MGAB01H3 Chapter 1: Chapter 1

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MGAB01H3 Full Course Notes

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Common shares are the term used to describe the amount paid by investors for shares of ownership in a company. Shareholders have no rights to claim to corporate resources until all creditors have been paid. Many companies pay shareholders a return on their investment on a regular basis called dividends. These activities involve the purchase of long-lived resources called assets. Investing generally involves long-lived assets, such as property, plants, and equipment. Items that are held for sale for future are called inventory. Once the goods are sold, they are expenses (cost of goods sold). Four main financial statements: statement of earnings, statement of retained earnings, balance sheet, cash flow statement. Additional information is reported to the notes of the financial statements. Statement of earnings j reports the success or failure of the companys operations for a period of time j annually, quarterly, or monthly. Note that cents are not reported on financial statements.

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The following events occurred last year at DorderCorporation:

Purchase of plant and equipment	$20,000
Sale of long-term investment	$8,000
Dividends received on long-term investments	$5,000
Paid off bonds payable	$11,000
Depreciation expense	$6,500

Based on the above information, the cash provided (used) byinvesting activities for the year on the statement of cash flowswould net to:

$(11,000)

$(12,000)

$(24,500)

$(6,500)

Last year Burch Corporation's cash account decreased by $16,000.Net cash provided by investing activities was $7,100. Net cash usedin financing activities was $14,000. On the statement of cashflows, the net cash flow provided by (used in) operating activitieswas:

$6,900

$(16,000)

$(9,100)

$(22,900)

McCorey Corporation recorded the following events last year:

Repurchase by the company of its own commonstock	$39,000
Sale of long-term investment	$58,000
Interest paid to lenders	$14,500
Dividends paid to the company's shareholders	$68,000
Collection by McCorey of a loan made to anothercompany	$44,000
Payment of taxes to governmental bodies	$24,500

On the statement of cash flows, some of these events areclassified as operating activities, some are classified asinvesting activities, and some are classified as financingactivities.

Based solely on the information above, the net cash provided by(used in) investing activities on the statement of cash flows wouldbe:

$102,000

$(9,500)

$34,000

$(19,500)

Financial statements of Rukavina Corporation follow:

Rukavina Corporation Comparative Balance Sheet
	Ending Balance	Beginning Balance
Assets:
Cash and cash equivalents	$24	$21
Accounts receivable	77	72
Inventory	33	31
Property, plant and equipment	528	480
Less: accumulated depreciation	326	299
Total assets	$336	$305
Liabilities and stockholders'equity:
Accounts payable	$42	$52
Bonds payable	95	110
Common stock	71	72
Retained earnings	128	71
Total liabilities and stockholders' equity	$336	$305

Income Statement
Sales	$705
Cost of goods sold	448
Gross margin	257
Selling and administrative expenses	151
Net operating income	106
Income taxes	38
Net income	$68

Cash dividends were $11. The company did not dispose of anyproperty, plant, and equipment. It did not issue any bonds payableor repurchase any of its own common stock. The following questionspertain to the company's statement of cash flows.

The net cash provided by (used in) investing activities for theyear was:

$(11)

$(15)

$(48)

periwinkleserval695

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		$

limeworm408

1 )

The following events occurred last year at Dorder Corporation:

Purchase of plant and equipment	$26,000
Sale of long-term investment	$11,000
Dividends received on long-term investments	$7,000
Paid off bonds payable	$14,500
Depreciation expense	$13,000

Based on the above information, the cash provided (used) by investing activities for the year on the statement of cash flows would net to:

Last year Burch Corporation's cash account decreased by $33,000. Net cash provided by investing activities was $8,800. Net cash used in financing activities was $29,500. On the statement of cash flows, the net cash flow provided by (used in) operating activities was:

McCorey Corporation recorded the following events last year:

Repurchase by the company of its own common stock	$27,000
Sale of long-term investment	$46,000
Interest paid to lenders	$8,500
Dividends paid to the company's shareholders	$56,000
Collection by McCorey of a loan made to another company	$32,000
Payment of taxes to governmental bodies	$18,500

On the statement of cash flows, some of these events are classified as operating activities, some are classified as investing activities, and some are classified as financing activities.

Based solely on the information above, the net cash provided by (used in) investing activities on the statement of cash flows would be:

MGAB01H3 Chapter 1: Chapter 1

MGAB01H3 Full Course Notes

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