Reference no: EM132223496
Problem 1 - Recording events in a horizontal statements model
Maben Company was started on January 1, 2018, 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 $25,000.
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.
Required -
a. 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). The first event is shown as an example.
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Event No.
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Balance Sheet
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Income Statement
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Cash + Land = N. Pay + C. Stock. + Ret. Ear.
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Rev. - Exp. = net Inc.
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1.
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30,000 + NA = NA + 30,000 + NA
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NA - NA = NA
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b. Determine the amount of total assets that Maben would report on the December 31, 2018, balance sheet.
c. Identify the asset source transactions and related amounts for 2018.
d. Determine the net income that Maben would report on the 2018 income statement. Explain why dividends do not appear on the income statement.
e. Determine the net cash flows from operating activities, financing activities, and investing activities that Maben would report on the 2018 statement of cash flows.
f. Determine the percentage of assets that were provided by investors, creditors, and earnings. Round to three decimal places.
g. What is the balance in the Retained Earnings account immediately after Event 3 is recorded?
Problem 2 - Effect of events on financial statements
Waddell Company had the following balances in its accounting records as of December 31, 2018:
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Assets
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Liabilities and Equity
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Cash
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$35,000
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Accounts Payable
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$7,500
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Accounts Receivable
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9,000
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Common Stock
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40,000
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Land
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51,000
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Retained Earnings
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47,500
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Total
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$95,000
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$95,000
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The following accounting events apply to Waddell Company's 2018 fiscal year:
Jan. 1 Acquired $20,000 cash from the issue of common stock.
Feb . 1 Paid $6,000 cash in advance for a one-year lease for office space.
Mar. 1 Paid a $2,000 cash dividend to the stockholders.
April 1 Purchased additional land that cost $15,000 cash.
May 1 Made a cash payment on accounts payable of $5,500.
July 1 Received $9,600 cash in advance as a retainer for services to be performed monthly over the coming year.
Sept. 1 Sold land for $30,000 cash that had originally cost $30,000.
Oct. 1 Purchased $2,500 of supplies on account.
Dec. 31 Earned $58,000 of service revenue on account during the year.
Dec. 31 Received cash collections from accounts receivable amounting to $46,000.
Dec. 31 Incurred other operating expenses on account during the year that amounted to $28,000.
Dec. 31 Recognized accrued salaries expense of $6,500.
Dec. 31 Had $50 of supplies on hand at the end of the period.
Dec. 31 The land purchased on April 1 had a market value of $20,000.
Dec. 31 Recognized $500 of accrued interest revenue.
Required - Based on the preceding information, answer the following questions for Waddell Company. All questions pertain to the 2018 financial statements. (Hint: Enter items in general ledger accounts under the accounting equation before answering the questions.)
a. Based on the preceding transactions, identify two additional adjustments and describe them.
b. What amount would Waddell report for land on the balance sheet?
c. What amount of net cash flow from operating activities would be reported on the statement of cash flows?
d. What amount of rent expense would be reported on the income statement?
e. What amount of total liabilities would be reported on the balance sheet?
f. What amount of supplies expense would be reported on the income statement?
g. What amount of unearned revenue would be reported on the balance sheet?
h. What amount of net cash flow from investing activities would be reported on the statement of cash flows?
i. What amount of total expenses would be reported on the income statement?
j. What amount of service revenue would be reported on the income statement?
k. What amount of cash flows from financing activities would be reported on the statement of cash flows?
l. What amount of net income would be reported on the income statement?
m. What amount of retained earnings would be reported on the balance sheet?
Problem 3 - Identifying and arranging elements on financial statements
The following accounts and balances were drawn from the records of Barker Company at December 31, 2018:
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Supplies
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$1,000
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Beginning retained earnings
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$9,300
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Cash flow from investing act.
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(5,200)
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Cash flow from financing act.
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(5,000)
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Prepaid insurance
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1,200
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Rent expense
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2,500
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Service revenue
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65,200
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Dividends
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3,000
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Other operating expenses
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41,000
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Cash
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48,000
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Supplies expense
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1,100
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Accounts receivable
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14,200
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Insurance expense
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2,100
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Prepaid rent
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4,800
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Beginning common stock
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40,000
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Unearned revenue
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6,400
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Cash flow from operating act.
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15,600
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Land
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24,000
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Common stock issued
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5,000
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Accounts payable
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17,000
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Required - Use the accounts and balances from Barker Company to construct an income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows (show only totals for each activity on the statement of cash flows).
Note - Must put answers into attached answer format.
Attachment:- ANSWER FORMAT SHEET.rar