Completing a
Carlos Ramirez and Camila Garza organized New World Book Store as a corporation; each contributed $80,000 cash to start the business and received 4,000 shares of common stock. The store completed its first year of operations on December 31 current year. On that date, the following financial items for the year were determined: December 31, current year, cash on hand and in the bank, $75,600: December 31, current year, amounts due from customers from sales of books, $39,000: unused portion of store and office equipment, $73,000: December 31, current year, amounts owed to publishers for books purchased, $ 12,000; one-year note pay able to a local bank for $3,000. No dividends were declared or paid to the stockholders during the year.
Required:
- 1. Complete the following balance sheet as of the end of the current year.
- 2. What was the amount of net income for the year? (Hint: Use the retained earnings equation | Beginning Retained Earnings + Net Income − Dividends = Ending Retained Earnings] to solve for net income.)
Assets | Liabilities | ||
Cash | $ | Accounts pay able | $ |
Accounts receivable | _______ | Note payable | _______ |
Store and office equipment | _______ | Interest payable | 300 |
Total liabilities | $ | ||
Stockholders’ Equity | |||
Common stock | |||
Retained earnings | 12,300 | ||
Total stockholders' equity | _______ | ||
Total assets | $ | Total liabilities and stockholders' equity | $ |
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FINANCIAL ACCOUNTING 9TH
- Statement of Cash Flows Colorado Corporation was organized at the beginning of the year, with the investment of $250,000 in cash by its stockholders. The company immediately purchased an office building for $300,000, paying $210,000 in cash and signing a three-year promissory note for the balance. Colorado signed a five-year, $60,000 promissory note at a local bank during the year and received cash in the same amount. During its first year, Colorado collected $93,970 from its customers. It paid $65,600 for inventory, $20,400 in salaries and wages, and another $3,100 in taxes. Colorado paid $5,600 in cash dividends. Required Prepare a statement of cash flows for the year. What does this statement tell you that an income statement does not?arrow_forwardDetermine the dollar effect on the accounting equation (increase or decrease assets, liabilities, or stockholders’ equity) from the following separate transactions. a. Dillon contributes $4,000 of cash to his corporation in exchange for common stock. b. Cowboy Corporation purchases equipment with a 10-year note payable for $1,600. c. Queen Bee pays off $1,300 of accounts payable.arrow_forwardMaben Company was started on January 1, Year 1, and experienced the following events during its first year of operation: Acquired $32,000 cash from the issue of common stock. Borrowed $44,000 cash from National Bank. Earned cash revenues of $60,000 for performing services. Paid cash expenses of $51,000. Paid a $2,200 cash dividend to the stockholders. Acquired an additional $32,000 cash from the issue of common stock. Paid $11,000 cash to reduce the principal balance of the bank note. Paid $49,000 cash to purchase land. Determined that the market value of the land is $69,000. Required Record the preceding transactions in the horizontal statements model. Also, in the Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). If the element is not affected by the event, leave the cell blank. The first event is shown as an example. (Enter any decreases to account balances and cash outflows with a minus sign. Not all…arrow_forward
- nces Blooming Flower Company was started in Year 1 when it acquired $60,500 cash from the issue of common stock. The following data summarize the company's first three years' operating activities. Assume that all transactions were cash transactions. Purchases of inventory Sales Cost of goods sold Selling and administrative expenses Income Statements Required: Prepare an income statement (use multistep format) and balance sheet for each fiscal year. (Hint: Record the transaction data for each accounting period in the accounting equation before preparing the statements for that year.) Complete this question by entering your answers in the tabs below. Balance Sheets Assets Cash Merchandise inventory Prepare a balance sheet for each fiscal year. (Hint: Record the transaction data for each accounting period in the accounting equation before preparing the statements for that year.) Total assets Liabilities Stockholders' equity Common stock Retained earnings Year 1 $ 22,200 26,400 12,500…arrow_forwardMaben Company was started on January 1, Year 1, and experienced the following events during its first year of operation: 1. Acquired $30,000 cash from the issue of common stock. 2. Borrowed $40,000 cash from National Bank. 3. Earned cash revenues of $48,000 for performing services. 4. Paid cash expenses of $45,000. 5. Paid a $1,000 cash dividend to the stockholders. 6. Acquired an additional $20,000 cash from the issue of common stock. 7. Paid $10,000 cash to reduce the principal balance of the bank note. 8. Paid $53,000 cash to purchase land. 9. Determined that the market value of the land is $75,000. e. Determine the net cash flows from operating activities, investing activities, and financing activities that Maben would report on the Year 1 statement of cash flows. Note: Enter cash outflows as negative amounts. Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activitiesarrow_forwardMaben Company was started on January 1, Year 1, and experienced the following events during its first year of operation: 1. Acquired $30,000 cash from the issue of common stock. 2. Borrowed $40,000 cash from National Bank. 3. Earned cash revenues of $48,000 for performing services. 4. Paid cash expenses of $45,000. 5. Paid a $1,000 cash dividend to the stockholders. 6. Acquired an additional $20,000 cash from the issue of common stock. 7. Paid $10,000 cash to reduce the principal balance of the bank note. 8. Paid $53,000 cash to purchase land. 9. Determined that the market value of the land is $75,000. f. Determine the percentage of assets that were provided by investors, creditors, and earnings. Note: Round your answers to 2 decimal places. Assets Investors % Creditors % Earnings %arrow_forward
- Use the horizontal model, or write the journal entry, for each of the following transactions and adjustments that occurred during the first year of operations at Kissick Co. Issued 220,000 shares of $5-par-value common stock for $1,100,000 in cash. Borrowed $540,000 from Oglesby National Bank and signed a 13% note due in two years. Incurred and paid $400,000 in salaries for the year. Purchased $700,000 of merchandise inventory on account during the year. Sold inventory costing $620,000 for a total of $960,000, all on credit. Paid rent of $330,000 on the sales facilities during the first 11 months of the year. Purchased $140,000 of store equipment, paying $53,000 in cash and agreeing to pay the difference within 90 days. Paid the entire $87,000 owed for store equipment and $590,000 of the amount due to suppliers for credit purchases previously recorded. Incurred and paid utilities expense of $37,000 during the year. Collected $875,000 in cash from customers during the year for credit…arrow_forwardThe following are selected account balances of Rule Corporation at the end of the current year: Debit Credit Operating Expenses $3,200 Sales Revenue $17,780 Cost of Goods Sold 8,500 Interest Expense 790 Gain on Sale of Land 590 Rule is subject to a 30% income tax rate, and shareholders own 1,200 shares of its capital stock. Required: Prepare the income statement for Rule. RULE CORPORATION Income Statement For the Year Ended December 31, Current Year Other items: Earnings per sharearrow_forwardRequired information [The following information applies to the questions displayed below.] Maben Company was started on January 1, Year 1, and experienced the following events during its first year of operation: 1. Acquired $31,000 cash from the issue of common stock. 2. Borrowed $43,000 cash from National Bank. 3. Earned cash revenues of $59,000 for performing services. 4. Paid cash expenses of $50,500. 5. Paid a $2,100 cash dividend to the stockholders. 6. Acquired an additional $31,000 cash from the issue of common stock. 7. Paid $11,000 cash to reduce the principal balance of the bank note. 8. Paid $50,000 cash to purchase land. 9. Determined that the market value of the land is $70,000. . Determine the net cash flows from operating activities, investing activities, and financing activities that Maben would report on the Year 1 statement of cash flows. Note: Enter cash outflows as negative amounts. Net cash flows from operating activities Net cash flows from investing activities…arrow_forward
- Use the horizontal model, or write the journal entry, for each of the following transactions and adjustments that occurred during the first year of operations at Kissick Co. Issued 210,000 shares of $6-par-value common stock for $1,260,000 in cash. Borrowed $540,000 from Oglesby National Bank and signed a 13% note due in two years. Incurred and paid $420,000 in salaries for the year. Purchased $650,000 of merchandise inventory on account during the year. Sold inventory costing $630,000 for a total of $980,000, all on credit. Paid rent of $110,000 on the sales facilities during the first 11 months of the year. Purchased $170,000 of store equipment, paying $50,000 in cash and agreeing to pay the difference within 90 days. Paid the entire $120,000 owed for store equipment and $610,000 of the amount due to suppliers for credit purchases previously recorded. Incurred and paid utilities expense of $44,000 during the year. Collected $845,000 in cash from customers during…arrow_forwardRequired information [The following information applies to the questions displayed below.] Maben Company was started on January 1, Year 1, and experienced the following events during its first year of operation: 1. Acquired $35,000 cash from the issue of common stock. 2. Borrowed $35,000 cash from National Bank. 3. Earned cash revenues of $53,000 for performing services. 4. Paid cash expenses of $47,500. 5. Paid a $1,500 cash dividend to the stockholders. 6. Acquired an additional $25,000 cash from the issue of common stock. 7. Paid $9,000 cash to reduce the principal balance of the bank note. 8. Paid $58,000 cash to purchase land. 9. Determined that the market value of the land is $81,000. e. Determine the net cash flows from operating activities, investing activities, and financing activities that Maben would report on the Year 1 statement of cash flows. (Enter cash outflows as negative amounts.) Net cash flows from operating activities Net cash flows from investing activities Net…arrow_forwardRequired information [The following information applies to the questions displayed below.] Maben Company was started on January 1, Year 1, and experienced the following events during its first year of operation: 1. Acquired $35,000 cash from the issue of common stock. 2. Borrowed $35,000 cash from National Bank. 3. Earned cash revenues of $53,000 for performing services. 4. Paid cash expenses of $47,500. 5. Paid a $1,500 cash dividend to the stockholders. 6. Acquired an additional $25,000 cash from the issue of common stock. 7. Paid $9,000 cash to reduce the principal balance of the bank note. 8. Paid $58,000 cash to purchase land. 9. Determined that the market value of the land is $81,000. f. Determine the percentage of assets that were provided by investors, creditors, and earnings. (Round your answers to 2 decimal places.) Investors Creditors Earnings Assets % % %arrow_forward
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