Problem Set 1 Essay

Submitted By cyclonus77
Words: 546
Pages: 3

All numbers reported in millions
Total Assets: 6385.9
Total Liabilities: 2703.6
Total Equity: 3682.3
Total Liabilities and Equity: 6385.9
Total Assets = Total Liabilities including Equity.
Total Liabilities = 2703.6 = 42.3%
Total Assets 6385.9

Problem 2:
a) Part of the Chief Executive’s job is to certify that the financial statements are true and correct and no fraud or misrepresentation took place while reporting on the financial health of the company. Steve Jobs is also certifying that the numbers reported in the Financial Statements are accurate and the organization followed the specified laws and procedures in establishing and maintaining internal controls over financial reporting and auditing.
b) Prior to the enactment of the Sarbanes Oxley act, companies like Enron and Arthur Anderson committed fraud regarding the financial health of the organization. Congress felt that holding the CEO/CFO personally liable for the accuracy of Financial Statements would lead to stricter financial and internal controls within the organization.
c) Once they sign these documents, the CEO and CFO are personally liable for the accuracy and truthfulness of the Financial Statements. Criminal and other proceedings can be initiated against them if proof is found that these officers were involved in financial malpractice or fraud. Also, there’s the risk of getting fired and the negative impact on future employment opportunities.
Problem 3:
Income Statement:
Sales……………………..30,000
Wages Expense……..12,000
Net Income-----------18,000

Balance Sheet:
Cash…………………………………………….0.0
Accounts Receivable……………...30,000
Total Assets………………..…………30,000 Wages Payable…………………….. 12,000
Retained Earnings………………… 18,000
Total Liabilities & Equity….……30,000

Problem 4:
Income Statement:

Revenue (sale) (4000+14000)……..…18000
Operating Expenses:
Office rent……………………………………….3200
Salary………………………………………………4800
Net Income (Loss)…………………….….10000

Problem 5: Sales A/c C.O.G.S SG&A R.E 3087.8
R.E 14880.2 R.E 8926.7

Interest expense Income Tax expense R.E 346.3 R.E 721.1

Retained Earnings

C.O.G.S 8926.7 Sales 14880.2 SG&A 3087.8 R.E Bal 8122.4 Interest exp 346.3 Income Tax exp 721.1 Closing balance (B/S) 9920.70 23002.60 23002.60

Problem 6:
1) Debit Bank 10,000
Credit Stock/Capital 10,000
Assets (Bank) have gone up by 10k but the liability (stock) has also…