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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 1, Problem 6PB
Textbook Problem
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Missing amounts from financial statements

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

Chapter 1, Problem 6PB, Missing amounts from financial statements The financial statements at the end of Atlas Realtys first

Instructions

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

To determine

Calculate the amount of (a) through (r), analyzing the financial statements.

Explanation of Solution

Financial statements: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making.

Calculate the amount of (a) through (r), analyzing the financial statements:

The financial statements of Company AR or month ended May 31, 20Y6, are given below:

Company AR
Income Statement
For the month ended May 31, 20Y6
ParticularsAmount ($)Amount ($)
Revenues  
     Fees earned $400,000
Expenses 
     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)

Hence the net income of Company AR for month ended May 31, 20Y6, is $112,000.

Company AR
Statement of Stockholder's Equity
For the month ended May 31, 20Y6
ParticularsCommon StockRetained EarningsTotal
Balances, May 1, 20Y6$0$0$0
Issued common stock(c)   $160,000 (c)   $160,000
Net income (d)   $112,000(d)   $112,000
Dividends (e)   ($64,000)(e)  ($64,000)
Balances, May 31, 20Y6(c)  $ 160,000(f)   $ 48,000(g)  $ 208,000

Table (2)

Hence the stockholder's equity of Company AR for month ended May 31, 20Y6, is $208,000.

Company AR
Balance Sheet
As on May 31, 20Y6
ParticularsAmount ($)Amount ($)
Assets
 Current Assets  
 Cash $123,200  
 Supplies $12,800  
 Land (h)   $120,000  
 Total current assets (i)   $256,000
Liabilities and Stockholders’ Equity
Liabilities  
 Accounts payable $48,000
 Stockholder's equity    
Common Stock(j)   $160,000  
Retained earnings(k)   $48,000  
 Total stockholders’ equity (l)   208,000
 Total liabilities and stockholders’ equity (m)   $256,000

Table (3)

Hence the financial statement of Company AR shows the same asset and total liabilities and stockholder's equity balance of $256,000 for month ended May 31, 20Y6.

Company AR
Statement of Cash Flows
For the month ended May 31, 20Y6
ParticularsAmount ($)Amount ($)
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 (decrease) in cash (q)   $123,200
Cash balance, May 1, 20Y6 $0
Cash balance, May 31, 20Y6 (r)   $123,200

 Table (4)

Hence the cash balance of Company AR on May 31, 20Y6, is $123,200.

Working Notes:

  1. a) Wages expense:

Calculate the wages expense.

Wages Expense = (TotalExpenses)[(Utilites Expense)+(Supplies Expense)+(Rent Expense)+(Miscellaneous Expense)]=$288,000($14,400+$17,600+$48,000+$4,800)=$288,000$84,800=$203,200

Wages expense during the month of May is $203,200

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Financial And Managerial Accounting
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