Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615



Accounting (Text Only)

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

Missing amounts from financial statements

The financial statements at the end of Atlas Realty’s first month of operations follow:





By analyzing the interrelation ships 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 AR.


Determine the missing amounts, by analyzing the interrelationships among the financial statements of Company AR.

Company AR
Income Statement
For the month ended May 31, 2016
Particulars Amount ($) Amount ($)
     Fees earned $400,000
     Wages expense (a)   $203,200
     Rent expense $48,000
     Supplies expense $17,600
     Utilities expense $14,400
     Miscellaneous expense $4,800
Total expenses $288,000
Net income (b)   $112,000

Table (1)

Company AR
Statement of Owner's Equity
For the month ended May 31, 2016
Particulars Amount ($) Amount ($)
LM Capital, May 1, 2016 (c)   $0
Investment on May 1,2016 (d)   $160,000
Net income for the month (e)   $112,000
Changes in capital before withdrawal (f)  $272,000
Less: Withdrawals (g)   $64,000
Increase in Owner's equity (h)   $208,000
LM Capital, May 31, 2016 (i)   $208,000

Table (2)

Company AR
Balance Sheet
May 31, 2016
Particulars Amount ($) Amount ($)
 Current Assets
 Cash $123,200
 Supplies $12,800
 Land (j)   $120,000
 Total current assets (k)   $256,000
Liabilities and Stockholders’ Equity
 Accounts payable $48,000
 Owner's equity 
 LM Capital (l)   $208,000
 Total liabilities and stockholders’ equity (m)   $256,000

Table (3)

Company AR
Statement of Cash Flows
For the month ended May 31, 2016
Particulars Amount ($) Amount ($)
Cash flows from operating activities:
Cash receipts from customers(n)   $400,000
Cash payments for expenses and creditors $252,800
Net cash flow used for operating activities (o)   $147,200
Cash flows from investing activities:
Cash payment for purchase of land $120,000
Cash flows from financing activities:
Cash receipt of owner’s investment $160,000
Cash Withdrawals $64,000
Net cash flow from financing activities (p)   $96,000
Net Increase in cash, May 31,2016 cash balance (q)   $123,200

Table (4)

Working Notes:

  1. a) Wages expense: Wages expense during the month of May is $203,200.

    Calculate the supplies expense.

    Expenses = [(WageExpense)+(RentExpense)+(SuppliesExpense)+(UtilitesExpense)+(MiscellaneousExpense)]$288,000=(WagesExpense)+$48,000+$17,600+$14,400+$4,800$288,000=$84,800+(WagesExpense)Wages Expense=$288,000$84,800=$203,200 (a)

  2. b) Net income: Net income during the month of May is $112,000

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