Missing amounts from financial statements The financial statements at the end of Atlas Realty’s first month of operations follow: Instructions By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (r).

Financial And Managerial Accounting

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

Chapter
Section

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 statementsThe financial statements at the end of Atlas Realty’s first month of operations follow:InstructionsBy 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 Particulars Amount ($) Amount ($) 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 Particulars Common Stock Retained Earnings Total 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 Particulars Amount ($) Amount ($) 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 $256,000 for month ended May 31, 20Y6.  Company AR Statement of Cash Flows For the month ended May 31, 20Y6 Particulars Amount ($) 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 (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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