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Assignment 1.2 Handout
1. Marilyn Mansion owns and operates a public relations firm called Goth, Inc. The
following amounts summarize her business on August 31, 2011:

During September 2011, the business completed the following transactions:

Requirements
R1. Analyze the effects of the preceding transactions on the accounting equation of
Goth.
R2. Prepare the income statement of Goth for the month ended September 30, 2011.
R3. Prepare the entity’s statement of retained earnings for the month ended September
30, 2011.
R4. Prepare the balance sheet at September 30, 2011.

2. The bookkeeper of Beautiful World Landscaping, Inc., prepared the company’s
balance sheet while the accountant was ill. The balance sheet contains numerous
errors. In particular, the bookkeeper knew that the balance sheet should balance, so he
plugged in the stockholders’ equity amount needed to achieve this balance. The
stockholders’ equity is incorrect. All other amounts are right, but some are out of place.

Requirements
R1. Prepare a corrected balance sheet.
R2. Consider the original balance sheet as presented and the corrected balance sheet
you prepared for requirement 1. Did total assets, as presented in your corrected
balance sheet increase, decrease or stay the same from the original balance sheet?
Why?

Financial Statement Case
This and similar cases in later chapters focus on the financial statement of a real
company— Amazon.com, Inc., the Internet shopping leader. As you work each case,
you will gain confidence in your ability to use the financial statements of real companies.
Refer to Amazon.com’s financial statements in the 2009 Amazon.com Financial
Statements handout.
Requirements
R1. How much in cash (including cash equivalents) did Amazon.com have on
December 31, 2009?
R2. What were the company’s total assets at December 31, 2009? At December 31,
2008?
R3. Write the company’s accounting equation at December 31, 2009, by filling in the
dollar amounts:

R4. Identify net sales (revenue) for the year ended December 31, 2009. How much did
total revenue increase or decrease from 2008 to 2009?
R5. How much net income or net loss did Amazon earn for 2009 and for 2008? Based
on net income, was 2009 better or worse than 2008?