Group Activity:
Chapter 1
Supplemental Instruction
Iowa State University
Leader:
Ammee
Course:
Acct 284
Instructor:
Whittle
Date:
1) Calculate the missing item in each of the following cases.
Case A
Case B
Case C
Assets
$16,000
?
$4,000
Liabilities
5,000
$22,000
?
Stockholders’ Equity
?
38,000
3,000
Case A:
Assets = Liabilities + Stockholders’ Equity
$16,000 = $5,000 + x
x = $11,000
Case B:
Assets = Liabilities + Stockholders’ Equity
x = $22,000 + 38,000
x = $60,000
Case C:
Assets = Liabilities + Stockholders’ Equity
$4,000 = x + $3,000
x = $1,000
2) Part A: Indicate (with an X) whether each account would be reported as an asset, liability, or
stockholders’ equity item on the balance sheet of Cyclone Corporation as of December 31, 2010. If the
account would not be reported on the balance sheet, check the appropriate column.
Amount
Accounts
Payable
Accounts
Receivable
Asset
Stockholders’
Equity
Not on
Balance Sheet
X
$540
210
X
Buildings
790
X
Cash
640
X
Contributed
Capital
Cost of Goods
Sold
Liability
X
950
230
X
Dividends
110
X
Income Tax
Expense
50
X
Inventory
130
X
Investments
370
X
Land
840
X
Long-term
Debt (due in
2014)
Notes Payable
(due in 2010)
260
X
250
X
Revenues
930
Supplies
100
Retained
Earnings
?
X
X
X
Part B: Using the information from Part A, determine the amount of retained earnings as of December
31, 2010.
Assets = Liabilities + Stockholders’ Equity
Assets = Liabilities + (Contributed Capital + Retained Earnings)
$3,080 = $1,050 + ($950 + Retained Earnings)
Retained Earnings = $1,080
Part C: After checking your answers to Parts A and B with the SI Leader, prepare a balance sheet on
the attached page for Cyclone Corporation as of December 31, 2010.
(If you are stuck, Exhibit 1.4 on page 12 of the textbook might be of assistance. Don’t be afraid to ask for help!)
3) Use the following information for Campanile Creations, Inc. to work parts A through D.
If your team doesn’t have time to complete this during SI, this exercise makes great self-study practice! Answers will
be posted on the SI website.
(If you get stuck, look back to the formulas for each of the financial statements. Exhibit 1.7 on page 16 of the textbook is a
good resource.)
Assets
$54,600
Ending Cash
$16,224
Beginning Cash
12,456
Ending Retained Earnings
28,220
Beginning Retained Earnings
25,820
Expenses
27,600
Cash Flows from Investing
Activities
(5,430)
Liabilities
21,250
Cash Flows from Financing
Activities
(6,512)
Net Income
Cash Flows from Operating
Activities
15,710
Revenue
31,500
Stockholders’ Equity
33,350
Dividend
1,500
Part A: Determine that the balance sheet is in balance.
Assets = Liabilities + Stockholders’ Equity
$54,600 = $21,250 + $33,350
The balance sheet is in balance.
Part B: Determine that net income amount was properly calculated.
Net Income = Revenues – Expenses
3,900
$31,500 - $27,600 = $3,900
Net income was properly calculated.
Part C: Determine what caused changes in retained earnings during the year.
Ending RE = Beginning RE + Net Income – Dividends
$25,820 + $3,900 - $1,500 = $28,220
The changes in retained earnings can be accounted for using the formula above.
Part D: Determine what caused the change in the cash account.
Change in Cash = Cash Flows from Operating Activities + Cash Flows from
Investing Activities + Cash Flows from Financing Activities
$15,710 + (-$5,430) + (-$6,512) = $3,768
Beginning Cash + Change in Cash = Ending Cash
$12,456 + $3,768 = $16,224
Campanile Creations, Inc.
Balance Sheet
July 31, 2010
Assets
Cash
Accounts Receivable
Inventory
Supplies
Investments
Land
Buildings
Total Assets
Liabilities
Accounts Payable
Notes Payable
Long-term Debt
Total Liabilities
Stockholders’ Equity
Contributed Capital
Retained Earnings
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
$ 640
210
130
100
370
840
790_____
$3,080 _ ___
$ 540
250
260___ __
1,050 _____
950
1,080_ ____
2,030_ ____
$3,080 _____