Unit 5: WORKSHEETS

WORKSHEET 1
The Contents of Financial Statements

1. In the space provided, write the name of the financial statement you would
look at to find the following information about a business:

The results of operations for a period of time

Sources and uses of cash - how cash was

obtained and what it was used for during
a period of time

The resources (assets) of the business and

the claims against those resources (liabilities)

2. Below are the names used to describe six financial statement items. In the
spaces provided, write what you understand each of these terms to mean:

Asset

Expense

Liability

Owners’ Equity

Net Income

Revenue
WORKSHEET 1 (cont’d)

3. Below are parts of the Equity section of the Balance Sheets of three
different businesses:

A.
COMPANY A
Share Capital $12,000
Retained Earnings 9,000

Total $21,000

B.
COMPANY B
L. Lane, Capital $21,000

C.
COMPANY C

F. Francis, Capital $ 8,000

G. Garrison, Capital 6,000
H. Harrison, Capital 7,000

$21,000

a) Which company is a sole proprietorship?

b) Which company is a partnership?

c) Which company is a corporation?

d) Which of the three companies would be likely to show Income Tax

Expense
in the Income Statement and Income Tax Payable on the Balance
Sheet?

Explain why:
 e) When would a business have a "negative" equity figure and what does
it indicate?
 WORKSHEET 1 (cont’d)

4. Below is a list, in alphabetical order, of items found in the financial

statements of a typical
small business.

Using the key below, identify in which part of the financial statements each
of these items
would be found. If you think that an item could be found in more than one
place in the financial statements, give what you think is the most likely
answer. For example, “Depreciation” must be an Expense Account (Income
Statement), because Accumulated Depreciation is also listed, which is a
Balance Sheet item. The answers for several items have been provided to
guide you.

KEY: DIFFERENT "PARTS" OF FINANCIAL STATEMENTS

CA = Current Asset LL = Long-term Liability

FA = Fixed Asset OE = Owners' Equity
OA = Other Asset R = Revenue
CL = Current Liability E = Expense

LIST BELOW THE ABBREVIATION FOR THE “PART” FROM WHICH EACH
ITEM COMES
AND INDICATE WHETHER EACH IS A BALANCE SHEET(BS) OR
STATEMENT(IS) ITEM.

(Several answers are provided to help you get started)

BS or BS or
“Part” IS? “Part” IS?
CA Accounts Receivable BS Office Salaries Payable
Accounts Payable Office Supplies on Hand
FA Accumulated Depreciation BS Office Supplies Expense
Advertising Expense Loan Payable (due in 2 mo.)
Capital Sales
Cash Utilities Expense
E Depreciation Expense IS Drawings
Fees Earned Prepaid Insurance
Insurance Expense Rent Expense
Inventory Prepaid Rent
Office Equipment Utilities Deposit
Office Salaries Expense Mortgage
WORKSHEET 2
Preparation of Financial Statements for a Business

Listed below are the figures for the financial statement items for Keith Sales
Company as at
December 31, 2005, the end of the Company’s fiscal year. This list is a “trial
balance”, a form
in which a bookkeeper would summarize the figures at the end of the year.

You will notice that the Assets are listed first, followed by the Liabilities, Owners'
Equity, Revenues and Expenses in that order. This is standard practice and
makes it easier to prepare the financial statements.

You may also have noticed that the figures for Assets and Expenses are listed in
the left column while the figures for Liabilities, Capital and Revenue are listed in
the right column. This is standard practice.

Keith Sales Company

Trial Balance
as at December 31, 2005

Cash $ 6,000
Accounts Receivable 15,000
Inventory (ending Inventory) 45,000
Office Supplies on hand 2,500
Store Equipment 26,000
Accumulated Depreciation - Store Equipment $ 9,000
Accounts Payable 12,000
Salaries Payable 1,500
Mack Keith, Capital, December 31, 1998 52,000
Sales 200,000
Cost of Goods Sold 140,000
Salaries Expense 15,000
Rent Expense 12,000
Utilities Expense 2,000
Advertising Expense 6,500
Depreciation Expense 4,500

Totals $ 274,500 $ 274,500

Instructions: Use the information above to prepare an Income Statement, a

Statement
of Owners' Equity and a Balance Sheet in the spaces provided on
the following pages.

Note that the left column (debit) items are equal in total to the
right column (credit) items; hence, the term "Trial Balance".
WORKSHEET 2 (cont’d)

Keith Sales Company

Income Statement
for the Year Ended December 31, 2005
WORKSHEET 2 (cont’d)

Keith Sales Company

Statement of Owners' Equity
for the Year Ended December 31, 2005
WORKSHEET 2 (cont’d)

Keith Sales Company

Balance Sheet
as at December 31, 2005

NOTE: Your total assets must equal the total liabilities plus owners'
equity.
 The owners' equity figure should come from the Owners' Equity
Statement
on the previous page.
OTHER ITEMS TO SUBMIT
WITH MODULE 6 WORKSHEETS

 Exercise in Fall Student Handout Package: “Adam Smith Repair Service”.

 Exercise in Fall Student Handout Package: “Hockey Haven”.

 Exercise in Fall Student Handout Package: L. Norwood”.

Suggested:
Remove the SB102 Module 1 Lecture Notes “Glendale Market” from the Fall Student
Handout Package and attach to your SB102 Module 1 notes for study purposes.