The Balance Sheet 1

1
The Balance Sheet 1
05

• Accountancy 503
• Fall 2006
• Professor Clifton Brown

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The balance sheet
An entitys financial position at a point in time.
Assets Liabilities
Owners Equity
Results of investing activities
Results of financing activities
Results of operating activities
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The balance sheet
An entitys financial position at a point in time.
Assets Liabilities
Owners Equity
?CashInventoriesPlant equipmentPatents
?Accounts payableWages payableNotes
payableBonds payable
?Contributed capitalRetained earnings
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Recognition criteria
An item and information about it should meet four
fundamental recognition criteria

• Meets definition of an element of financial
  statements
• Has a relevant attribute measurable with
  sufficient reliability
• The information about the item is relevant, i.e.,
  capable of making a difference in user decisions
• The information about the item is reliable, i.e.,
  representationally faithful, verifiable, and
  neutral.

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Element definitions balance sheet

• Assets probable future economic benefits
  obtained or controlled by an entity as a result
  of past transactions
• Liabilities probable future sacrifices of
  economic benefits arising from present
  obligations of an entity to transfer assets or
  perform services to other entities as a result of
  past transactions
• Equity (net assets) residual interest in the
  assets of an entity that remains after deducting
  its liabilities

6
Boeing Everett
On Monday of this week, Boeing Everett paid 650
for an advertise-ment in the Seattle Times
newspaper announcing the hours and policies for
public tours of its manufacturing complex.
7
Boeing Everett
Last month, Boeing Everett purchased and received
aircraft engines from General Electric to build
aircraft ordered by All Nippon Airways. The 5.5
million purchase price is on an open credit
account with GE with payment due 30 days from
delivery.
8
Boeing Everett
On Tuesday of this week, Boeing Everett paid
General Electric, in full, for aircraft engines
described in transaction 1 above.
9
Boeing Everett
On Friday of this week, Boeing Everett paid an
aircraft assembly worker his weekly wages for the
prior week. These wages amounted to 740, and
the plant information system indicates that this
worker spent 32 hours wiring electrical controls
of a 747 on order from Cargolux Airlines and
spent 8 hours in an employee training session on
quality control.
10
Boeing Everett
Also on Friday of this week, a clerk in Boeing
Everetts Human Resources Department worked her
normal forty hours, receiving 450 in wages.
11
Boeing Everett
On Monday of this week, Boeing Everett received a
sales order and a check for 15 million from Jet
Airways as a down payment for a 737.
12
Boeing Everett
On Thursday of last week, Boeing Everett
completed production of a 767 ordered by GE
Capital Corp., transferring the aircraft to a
flight hanger to await customer delivery and
approval. The contract sales price of this
aircraft is 141 million and Everetts production
cost is 119 million.
13
Boeing Everett
On Friday of this week, Boeing Everett delivered
the finished 767 described in transaction 6 to
GE Capital Corp. GE Capital paid 30 million at
delivery, having previously paid 111 million in
advance payments.
14
Boeing Everett
On Thursday of this week, Boeing Everett paid
Alco Aluminum 10 million for seamless pipes and
tubes that Boeing ordered and received last
month. Boeing uses these pipes and tubes in its
production of aircraft. Boeing has an open
credit account with Alco, with payment due within
20 days from the date Boeing receives the order
at its Everett plant.
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Turn-in a case write-up
The following individuals should e-mail a
write-up of Boeing Everett to the instructor no
later than 24-hours from now
Abenov, Nurzhan Avci, Ozcan Chen,
Kuo-Liang Chung, Hee Yong Ha, Seung-Hyup Jinsiriva
nich, Napaporn
Law, Pi-Cheng Lee, Jun-hee Michaels,
Jonathan Pali, Gulali Tangka-Aree, Siri