MGAD60H3 Lecture Notes - Cash Flow Statement, Retained Earnings, Revenue Recognition
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Missing Amounts from Financial Statements
The financial statements at the end of Atlas Realty's firstmonth of operations follow:
Required:
Analyze the interrelationships among the four financialstatements and enter the missing amounts. If an amount is zero,enter "0".
AtlasRealty | ||
IncomeStatement | ||
For the MonthEnded May 31, 2018 | ||
Fees earned | $400,000 | |
Expenses: | ||
Wages expense | $ | |
Rent expense | 48,000 | |
Supplies expense | 17,600 | |
Utilities expense | 14,400 | |
Miscellaneous expense | 4,800 | |
Total expenses | 288,000 | |
Net income | $ |
AtlasRealty | ||
RetainedEarnings Statement | ||
For the MonthEnded May 31, 2018 | ||
Retained earnings, May 1, 2018 | $ | |
Net income | $ | |
Dividends | ||
Change in retained earnings | ||
Retained earnings, May 31, 2018 | $ |
AtlasRealty | ||
BalanceSheet | ||
May 31,2018 | ||
Assets | ||
Cash | $123200 | |
Supplies | 12,800 | |
Land | ||
Total assets | $ | |
Liabilities | ||
Accounts payable | $48,000 | |
Stockholdersâ Equity | ||
Common stock | $ | |
Retained earnings | ||
Total stockholders' equity | ||
Total liabilities and stockholdersâequity | $ |
Use the minus sign to indicate cash outflows, decreases in cash,and cash payments.
AtlasRealty | ||
Statement ofCash Flows | ||
For the MonthEnded May 31, 2018 | ||
Cash flows from operating activities: | ||
Cash received from customers | $ | |
Cash payments for expenses and payments tocreditors | -252,800 | |
Net cash flows from operatingactivities | $ | |
Cash flows from investing activities: | ||
Cash payments for acquisition of land | -120,000 | |
Cash flows from financing activities: | ||
Cash received from issuing commonstock | $160,000 | |
Cash dividends | -64,000 | |
Net cash flows from financingactivities | ||
Net increase (decrease) in cash and May 31,2018, cash balance | $ |
Statement of Cash FlowsâIndirect Method
The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows:
Dec. 31, 20Y9 | Dec. 31, 20Y8 | ||||
Assets | |||||
Cash | $245,600 | $227,150 | |||
Accounts receivable (net) | 88,970 | 81,580 | |||
Inventories | 251,170 | 241,550 | |||
Investments | 0 | 93,580 | |||
Land | 128,820 | 0 | |||
Equipment | 277,110 | 213,550 | |||
Accumulated depreciationâequipment | (64,880) | (57,590) | |||
Total assets | $926,790 | $799,820 | |||
Liabilities and Stockholders' Equity | |||||
Accounts payable | $167,750 | $157,560 | |||
Accrued expenses payable | 16,680 | 20,800 | |||
Dividends payable | 9,270 | 7,200 | |||
Common stock, $10 par | 50,050 | 39,190 | |||
Paid-in capital: Excess of issue price over par-common stock | 188,140 | 108,780 | |||
Retained earnings | 494,900 | 466,290 | |||
Total liabilities and stockholdersâ equity | $926,790 | $799,820 |
Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:
Equipment and land were acquired for cash.
There were no disposals of equipment during the year.
The investments were sold for $84,220 cash.
The common stock was issued for cash.
There was a $66,200 credit to Retained Earnings for net income.
There was a $37,590 debit to Retained Earnings for cash dividends declared.
Required:
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.
Merrick Equipment Co. | ||
Statement of Cash Flows | ||
For the Year Ended December 31, 20Y9 | ||
Cash flows from operating activities: | ||
Net income | $ | |
Adjustments to reconcile net income to net cash flow from operating activities: | ||
Depreciation | ||
Loss on sale of investments | ||
Changes in current operating assets and liabilities: | ||
Increase in accounts receivable | ||
Increase in inventories | ||
Increase in accounts payable | ||
Decrease in accrued expenses payable | ||
Net cash flow from operating activities | $ | |
Cash flows from (used for) investing activities: | ||
Cash from sale of investments | $ | |
Cash used for purchase of land | ||
Cash used for purchase of equipment | ||
Net cash flow used for investing activities | ||
Cash flows from (used for) financing activities: | ||
Cash from sale of common stock | ||
Cash used for dividends | ||
Net cash flow from financing activities | ||
Increase in cash | $ | |
Cash at the beginning of the year | ||
Cash at the end of the year | $ |