E1-1 LO1-1, 1-2 Matching Definitions with Terms or Abbreviations Match each definition with its related term or abbreviation by entering the appropriate letter in the space provided. Term or Abbreviation (1) SEC (2) Audit (3) Sole proprietorship (4) Corporation (5) Accounting (6) Accounting entity (7) Audit report (8) Publicly traded (9) Partnership (10) FASB (11) CPA (12) Unit of measure (13) GAAP Definition A. A system that collects and processes financial information about an organization and reports that information to deci- sion makers. B. Measurement of information about an entity in terms of the dollar or other national monetary unit. C. An unincorporated business owned by two or more persons D. The organization for which financial data are to be collected (separate and distinct from its owners). E. An incorporated entity that issues shares of stock as evidence of ownership. F. An examination of the financial reports to ensure that they represent what they claim and conform with generally accepted accounting principles. G. Certified public accountant H. An unincorporated business owned by one person I. A report that describes the auditor's opinion of the fairness of the financial statement presentations and the evidence gathered to support that opinion. J. Securities and Exchange Commission K. Financial Accounting Standards Board. L. A company with stock that can be bought and sold by investors on established stock exchanges M. Generally accepted accounting principles E1-2 LO1-1 Matching Financial Statement Items to Financial Statement Categories According to its annual report, P&G's billion-dollar brands include Pampers Tide, Ariel, Always, Pantene, E1-3 LO1-1 -Matching Financial Statement Items to Financial Statement Categories Tootsie Roll Industries is engaged in the manufacture and sale of candy. Major products include Tootsie Roll, Tootsie Roll Pops, Tootsie Pop Drops, Tootsie Flavor Rolls, Charms, and Blow.Pop lollipops. The following items were listed on Tootsie Roll's recent income statement and balance sheet. Mark each item from the balance sheet as an asset (A). liability (L) or shareholders' equity (SE), item and mark each item from the income statement as a revenue (R) or expense (E) item. (1) Bank loans (10) Machinery and equipment (2) Selling, marketing and administrative expenses (11) Net product sales (3) Accounts payable (12) Inventories (4) Dividends payable (13) Trademarks (5) Retained Cornings (14) Buildings (6) Cash and cash equivalents (15) Land (7) Accounts receivable (16) Income taxes payable (8) Provision for income taxes (17) Rental and royalty costs (9) Product cont of soods sold (18) Investments in other companies) E1-6 LO1-1 Analyzing Revenues and Expenses and Preparing an Income Statement Assume that you are the owner of Campus Connection, which specializes in items that interest students. At the end of January of the current year, you find (for January only) this information: a Sales, per the cash register tapes, of $150,000, plus one sale on credit (a special situation) of $2,500. d. With the help of a friend (who majored in accounting), you determine that all of the goods sold during January cost $70,000 to purchase. c. During the month, according to the checkbook, you paid $37,000 for salaries, rent, supplies, advertising. and other expenses; however, you have not yet paid the $900 monthly utilities for January Required: On the basis of the data given (disregard income taxes), what was the amount of net income for January? Show computations. (Hint: A convenient form to use has the following major side captions: Revenue from Sales, Expenses, and the difference--Net Income.) P1-1 Preparing an Income Statement, Statement of Stockholders' Equity, and Balance Sheet LO1-1 (AP1-1) Assume that you are the president of Highlight Construction Company. At the end of the first year of operations (December 31), the following financial data for the company are available: Cash $25,600 Receivables from customers (all considered collectible) 10,800 Inventory of merchandise (based on physical count and priced at cost) 81,000 Equipment owned, at cost less used portion 42,000 Accounts payable owed to suppliers 46,140 Salary payable (on December 31. this was owed to an employee who will be paid on January 10) 2.520 Total sales revenue 128.400 Expenses, including the cost of the merchandise sold (excluding income taxes) 80,200 Income tax expense at 30% * Prelax income, all paid during the current year Common stock (December 31) 87,000 Dividends declared and paid during the current year 10,000 (Note: The beginning balances in Common Stock and Retained Earnings are zero because it is the first year of operations) Required Using the financial statement exhibits in the chapter as models and showing computations 1. Prepare a summarized income statement for the year 2. Prepare a statement of stockholders equity for the year. 3. Prepare a balance sheet at December 31