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 $
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 | $ | |
Related questions
Allison Corporation acquired all of the outstanding voting stockof Mathias, Inc., on January 1, 2017, in exchange for $6,162,000 incash. Allison intends to maintain Mathias as a wholly ownedsubsidiary. Both companies have December 31 fiscal year-ends. Atthe acquisition date, Mathiasâs stockholdersâ equity was $2,070,000including retained earnings of $1,570,000.
At the acquisition date, Allison prepared the following fairvalue allocation schedule for its newly acquired subsidiary:
| Consideration transferred | $ | 6,162,000 | |||||
| Mathias stockholders'equity | 2,070,000 | ||||||
| Excess fair over bookvalue | $ | 4,092,000 | |||||
| to unpatented technology(8-year remaining life) | $ | 912,000 | |||||
| to patents (10-year remaininglife) | 2,640,000 | ||||||
| to increase long-term debt(undervalued, 5-year remaining life) | (170,000 | ) | 3,382,000 | ||||
| Goodwill | $ | 710,000 | |||||
Post-acquisition, Allison employs the equity method to accountfor its investment in Mathias. During the two years following thebusiness combination, Mathias reports the following income anddividends:
| Income | Dividends | |||
| 2017 | $ | 453,750 | $ | 25,000 |
| 2018 | 907,500 | 50,000 | ||
No asset impairments have occurred since the acquisitiondate.
Individual financial statements for each company as of December31, 2018, appear below. Parentheses indicate credit balances.Dividends declared were paid in the same period.
| Allison | Mathias | ||||||
| IncomeStatement | |||||||
| Sales | $ | (6,680,000 | ) | $ | (3,970,000 | ) | |
| Cost of goods sold | 4,696,000 | 2,545,500 | |||||
| Depreciation expense | 945,000 | 319,000 | |||||
| Amortization expense | 465,000 | 124,000 | |||||
| Interest expense | 83,000 | 74,000 | |||||
| Equity earnings in Mathias | (563,500 | ) | 0 | ||||
| Net income | $ | (1,054,500 | ) | $ | (907,500 | ) | |
| Statement of RetainedEarnings | |||||||
| Retained earnings 1/1 | $ | (5,480,000 | ) | $ | (1,998,750 | ) | |
| Net income (above) | (1,054,500 | ) | (907,500 | ) | |||
| Dividends declared | 560,000 | 50,000 | |||||
| Retained earnings 12/31 | $ | (5,974,500 | ) | $ | (2,856,250 | ) | |
| BalanceSheet | |||||||
| Cash | $ | 96,000 | $ | 164,000 | |||
| Accounts receivable | 1,020,000 | 260,000 | |||||
| Inventory | 1,840,000 | 855,000 | |||||
| Investment in Mathias | 6,760,250 | 0 | |||||
| Equipment (net) | 3,840,000 | 2,101,000 | |||||
| Patents | 130,000 | 0 | |||||
| Unpatented technology | 2,195,000 | 1,520,000 | |||||
| Goodwill | 474,000 | 0 | |||||
| Total assets | $ | 16,355,250 | $ | 4,900,000 | |||
| Accounts payable | $ | (1,180,750 | ) | $ | (343,750 | ) | |
| Long-term debt | $ | (1,000,000 | ) | $ | (1,200,000 | ) | |
| Common stock | (8,200,000 | ) | (500,000 | ) | |||
| Retained earnings 12/31 | (5,974,500 | ) | (2,856,250 | ) | |||
| Total liabilities andequity | $ | (16,355,250 | ) | $ | (4,900,000 | ) | |
Required:
Determine Allison's December 31, 2018, Investment inMathias balance.
Prepare a worksheet to determine the consolidated valuesto be reported on Allisonâs financial statements.
Prepare a worksheet to determine the consolidated values to bereported on Allisonâs financial statements. (For accounts wheremultiple consolidation entries are required, combine all debitentries into one amount and enter this amount in the debit columnof the worksheet. Similarly, combine all credit entries into oneamount and enter this amount in the credit column of the worksheet.Amounts in the Debit and Credit columns should be entered aspositive. Negative amounts for the Consolidated Totals columnshould be entered with a minus sign.)
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At the end of May, the first month of operations, the following selected data were taken from the financial statements of Julie Mortenson, Attorney at Law, P.C.:
| Net income for May | $168,400 |
| Total assets at May 31 | 898,000 |
| Total liabilities at May 31 | 296,000 |
| Total stockholders' equity at May 31 | 602,000 |
In preparing the financial statements, adjustments for the following data were overlooked:
Unbilled fees earned at May 31, $8,530.
The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.Depreciation of equipment for May, $3,800.
Accrued wages at May 31, $2,730.
Supplies used during May, $2,390.
Determine the correct amount of net income for May and the total assets, liabilities, and stockholders' equity at May 31. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table below. Enter account decreases as negative amounts. If an effect is zero, enter "0". Adjustment (a) is presented as an example.
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