Survey Of Accounting
Survey Of Accounting
4th Edition
ISBN: 9780077862374
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 8, Problem 18P

a)

To determine

Prepare a 2014 income statement, capital statement, balance sheet, and statement of cash flows for a Company AS owned by Person BB.

a)

Expert Solution
Check Mark

Explanation of Solution

Income statement: It is one of the financial statements that reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Prepare the income statement of forCompany AS the year ended December 31, 2014.

Company AS
Income statement
Forthe year ended December 31, 2014
ParticularsAmount ($)
Revenues80,000
Less: Expenses(56,000)
Net income$24,000

Table (1)

Statement of owner's’ equity: This statement reports the beginning owner’s equity and all the changes which led to ending owner's’ equity. Additional capital, net income from income statement is added to and drawings are deducted from beginning owner’s equity to arrive at the end result, ending owner’s equity.

Prepare the capital account of Company AS for the year ended December 31, 2014.

Company AS
Capital statement
Forthe year ended December 31, 2014
ParticularsAmount ($)
Beginning Capital Balance0
Add: Initial Capital from owner120,000
Add: Net Income24,000
Less: Withdrawal by owner(5,000)
Ending Capital Balance139,000

Table (2)

Balance sheet: Balance Sheet is one of the financial statements that summarize the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.

Prepare the balance sheet of Company AS as on December 31st, 2014.

Company AS
Balance sheet
Ason December 31, 2014
ParticularsAmount ($)
Assets 
Cash139,000
Total assets139,000
Liabilities and Equity
Liabilities0
Equity 
BB’s Capital139,000
Total Liabilities and Equity139,000

Table (3)

StatementCash flows: Statement of cash flows is a statement showing the source and application of cash between two balance sheet dates. It shows how the cash is sourced and used for the company’s operating, investing, and financing activities.

Prepare statement of cash flows for year ended December 31st, 2014 of Company AS.

Company AS
Cash Flow Statement
For the year ended  December 31, 2014
ParticularsAmount ($)Amount ($)
Cash Flows From Operating Activities:  
Receipts from Revenues80,000 
Paid for Expenses(56,000) 
Net Cash Flow from Operating Activities24,000
Cash Flows From Investing Activities0
Cash Flows From Financing Activities:  
Proceeds from owners120,000 
Paid for Owner’s Withdrawals(5,000) 
Net Cash Flow from Financing Activities115,000
Net Change in Cash 139,000
Add: Beginning Cash Balance 0
Ending Cash Balance 139,000

Table (4)

b)

To determine

Prepare a 2014 income statement, capital statement, balance sheet, and statement of cash flows for a Partnership AS.

b)

Expert Solution
Check Mark

Explanation of Solution

Calculate the capital contributions and determine the adjustments to the capital account.

ParticularsAmount ($)Percentage (%)
Capital contributions:  
SM’s contribution72,00060%
JP’s contribution48,00040%
Total capital contribution120,000100%
   
Adjustments to capital account  
Revenues (add to capital)80,000 
Expenses (deduct from capital)56,000 
Withdrawals:  
SM (deduct from capital)3,500 
JP (deduct from capital)1,500 

Table (5)

Income statement: It is one of the financial statements that reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Prepare the income statement of a PartnershipAS for the year ended December 31, 2014.

Partnership AS
Income statement
Forthe year ended December 31, 2014
ParticularsAmount ($)
Revenues80,000
Less: Expenses(56,000)
Net income24,000

Table (6)

Statement of owner's’ equity: This statement reports the beginning owner’s equity and all the changes which led to ending owner's’ equity. Additional capital, net income from income statement is added to and drawings are deducted from beginning owner’s equity to arrive at the end result, ending owner’s equity.

Prepare the capital account of PartnershipAS for the year ended December 31, 2014.

PartnershipAS
Capital statement
Forthe year ended December 31, 2014
ParticularsAmount ($)
Beginning Capital Balance0
Add: initial Capital  from partners120,000
Add: Net Income24,000
Less: Withdrawal by partners(5,000)
Ending Capital Balance$139,000

Table (7)

Balance sheet: Balance Sheet is one of the financial statements that summarize the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.

Prepare the balance sheet of PartnershipAS as on December 31st, 2014.

PartnershipAS
Balance sheet
Ason December 31, 2014
ParticularsAmount ($)
Assets 
Cash139,000
Total assets139,000
Liabilities and Equity 
Liabilities0
Equity 
SM’s Capital(1)78,100
JP’s Capital(1)60,900
Total Liabilities and Equity139,000

Table (8)

StatementCash flows: Statement of cash flows is a statement showing the source and application of cash between two balance sheet dates. It shows how the cash is sourced and used for the company’s operating, investing, and financing activities.

Prepare statement of cash flows for year ended December 31st, 2014 of Partnership AS.

PartnershipAS
Cash Flow Statement
For the year ended  December 31, 2014
ParticularsAmount ($)Amount ($)
Cash Flows From Operating Activities:  
Receipts from Revenues80,000 
Paid for Expenses(56,000) 
Net Cash Flow from Operating Activities24,000
   
Cash Flows From Investing Activities0
   
Cash Flows From Financing Activities:  
Proceeds from Partners120,000 
Paid for partners’ Withdrawals(5,000) 
Net Cash Flow from Financing Activities115,000
   
Net Change in Cash 139,000
Add: Beginning Cash Balance 0
Ending Cash Balance 139,000

Table (9)

Working note:

1. Calculate the ending balance of capital for each partner.

ParticularsBSJPTotal
Beginning Capital Balance$0$0$0
Investments72,00048,000120,000
Add: Net Income  24,000
    SM 40%9,600  
    JP 60% 14,400 
Less: Withdrawals(3,500)(1,500)(5,000)
Ending Capital Balances$78,100$60,900$139,000

Table (10)

c)

To determine

Prepare a 2014 income statement, statement of changes in stockholders equity, balance sheet, and statement of cash flows for Company AS.

c)

Expert Solution
Check Mark

Explanation of Solution

Income statement: It is one of the financial statements that reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Prepare the income statement of Company AS for the year ended December 31, 2014.

Company AS
Income statement
Forthe year ended December 31, 2014
ParticularsAmount ($)
Revenues80,000
Less: Expenses(56,000)
Net income$24,000

Table (11)

Statement of owner's’ equity: This statement reports the beginning owner’s equity and all the changes which led to ending owner's’ equity. Additional capital, net income from income statement is added to and drawings are deducted from beginning owner’s equity to arrive at the end result, ending owner’s equity.

Prepare the capital account of Company AS for the year ended December 31, 2014.

Company AS
Statement of changes in stockholders’ equity
Forthe year ended December 31, 2014
ParticularsAmount ($)
Beginning Capital Balance0
Add: issuance of common stock120,000
Ending common stock120,000
  
Beginning retained earnings$0
Add: Net Income24,000
Less: Dividends(5,000)
Ending retained earnings$19,000
  
Total stockholders’ equity$139,000

Table (12)

Balance sheet: Balance Sheet is one of the financial statements that summarize the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.

Prepare the balance sheet of Company AS as on December 31st, 2014.

Company AS
Balance sheet
Ason December 31, 2014
ParticularsAmount ($)
Assets 
Cash139,000
Total assets139,000
 
Liabilities and Equity 
Liabilities0
Equity 
Common stock, $10 par value, 10,000 shares issued and outstanding100,000
Paid-in capital in excess and outstanding20,000
Total paid in capital120,000
Retained earnings19,000
Total Liabilities and Equity139,000

Table (13)

StatementCash flows: Statement of cash flows is a statement showing the source and application of cash between two balance sheet dates. It shows how the cash is sourced and used for the company’s operating, investing, and financing activities.

Prepare statement of cash flows for year ended December 31st, 2014 of Corporation C.

Company AS
Cash Flow Statement
For the year ended  December 31, 2014
ParticularsAmount ($)Amount ($)
Cash Flows From Operating Activities:  
Receipts from Revenues80,000 
Paid for Expenses(56,000) 
Net Cash Flow from Operating Activities24,000
   
Cash Flows From Investing Activities0
   
Cash Flows From Financing Activities:  
Proceeds from issue of stock120,000 
Paid for Dividends(5,000) 
Net Cash Flow from Financing Activities115,000
   
Net Change in Cash 139,000
Add: Beginning Cash Balance 0
Ending Cash Balance 139,000

Table (14)

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Chapter 8 Solutions

Survey Of Accounting

Ch. 8 - 11. What is the difference between contributed...Ch. 8 - Prob. 12QCh. 8 - Prob. 13QCh. 8 - 14. What is the meaning of each of the following...Ch. 8 - 15. What is the difference between cumulative...Ch. 8 - 16. What is no-par stock? How is it recorded in...Ch. 8 - 17. Assume that Best Co. has issued and...Ch. 8 - 18. If Best Co. issued 10,000 shares of 20 par...Ch. 8 - 19. What is the difference between par value stock...Ch. 8 - 20. Why might a company repurchase its own stock?Ch. 8 - 21. What effect does the purchase of treasury...Ch. 8 - 22. Assume that Day Company repurchased 1,000 of...Ch. 8 - 23. What is the importance of the declaration...Ch. 8 - 24. What is the difference between a stock...Ch. 8 - 25. Why would a company choose to distribute a...Ch. 8 - 26. What is the primary reason that a company...Ch. 8 - 27. If Best Co. had 10,000 shares of 20 par value...Ch. 8 - 28. When a company appropriates retained earnings,...Ch. 8 - Prob. 29QCh. 8 - Prob. 30QCh. 8 - Prob. 31QCh. 8 - 32. What are some reasons that a corporation might...Ch. 8 - Effect of accounting events on the financial...Ch. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Prob. 6ECh. 8 - Prob. 7ECh. 8 - Prob. 8ECh. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - Prob. 14ECh. 8 - Prob. 15ECh. 8 - Prob. 16ECh. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 1ATCCh. 8 - ATC 8-3 Research Assignment Analyzing Skecherss...Ch. 8 - Prob. 4ATCCh. 8 - ATC 11-7 Ethical Dilemma Bad news versus very bad...
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