Concept explainers
P2-3 Financial statements The following amounts were taken from the accounting records of Padget Home Services, Inc.. as of December 31, 20Y7. Padget Home Services began its operations on January 1, 20Y7.
Instructions
Prepare an income statement for the year ending December 31. 2017.
Prepare a statement of stockholdessrs’ equity for the year ending December 31, 2017.
Prepare a
Prepare a statement of cash flows for the year ending December 31, 2017.
Concept Introduction:
Financial statements:
Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner's equity and Cash flows statements.
Requirement-1:
To Prepare:
The Income Statement for the year ending Dec 31, 20Y7
Answer to Problem 2.3P
The Income Statement for the year ending Dec 31, 20Y7 is as follows:
Padget Home Services | ||
Income Statement | ||
For the Year ending Dec. 31, 20Y7 | ||
Revenue: | ||
Fees Earned | $ 620,000 | |
Total Revenue | $ 620,000 | |
Less: Expenses: | ||
Salaries Expense | $ 272,000 | |
Rent Expense | $ 70,000 | |
Interest Expense | $ 4,800 | |
Misc. Expense | $ 10,200 | |
Tax Expense | $ 43,000 | |
Utilities Expense | $ 85,000 | |
Total Expenses | $ 485,000 | |
Net Income (Loss) | $ 135,000 |
Explanation of Solution
The Income Statement for the year ending Dec 31, 20Y7 is prepared as follows:
Padget Home Services | ||
Income Statement | ||
For the Year ending Dec. 31, 20Y7 | ||
Revenue: | ||
Fees Earned | $ 620,000 | |
Total Revenue | $ 620,000 | |
Less: Expenses: | ||
Salaries Expense | $ 272,000 | |
Rent Expense | $ 70,000 | |
Interest Expense | $ 4,800 | |
Misc. Expense | $ 10,200 | |
Tax Expense | $ 43,000 | |
Utilities Expense | $ 85,000 | |
Total Expenses | $ 485,000 | |
Net Income (Loss) | $ 135,000 |
Concept Introduction:
Financial statements:
Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner's equity and Cash flows statements.
Requirement-2:
To Prepare:
The Statement of stockholder's equity for the year ending Dec 31, 20Y7
Answer to Problem 2.3P
The Statement of stockholder's equity for the year ending Dec 31, 20Y7 is as follows:
Padget Home Services | |
Statement of Stockholder's Equity | |
For the Year ending Dec. 31, 20Y7 | |
Common Stock | $ 75,000 |
Retained earnings (135000-15000) | $ 120,000 |
Total Stockholders' Equity | $ 195,000 |
Explanation of Solution
The Statement of stockholder's equity for the year ending Dec 31, 20Y7 is prepared as follows:
Padget Home Services | |
Statement of Stockholder's Equity | |
For the Year ending Dec. 31, 20Y7 | |
Common Stock | $ 75,000 |
Retained earnings (135000-15000) | $ 120,000 |
Total Stockholders' Equity | $ 195,000 |
Concept Introduction:
Financial statements:
Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner's equity and Cash flows statements.
Requirement-3:
To Prepare:
The Balance Sheet as on Dec 31, 20Y7
Answer to Problem 2.3P
The Balance Sheet as on Dec 31, 20Y7 is as follows:
Padget Home Services | ||
Balance Sheet | ||
As on Dec. 31, 20Y7 | ||
ASSETS: | ||
Cash | $ 60,000 | |
Land | $ 215,000 | |
TOTAL | $ 275,000 | |
LIABILITIES: | ||
Notes Payable | $ 80,000 | |
STOCKHOLDER'S EQUITY | $ 195,000 | |
TOTAL | $ 275,000 |
Explanation of Solution
The Balance Sheet as on Dec 31, 20Y7 is prepared as follows:
Padget Home Services | ||
Balance Sheet | ||
As on Dec. 31, 20Y7 | ||
ASSETS: | ||
Cash | $ 60,000 | |
Land | $ 215,000 | |
TOTAL | $ 275,000 | |
LIABILITIES: | ||
Notes Payable | $ 80,000 | |
STOCKHOLDER'S EQUITY | $ 195,000 | |
TOTAL | $ 275,000 |
Concept Introduction:
Financial statements:
Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner's equity and Cash flows statements.
Requirement-4:
To Prepare:
The Statement of Cash Flows for the year ending Dec 31, 20Y7
Answer to Problem 2.3P
The Statement of Cash Flows for the year ending Dec 31, 20Y7 is as follows:
Padget Home Services | ||
Statement of Cash Flows-Direct Method | ||
For the Year ending Dec. 31, 20Y7 | ||
Cash flow from Operating activities: | ||
Collection from Customers | $ 620,000 | |
Payments of expenses | $(485,000) | |
Net Cash Provided by Operating activities | $ 135,000 | |
Cash flow from Investing activities: | ||
Cash Payment for Acquisition of land | $(215,000) | |
Net Cash Used by Investing activities | $(215,000) | |
Cash flow from Financing activities: | ||
Cash Receipts from Issuance of Common Stock | $ 75,000 | |
Cash received from Long Term notes payable | $ 80,000 | |
Payment of Dividends | $ (15,000) | |
Net Cash Provided by Financing activities | $ 140,000 | |
Net Cash Flows | $ 60,000 | |
Add: Beginning Cash Balance | $ - | |
Ending Cash Balance | $ 60,000 |
Explanation of Solution
The Statement of Cash Flows for the year ending Dec 31, 20Y7 is prepared as follows:
Padget Home Services | ||
Statement of Cash Flows-Direct Method | ||
For the Year ending Dec. 31, 20Y7 | ||
Cash flow from Operating activities: | ||
Collection from Customers | $ 620,000 | |
Payments of expenses | $(485,000) | |
Net Cash Provided by Operating activities | $ 135,000 | |
Cash flow from Investing activities: | ||
Cash Payment for Acquisition of land | $(215,000) | |
Net Cash Used by Investing activities | $(215,000) | |
Cash flow from Financing activities: | ||
Cash Receipts from Issuance of Common Stock | $ 75,000 | |
Cash received from Long Term notes payable | $ 80,000 | |
Payment of Dividends | $ (15,000) | |
Net Cash Provided by Financing activities | $ 140,000 | |
Net Cash Flows | $ 60,000 | |
Add: Beginning Cash Balance | $ - | |
Ending Cash Balance | $ 60,000 |
Want to see more full solutions like this?
Chapter 2 Solutions
SURVEY OF ACCOUNTING
Additional Business Textbook Solutions
Auditing And Assurance Services
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
INTERMEDIATE ACCOUNTING
Advanced Financial Accounting
Horngren's Accounting (11th Edition)
FINANCIAL ACCT.FUND.(LOOSELEAF)
- Financial statements, including statement of cash flows Pendray Systems Corporation began operations on January 1, 20Y5 as an online retailer of computer software and hardware. The following financial statement data were taken from Pcndrays records at the end of its first year of operations. December 31, 20Y5. Instructions Prepare a statement of stockholders’ equity for the year ended December 31. 20Y5.arrow_forwardFinancial statements, including statement of cash flows Pendray Systems Corporation began operations on January 1, 20Y5 as an online retailer of computer software and hardware. The following financial statement data were taken from Pendrays records at the end of its first year of operations. December 31, 20Y5. Instructions Prepare a balance sheet as of December 31. 20Y5.arrow_forwardFinancial statements Padget Home Services began its operations on January 1, 20Y7 (see Problem 2-3). After its second year of operations. the following amounts were taken from the accounting records of Padget Home Services, Inc., as of December 31, 20Y8. Instructions Prepare a statement of cash flows for the year ending December 31, 20Y8. (Hint: You should compare the asset and liability amounts of December 31. 20Y8, with those of December 31, 20Y7, to determine cash used in investing and financing activities. See Problem 2-3 for the December 31, 20Y7, balance sheet amounts.)arrow_forward
- Financial statements, including statement of cash flows Pendray Systems Corporation began operations on January 1, 20Y5 as an online retailer of computer software and hardware. The following financial statement data were taken from Pcndrays records at the end of its first year of operations. December 31, 20Y5. Instructions Prepare an income statement for the year ended December 31. 20Y5.arrow_forwardFinancial statements, including statement of cash flows Pendray Systems Corporation began operations on January 1, 20Y5 as an online retailer of computer software and hardware. The following financial statement data were taken from Pcndrays records at the end of its first year of operations. December 31, 20Y5. Instructions Prepare a statement of cash flows for the year ended December 31, 20Y5.arrow_forwardJose Loder established Bronco Consulting on August 1, 2016. The effect of each transaction and the balances after each transaction for August follow: Instructions 1. Prepare an income statement for the month ended August 31, 2016. 2. Prepare a statement of owners equity for the month ended August 31, 2016. 3. Prepare a balance sheet as of August 31, 2016. 4. (Optional) Prepare a statement of cash flows for the month ending August 31, 2016.arrow_forward
- Transactions and Financial statements James Nesbitt established Up-Date Computer Services on August 1, 20Y4. The effect of each transaction and the balances after each transaction for August are shown below in the integrated financial statement framework. Instructions 4. Prepare a statement of cash flows for the month ended August 31, 20Y4.arrow_forwardSeth Feye established Reliance Financial Services on July 1, 2016. Reliance Financial Services offers financial planning advice to its clients. The effect of each transaction and the balances after each transaction for July follow: Instructions 1. Prepare an income statement for the month ended July 31, 2016. 2. Prepare a statement of owners equity for the month ended July 31, 2016. 3. Prepare a balance sheet as of July 31, 2016. 4. (Optional) Prepare a statement of cash flows for the month ending July 31, 2016.arrow_forwardA summary of cash flows for Ethos Consulting Group for the year ended May 31, 2016, follows: The cash balance as of June 1, 2015, was 58,000. Prepare a statement of cash flows for Ethos Consulting Group for the year ended May 31, 2016.arrow_forward
- Financial statements Padget Home Services began its operations on January 1, 20Y7 (see Problem 2-3). After its second year of operations. the following amounts were taken from the accounting records of Padget Home Services, Inc., as of December 31, 20Y8. Instrustions Prepare a statement of stockholders’ equity for the year ending December 31, 20Y8. (Nole: The retained earnings at January 1, 20Y8. was $1 20.000.)arrow_forwardA summary of cash flows for Ousel Travel Service for the year ended November 30, 2016, follows: The cash balance as of December 1, 2015, was 203,000. Prepare a statement of cash flows for Ousel Travel Service for the year ended November 30, 2016.arrow_forwardExercise 1-51 Relationships Among the Financial Statements Zachary Corporations December 31, 2018 balance sheet included the following amounts: Required: Calculate the amount of cash and retained earnings at the end of 2019.arrow_forward
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
- Financial & Managerial AccountingAccountingISBN:9781285866307Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCorporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning