Alicia Cannady Week 3 FIN/419 David Walker

P2-1
Reviewing basic financial statements The income statement for the year ended
December 31, 2009, the balance sheets for December 31, 2009 and 2008, and the statement of retained earnings for the year ended December 31, 2009, for Technica,
Inc., are given on pages 82 and 83. Briefly discuss the form and informational content of each of these statements.
Income statement: Technica, Inc. showed a net profit for 2006 and the ability to pay cash dividends to its stockholders.
Balance sheet: The financial condition of Technica, Inc. at December 31, 2005 and 2006 is shown as a summary of assets and liabilities. They have an excess of current assets over current liabilities, demonstrating liquidity. The firm’s fixed assets 270,000 represent over one-half of total assets $408,300. The firm is financed by short-term debt, long-term debt, common stock, and retained earnings. It also shows that Techinica repurchased 500 shares of common stock in 2006.
Statement of retained earnings: Technica, Inc. earned a net profit of $42,900 in 2006 and paid out $20,000 in cash dividends. The reconciliation of the retained earnings account from $50,200 to $73,100 shows the net amount ($22,900) retained by the firm.

P2- 2
Financial statement account identification Mark each of the accounts listed in the following table as follows:
a. In column (1), indicate in which statement—income statement (IS) or balance sheet (BS)—the account belongs.
b. In column (2), indicate whether the account is a current asset (CA), current liability (CL), expense (E), fixed asset (FA), long-term debt (LTD), revenue (R), or stockholders’ equity (SE). | (a) | (b) | Account Name | Statement | Type of Account | Accounts payable | BS | CL | Accounts receivable | BS | CA | Accruals | BS | CL | Accumulated depreciation | BS | FA* |