# Equity Articulation of Financial Statements

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CHAPTER 2 BASIC FINANCIAL STATEMENTS
OVERVIEW OF BRIEF EXERCISES, EXERCISES AND CRITICAL THINKING CASES
Brief Exercises B. Ex. 2.1 B. Ex. 2.2 B. Ex. 2.3 B. Ex. 2.4 B. Ex. 2.5 B. Ex. 2.6 B. Ex. 2.7 B. Ex. 2.8 B. Ex. 2.9 B. Ex. 2.10 Learning Objectives 3 3 4 4 5 5 6 8 8 7 Learning Objectives 3

Topic Recording transactions Recording transactions Computing retained earnings Computing total liabilities Computing net income Computing net income Computing change in cash Alternative forms of equity Alternative forms of equity Articulation of financial statements

Skills Analysis, communication Analysis, communication Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis

Exercises 2.1

2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9
Students are asked to write a sentence or two explaining the nature of each transaction. 2.3 A,B Goldstar Communications/Delta Corporation Show in tabular form the effects of various business transactions upon the accounting equation. (Problem 2–4 is an alternate.) 2.4 A,B Rankin Truck Rental/Smith Trucking Show in tabular form the effects of various business transactions upon the accounting equation. (Alternate to Problem 2–3.) 15 Easy

15 Easy

15 Medium

15 Medium

© The McGraw-Hill Companies, Inc., 2010 Overview and Desc. of Cases

Problems (cont 'd)
2.5 A,B Here Come the Clowns/Circus World Preparation of a balance sheet for a circus—an entity with an unusual variety of asset accounts. Also requires students to explain the effects upon this balance sheet of a fire that destroys one of the assets. (Problem 2–6 is an alternate.) Wilson Farms, Inc./Apple Valley Farms Prepare a balance sheet for a farm—an entity with a wide variety of assets. Also, explain the effects upon this balance sheet of the destruction of one of the assets. (Alternate to Problem 2–5.) 20 Medium

2.6 A,B

20 Medium

2.7 A,B

The Oven Bakery/The City Butcher 35 Medium Prepare a balance sheet from an alphabetical listing of accounts, and prepare a second balance sheet and a statement of cash flows after some additional transactions. Evaluate the company’s relative solvency at each date. The Sweet Soda Shop/The Candy