Concept explainers
a.
Record the given events in the
a.
Explanation of Solution
Record the given events in accounting equation.
Table (1)
Working note 1: Calculate the amount of Accrued interest:
b.
Calculate the amount of net cash flow from operating activities that would be reported on 2018 Statement of cash flows.
b.
Explanation of Solution
Cash flows from operating activities refer to the cash received or cash paid in day-to-day operating activities of a company.
Calculate the cash flow from operating activities.
Enterprise M | ||
Statement of cash flow | ||
Particulars | Amount ($) | Amount ($) |
Cash flow from operating activities | ||
Cash collected from revenue | $61,300 | |
Cash paid for operating expenses | ($39,000) | |
Net cash flow from operating activities | $22,300 |
Table (2)
Thus, the amount of net cash flow from operating activities that would be reported on 2018 Statement of cash flows is $22,300.
c.
Calculate the amount of interest expense that would be reported on 2018 income statement.
c.
Explanation of Solution
Interest expense refers to the cost of debt which is incurred during a particular accounting period. The interest amount is a fixed interest rate payable on the principal amount of debt.
Calculate the amount of interest expense.
Hence, the amount of interest expense that would be reported on 2018 income statement is $1,080.
d.
Calculate the amount of total liabilities that would be reported on December 31, 2018 balance sheet.
d.
Explanation of Solution
Total liabilities are the sum of financial obligations and debt owed by business.
Calculate the total liabilities.
Particulars | Amount ($) | Amount ($) |
Notes payable | 36,000 | |
Interest payable | 1,080 | |
Total liabilities | 37,080 |
Table (3)
Thus, the amount of total liabilities that would be reported on December 31, 2018 balance sheet is $37,080.
e.
Calculate the amount of
e.
Explanation of Solution
Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.
Calculate the amount of retained earnings.
Hence, the amount of retained earnings that would be reported on December 31, 2018 balance sheet is $32,420.
f.
Calculate the amount net cash flow from financing activities that would be reported on 2018 statement of cash flows.
f.
Explanation of Solution
Cash flow from financing activities: This section of cash flows statement provides information about the
Calculate the amount net cash flow from financing activities.
Enterprise M | ||
Statement of cash flow | ||
Particulars | Amount ($) | Amount ($) |
Cash flow from financing activities | ||
Issued common stock | $10,000 | |
Loan borrowed | $36,000 | |
Net cash flow from operating activities | $46,000 |
Table (4)
Thus, the amount of cash flow from financing activities that would be reported on 2018 statement of cash flow is $46,000.
g.
Calculate the amount of interest expense that would be reported on 2019 income statement.
g.
Explanation of Solution
Interest expense refers to the cost of debt which is incurred during a particular accounting period. The interest amount is a fixed interest rate payable on the principal amount of debt.
Calculate the amount of interest expense.
Hence, the amount of interest expense that would be reported on 2019 income statement is $1,080.
h.
Calculate the amount of net cash flow from operating activities that would be reported on the 2019 Statement of cash flows.
h.
Explanation of Solution
Cash flows from operating activities refer to the cash received or cash paid in day-to-day operating activities of a company.
Calculate the cash flow from operating activities.
Enterprise M | ||
Statement of cash flow | ||
Particulars | Amount ($) | Amount ($) |
Cash flow from operating activities | ||
Cash collected from | $71,500 | |
Cash paid for operating expenses | ($45,000) | |
Cash paid for interest | ($2,160) | |
Net cash flow from operating activities | $24,340 |
Table (5)
Thus, the cash flow operating activities that would be reported on 2019 statement of cash flows is $24,340.
i.
Calculate the amount of total assets that would be reported on 2019 balance sheet.
i.
Explanation of Solution
Calculate the total assets.
Particulars | Amount ($) | Amount ($) |
Cash | 56,640 | |
Accounts receivable | 24,900 | |
Total assets | 81,540 |
Table (6)
Thus, the amount of total assets that would be reported on 2019 balance sheet is $81,540.
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Chapter 7 Solutions
SURVEY OF ACCOUNT.(LL)-W/ACCESS>CUSTOM<
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