Leader: Ammee
Course: Acct 284
Instructor: Whittle
Date:
Group Activity:
Chapter 1
Supplemental Instruction
Iowa State University
1) Part A: Indicate (with an X) whether each account would be reported as a revenue or
expense item on the income statement, an item on the statement of retained earnings,
or not on either statement of Cyclone Corporation for the year ended December 31,
2010.
Income Statement
Amount
Accounts
Receivable
Advertising
Expense
General &
Administrative
Expense
Dividends
Utilities Expense
Interest Expense
Insurance Expense
Inventory
Marketing & Other
Operating
Expenses
Beginning Retained
Earnings
Ending Retained
Earnings
Sales Revenue
$
Revenues
Expenses
Statement of
Retained
Earnings
Not on Either
Statement
X
210
81
X
425
X
X
110
73
X
104
X
50
X
X
130
X
94
?
X
1,080
X
1,085
X
Part B: Using information from Part A, prepare an income statement for Cyclone
Corporation for the year ended December 31, 2010.
Use the template on page 3 to create your income statement. If you get stuck, Exhibit 1.2 on page 10 of the
textbook may be of assistance. Don’t be afraid to ask for help! 
Part C: After checking your answers to Parts A and B with the SI Leader, compute the
amount of beginning retained earnings.
Ending Retained Earnings = Beginning Retained Earnings + Net
Income – Dividends
x + $258 - $110 = $1,080
x = $932
Supplemental Instruction
1060 Hixson-Lied Student Success Center  294-6624  www.si.iastate.edu
If your group doesn’t finish these two problems during the session, they make
great self-study! Solutions will be posted online at www.si.iastate.edu.
2) This summer’s flood destroyed some accounting records at Campanile Creations, Inc.,
so Cy, the company’s manager, is trying to piece together some of the historical
information. On December 31, 2010, the company had retained earnings of $140,000.
The company paid $15,000 in dividends during the year, and reported net earnings of
$60,000. How much was retained earnings on January 1, 2010?
Ending Retained Earnings = Beginning Retained Earnings + Net
Income – Dividends
$140,000 = x + $60,000 – $15,000
x = $95,000
3) You are the manager of ISU Dining’s catering segment, and you are working on the
segment’s income statement for the month of December. The following transactions
occurred during the month:
Dec. 7
Dec. 10
Dec. 22
Dec. 26
Delivered $4,000 of food to the College of Business for an accounting
conference. Cash was received by the delivery person.
Received a check for $500 from a customer who had bagels and coffee
delivered on November 29 for a staff meeting.
Delivered sub sandwiches to a student organization meeting. The
campus organization accounting office will verify the expense and send a
check for $150 by January 15th.
Received a $300 cash deposit from a couple wanting catering service for
a wedding that will occur on April 5th.
How much revenue should ISU Dining’s catering segment report for the month of
December?
$4,000 + $150 = $4,150
Use this template to complete Exercise 1, Part B.
Cyclone Corporation
Income Statement
For the year ended December 31, 2010
Revenues
Sales Revenue
Total Revenues
Expenses
General & Admin. Expense
Interest Expense
Marketing & Other Expense
Advertising Expense
Utilities Expense
Insurance Expense
Total Expenses
Net Income
$
$
1,085
1,085
425
104
94
81
73
50
827
258