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AccountingAccounting (Text Only)26th Edition

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Chapter 1, Problem 1.6APR
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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

Solutions

Chapter
Section
Problem 1DQ
Problem 2DQ
Problem 3DQ
Problem 4DQ
Problem 5DQ
Problem 6DQ
Problem 7DQ
Problem 8DQ
Problem 9DQ
Problem 10DQ
Problem 1.1APE
Problem 1.1BPE
Problem 1.2APE
Problem 1.2BPE
Problem 1.3APE
Problem 1.3BPE
Problem 1.4APE
Problem 1.4BPE
Problem 1.5APE
Problem 1.5BPE
Problem 1.6APE
Problem 1.6BPE
Problem 1.7APE
Problem 1.7BPE
Problem 1.8APE
Problem 1.8BPE
Problem 1.1EX
Problem 1.2EX
Problem 1.3EX
Problem 1.4EX
Problem 1.5EX
Problem 1.6EX
Problem 1.7EX
Problem 1.8EX
Problem 1.9EX
Problem 1.10EX
Problem 1.11EX
Problem 1.12EX
Problem 1.13EX
Problem 1.14EX
Problem 1.15EX
Problem 1.16EX
Problem 1.17EX
Problem 1.18EX
Problem 1.19EX
Problem 1.20EX
Problem 1.21EX
Problem 1.22EX
Problem 1.23EX
Problem 1.24EX
Problem 1.25EX
Problem 1.26EX
Problem 1.27EX
Problem 1.1APR
Problem 1.2APR
Problem 1.3APR
Problem 1.4APR
Problem 1.5APR
Problem 1.6APR
Problem 1.1BPR
Problem 1.2BPR
Problem 1.3BPR
Problem 1.4BPR
Problem 1.5BPR
Problem 1.6BPR
Problem 1COP
Problem 1.1CP
Problem 1.2CP
Problem 1.3CP
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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
1 views

Missing amounts from financial statements

The financial statements at the end of Wolverine Realty’s first month of operations are as follows:

Chapter 1, Problem 1.6APR, Missing amounts from financial statements The financial statements at the end of Wolverine Realtys , example 1

Chapter 1, Problem 1.6APR, Missing amounts from financial statements The financial statements at the end of Wolverine Realtys , example 2

Chapter 1, Problem 1.6APR, Missing amounts from financial statements The financial statements at the end of Wolverine Realtys , example 3

Chapter 1, Problem 1.6APR, Missing amounts from financial statements The financial statements at the end of Wolverine Realtys , example 4

Instructions

By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (q).

To determine

Financial statements:

Financial statements refer to those statements, which are prepared by the Company according to particular formats in accounting to show its financial position.

Financial statements include the following statements:

Income statement:

Income statement is a financial statement that shows the net income or net loss by deducting the expenses from the revenues and vice versa.

Statement of owner's’ equity:

This statement reports the changes in the owners’ equity for a particular period of time

Statement of cash flows:

This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.

To Determine:  The missing amount in the given financial statement of Company WR.

Explanation

Calculate the missing amounts in the given financial statement of Company WR for month ended April 30, 2016.

Company WR
Income Statement
For the month ended April 30, 2016
Particulars Amount ($) Amount ($)
Revenues
     Fees earned
  1. (a)  $750,000
Expenses
     Wages expense $300,000
     Rent expense $100,000
     Supplies expense (b)  $30,000
     Utilities expense $20,000
     Miscellaneous expense $25,000
Total expenses $475,000
Net income $275,000

Table (1)

Company WR
Statement of Owner's Equity
For the month ended April 30, 2016
Particulars Amount ($) Amount ($)
DR Capital, April 1, 2016 (c)   $0
Investment on April 1,2016 $375,000
Net income for the month (d)   $275,000
Changes before withdrawals (e)     $650,000
Less: Withdrawals $125,000
Increase in Owner's equity (f)   $525,000
DR Capital, April 30, 2016 (g)   $525,000

Table (2)

Company WR
Balance Sheet
April 30, 2016
Particulars Amount ($) Amount ($)
Assets
 Current Assets
 Cash $462,500
 Supplies $12,500
 Land $150,000
 Total current assets (h)   $625,000
Liabilities and Stockholders’ Equity
 Liabilities
 Accounts payable $100,000
 Owner's equity 
 DR Capital (i)   $525,000
 Total liabilities and stockholders’ equity (j)   $625,000

Table (3)

Company WR
Statement of Cash Flows
For the month ended April 30, 2016
Particulars Amount ($) Amount ($)
Cash flows from operating activities:
Cash receipts from customers(k)    $750,000
Cash payments for expenses and creditors $387,500
Net cash flow used for operating activities (l)      $362,500
Cash flows from investing activities:
Cash payment for acquisition of land (m) ($150,000)
Cash flows from financing activities:
Cash receipt of owner’s investment (n)  $375,000
Cash Withdrawals (o)  $125,000
Net cash flow from financing activities (p)  $250,000
Net Increase in cash, April 30,2016 cash balance(q)  $462,500

Table (4)

Working Notes:

  1. a) Fees Earned: Fees earned during the month of April is $750,000.

    Calculate the fees earned.

    Net Income  =  Revenue − ExpenseRevenue  =  Net Income + Expense=  $475,000 + $275,000=  $750,000 (a)

  2. b) Supplies expense: Supplies expense during the month of April is $30,000.

Calculate the supplies expense.

Expenses = [(WageExpense)+(RentExpense)+(SuppliesExpense)+(UtilitesExpense)+(MiscellaneousExpense)]$475,000=$300,000+$100,000+(SuppliesExpense)+$20,000+$25,000$475,000=$445,000+(Supplies Expense)Supplies Expense=$475,000−$445,000=$30,000 (b)

  1. c) DR Capital, April 1, 2016:  As this is the first month of operation for Company WR, there will be having no opening balance for the Capital account

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Ch-1 P-1DQCh-1 P-2DQCh-1 P-3DQCh-1 P-4DQCh-1 P-5DQCh-1 P-6DQCh-1 P-7DQCh-1 P-8DQCh-1 P-9DQCh-1 P-10DQ
Ch-1 P-1.1APECh-1 P-1.1BPECh-1 P-1.2APECh-1 P-1.2BPECh-1 P-1.3APECh-1 P-1.3BPECh-1 P-1.4APECh-1 P-1.4BPECh-1 P-1.5APECh-1 P-1.5BPECh-1 P-1.6APECh-1 P-1.6BPECh-1 P-1.7APECh-1 P-1.7BPECh-1 P-1.8APECh-1 P-1.8BPECh-1 P-1.1EXCh-1 P-1.2EXCh-1 P-1.3EXCh-1 P-1.4EXCh-1 P-1.5EXCh-1 P-1.6EXCh-1 P-1.7EXCh-1 P-1.8EXCh-1 P-1.9EXCh-1 P-1.10EXCh-1 P-1.11EXCh-1 P-1.12EXCh-1 P-1.13EXCh-1 P-1.14EXCh-1 P-1.15EXCh-1 P-1.16EXCh-1 P-1.17EXCh-1 P-1.18EXCh-1 P-1.19EXCh-1 P-1.20EXCh-1 P-1.21EXCh-1 P-1.22EXCh-1 P-1.23EXCh-1 P-1.24EXCh-1 P-1.25EXCh-1 P-1.26EXCh-1 P-1.27EXCh-1 P-1.1APRCh-1 P-1.2APRCh-1 P-1.3APRCh-1 P-1.4APRCh-1 P-1.5APRCh-1 P-1.6APRCh-1 P-1.1BPRCh-1 P-1.2BPRCh-1 P-1.3BPRCh-1 P-1.4BPRCh-1 P-1.5BPRCh-1 P-1.6BPRCh-1 P-1COPCh-1 P-1.1CPCh-1 P-1.2CPCh-1 P-1.3CP

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