Management Accounting – I (Section A, B &H)

Term I (2021-22)

To be practiced between Session 2 and Session 3 of Financial Accounting

Exercise: 1-1.

As of December 31, Charles Company had $12,000 in cash, held $95,000 of inventory, and owned
other items that originally cost $13, 000. Charles Company also had borrowed $40,000 from First
City Bank. Prepare a balance sheet for Charles Company as of December 31. Be sure to label each
item and each column with appropriate terms.

Charles Company

Balance Sheet
As on 31 Dec 2010
Assets
Cash = $12,000
Inventory = $95,000
Total current Assets =$107,000
Property, Plant & Equipments = $13,000
Total Assets = $120,000

Liabilities:
Total Current Liabilities =$0
Long term liabilities:
Loan from Bank = $40,000
Total Liabilities = $40,000

Equity:
Total Owner's Equity = $80,000
Total Liabilities & Owner's Equity = $120,000

Owner's equity = Total Assets

Exercise: 1-2.

Selected balance sheet items are shown for the Microtech Company. Compute the missing amounts
for each of the four years. What basic accounting equation did you apply in making your
calculations?

Year 1 Year 2 Year3 Year 4

Current Assets $113,624 $90,442 $85,124 $69,090
Noncurrent assets $410,976 198,014 162,011 151,021
Total assets $524,600 $ 288,456 $ 247,135 $220,111
Current liabilities $56,142 $40,220 $ 15,583 $ 17,539
Noncurrent liabilities $240,518 $78,585 60,100 30,222
Paid-in capital 214,155 173,295 170,000 170,000
Retained earnings 13,785 (3,644) 1,452 2,350
Total liabilities and owners’ equity $524,600 $288,456 $ 247135 $220,111

1
YEAR 1 NON CURRENT ASSESTS = TOTAL ASSETS – CURRENT ASSETS
YEAR 1 NON CURRENT LIABILITIES = TOTAL LIABILITIES AND OWNER EQUITY – CURRENT LIABILITIES – OWNERS EQUITY
YEAR 2 CURRENT ASSETS = TOTAL ASSESTS – NON CURRENT ASSETS
YEAR 2 TOTA; ASSESTS = TOTAL LIABILITIES AND OWNERS EQUITY
YEAR 2 NON CURRENT LIABILITIES = TOTAL LIABILITIES AND OWNERS EQUITY – CURRENT LIABILITIES – OWNERS EQUITY
YEAR 3 TOTAL ASSETS = CURRENT ASSETS + NON CURRENT ASSETS
YEAR 3 CURRENT LIABILITIES = TOTAL LIABILITIES AND OWNERS EQUITY – NON CURRENT LIABILITIES – OWNERS EQUITY
YEAR 3 TOTAL LIABILITIES AND OWNERS EQUITY = TOTAL ASSETS
YEAR 4 CURRENT ASSETS = TOTAL ASSETS – NON CURRENT ASSETS
YEAR 4 CURRENT LIABILITIES = TOTAL LIABILITIES AND OWNERS EQUITY - NON CURRENT LIABILITIES – OWNERS EQUITY

Exercise: 1-3.
Selected income statement items are shown for Astrotech Company. Compute the missing amounts
for each of the four years. What basic accounting equation did you apply in making your
calculations?

(Hint: To estimate the Year 4 missing numbers, compute the typical percentage each expense item is
of sales for Years 1 to 3 and apply the percentage figure for each expense item to Year 4’s sales.)

Year 1 Year 2 Year 3 Year 4

Sales $12,011 $11,968 $11,545 $10,000
Cost of goods sold 3,011 2,992 2,886 2,500
Gross margin 9,000 8,976 8,659 7,500
Other expenses 6,201 6,429 6,296 5,300
Profit before taxes 2,799 2,547 2,363 2,200
Tax expense 1,120 1,019 945 880
Net income $1,679 $1,528 $1,418 $1,320

Gross margin = sales – COGS

Profit before Tax = Gross margin – other expenses

Net income = Profit before tax – Tax expense

Exercise 1.4:
Using the information given, calculate the missing amount in each of the independent cases below:

  a. b. c.
Current Assets $31,500 $39,000 $45,000
Noncurrent Assets $36,000 $60,000 $66,000

2
Current Liabilities $21,000 $15,000 $1,500
Noncurrent Liabilities $18,000 $30,000 $10,500
Contributed Capital $16,500 $33,000 $33,000
Retained Earnings $12,000 $21,000 $66,000
Shareholders' Equity $28,500 $54,000 $99,000

Exercise 1.5:
Using the information given, calculate the missing amounts in each of the independent cases below:

  a. b. c.
Assets $105,000 $288,000 $198,000
Liabilities $36,000 $ 90,000 $132,000
Contributed Capital $45,000 $174,600 $ 48,000
Retained Earnings 1/1 $19,200 $0 $ 6,000
Net Income $10,800 $45,000 $33,000
Dividends $6,000 $21,600 $21,000
Retained Earnings,
$24,000 $23,400 $18,000
12/31

Exercise 1.6:

Selected balance sheet amounts for Georgia-Pacific Corporation, a forest products company, for four
recent year appear below (amounts in $ millions).

Year 8 Year 9 Year 10 Year 11

Non-current assets 5,223 5,227 10,294 9,060
Shareholders’ equity 2,635 2,717 2,975 2,736
Total assets 7,115 7,056 12,060 10,622
Current liabilities 1,013 924 2,535 2,722
Current assets 1,892 1,829 1,766 1,562
Noncurrent liabilities 3,467 3,474 6,550 5,164
Total liabilities and shareholders’ equity 7,115 7,056 12,060 10,622
a
Current Assets – Current Liabilities = –$769.
b
Current Assets – Current Liabilities = –$1,160.

You are required to compute the missing balance sheet amounts for each of the four years.