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Suppose the following items were taken from the balance sheet of Nike, Inc. (All items are in millions.)
Instructions
(a) Classify each of these items as an asset, liability, or stockholders' equity and determine the total
dollar amount for each classification.
(b) Determine Nike's accounting equation by calculating the value of total assets, total liabilities, and
total stockholders' equity.
(c ) To what extent does Nike rely on debt versus equity financing?
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with
Liabilities
Notes payable Value
Accounts payable Value
Mortgage payable Value
Income taxes payable Value
Total liabilities ?
Stockholders' equity
Common stock Value
Retained earnings Value
Total stockholders' equity ?
Cash $4,600
Accounts receivable 4,000
Service revenue 7,500
Supplies 2,400
Advertising expense 400
Equipment 26,000
Common Stock 22,100
In June, the company issued no additional stock but paid dividends of $1,400.
Instructions
(a) Prepare an income statement and retained earnings statement for the month of June and a balance
at June 30, 2017.
(b) Briefly discuss whether the company's first month of operations was a success.
(c ) Discuss the company's decision to distribute a dividend.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with
After you have completed P1-3A consider the following additional question.
1. Assume that service revenue and salaries and wages changed to $9,000 and $1,800 respectively.
The additional revenue earned were all on account. Revise the financial statements to reflect these
ment and balance sheet; discuss results
nvestment in the company of $22,100 cash.
pany at June 30, 2017, and the revenues and
dends of $1,400.