. $880,000.
c. $640,000.
d. $960,000.
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting
Solution: $240,000 + [$600,000 + ($1,120,000 - $1,000,000) - $80,000] = $880,000
(Com. st. + beg. R/E + (ser. rev – oper. exp.) – div.)
159. The heading on the statement of cash flows identifies all of the following except
a. the preparer of the statement.
b. the company
c. the time period covered by the statement.
d. the type of statement.
Ans: A, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
160. All of the following are interrelationships that are important to understand when preparing financial statements except