Anonymous
Anonymous asked in Education & ReferenceHomework Help · 9 years ago

# Financial accounting question from Horngren book?

The book : Introduction to financial accounting , horngren

Question - The following data pertain to Franciso Corporation. Total assets at january 1, 20X1 were \$110,000 ; at December 31, 20X1, \$ 124,000. During 20X1, sales were \$354,000 , cash dividends were \$5000, and operating expenses (EXCLUSIVE of the cost of goods sold) were 200,000. Total liabilities at December 31,20X1 were \$55,000 ; at january 1, 20X1, \$50,000. There was no additional capital paid in during 20X1.

Compute the following :

(1)Stockholder's equity, January 1, 20X1 and December 31,20X1

(2)Net Income for 20X1

(3)Cost of the goods sold for 20X1

PS : Introduction to financial accounting by Horngren, Sundem, Elliot book has good theory but it does not give hints or solutions at the end and there is no students manual. The instructor manual is impossible to get.

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• JKRB
Lv 7
9 years ago

Your textbook may not have went over these exact problems, but I'm sure it went over the basic accounting equation and what goes into calculating net income and stockholders' equity. This problem just tests your knowledge of that.

(1)Stockholder's equity, January 1, 20X1

Basic accounting equation

Assets = Liabilities + Stockholders' Equity

110,000 = 50,000 + Stockholders' Equity must be 70,000

December 31,20X1

124,000 = 55,000 + Stockholders' Equity must be 69,000

(2)Net Income for 20X1

Since net income increases Stockholders' Equity and dividends decrease it:

Jan. 1 Stockholders' Equity + Net Income - Dividends = Dec. 31 Stockholders' Equity

70,000 + Net Income - 5,000 = 69,000

Net Income = \$4,000

(3)Cost of the goods sold for 20X1

Sales - Cost of Goods Sold - Operating Expenses = Net Income

354,000 - Cost of Goods Sold - 200,000 = 4,000

Cost of Goods Sold = \$150,000