Concept explainers
1.
To identify: The effect of transactions on the
1.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Table (1)
Hence, the cash balance is $87,545,accounts receivables is $5,000, office supplies is $3,700 office equipment is $2,300,roofing equipment is$5,000 accounts payable is $7,100, common stock is $80,000, dividend is $1,800, revenue is $20,800 and expenses is $2,555.
2.
To prepare: The income statement, statement of
2.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Prepare income statement.
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Particulars | Amount ($) | Amount ($) |
Revenue: | ||
Service Revenue | 20,800 | |
Total Revenue | 20,800 | |
Expenses: | ||
Rent Expenses | 700 | |
Salary Expenses | 1,560 | |
Utilities Expenses | 295 | |
Total Expense | 2,555 | |
Net income | 18,245 |
Table(2)
Hence, net income of .R Company as on July 31, 20XX is $18,245
Prepare statement of retained earnings
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Particulars | Amount ($) | |
Opening balance | 0 | |
Net income | 18,245 | |
Total | 18,245 | |
Dividends | (1,800) | |
Retained earnings | 16,445 |
Table(3)
Hence, the retained earnings of .R Company as on July 31, 20XX are $16,445.
Prepare balance sheet
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Particulars | Amount ($) | |
Assets | ||
Cash | 87,545 | |
Accounts Receivables | 5,000 | |
Office Supplies | 3,700 | |
Office Equipment | 2,300 | |
Roofing Equipment | 5,000 | |
Total Assets | 103,545 | |
Liabilities and | ||
Liabilities | ||
Accounts Payable | 7,100 | |
Stockholder’s Equity | ||
Common Stock | 80,000 | |
Retained earnings | 16,445 | |
Total stockholders’ equity | 96,445 | |
Total Liabilities and Stockholder’s equity | 103,545 |
Table(4)
Hence, the total of the balance sheet of the R Company as on July 31, 20XX is of $103,545.
3.
To prepare: The statement of cash flows of the S Electric.
3.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Prepare the cash flow statement.
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Particulars | Amount ($) | Amount ($) |
Cash flow from operating activities | ||
Receipts: | ||
Collections from customers | 15,800 | |
Payments: | ||
Supplies | (600) | |
Rent Expenses | (700) | |
Salary Expenses | (1,560) | |
Utilities | (295) | (3,155) |
Net cash from operating activities | 12,645 | |
Cash flow from investing activities | ||
Purchase of office equipment | (2,300) | |
Purchase of Roofing equipment | (1,000) | |
Net cash from investing activities | (3,300) | |
Cash flow from financing activities | ||
Issued common stock | 80,000 | |
Less: Payment of cash dividends | (1,800) | |
Net cash from financing activities | 78,200 | |
Net increase in cash | 87,545 | |
Cash balance, July 1,20XX | 0 | |
Cash balance, July 31,20XX | 87,545 |
Table(5)
Hence, the cash balance of the R Company as on July 31, 20XX is $87,545.
4.
To identify: The changes on (a) total assets, (b) total liabilities, and (c) total equity.
4.
![Check Mark](/static/check-mark.png)
Explanation of Solution
If the company purchase roofing equipment by owner investment instead of cash as mention in question.
- On assets- The asset of the company increases by $1,000.
- On liabilities- The liability of the company decreases by $4,000.
- On equity- The common stock is increased by $5,000 and common stock is the part of equity so equity increases by $5,000.
Thus, assets and equity will increase and liability will decrease.
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Chapter 1 Solutions
CONNECT PLUS-FINANCIAL & MANAGERIAL AC
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