Crawford Enterprises started the 2014 accounting period with$75,000 of assets (all cash), $15,000 of liabilities, and $25,000of common stock. During the year, Crawford earned cash revenues of$46,000, paid cash expenses of $26,000, and paid a cash dividend tostockholders of $5,000. Crawford also acquired $15,000 ofadditional cash from the sale of common stock and paid $10,000 cashto reduce the liability owed to a bank.
1.
value:
10.00 points
Required information
Required
a-1. Prepare an income statement for the 2014 accountingperiod.
a-2. Prepare a statement of changes in stockholdersâ equity forthe 2014 accounting period.
a-3. Prepare a period-end balance sheet for the 2014 accountingperiod.
Crawford Enterprises started the 2014 accounting period with$75,000 of assets (all cash), $15,000 of liabilities, and $25,000of common stock. During the year, Crawford earned cash revenues of$46,000, paid cash expenses of $26,000, and paid a cash dividend tostockholders of $5,000. Crawford also acquired $15,000 ofadditional cash from the sale of common stock and paid $10,000 cashto reduce the liability owed to a bank.
1.
value:
10.00 points
Required information
Required
a-1. Prepare an income statement for the 2014 accountingperiod.
a-2. Prepare a statement of changes in stockholdersâ equity forthe 2014 accounting period.
a-3. Prepare a period-end balance sheet for the 2014 accountingperiod.
Related questions
Susanâs Consulting experienced the following transactions for2014, its first year of operations, and 2015. Assume that alltransactions involve the receipt or payment of cash.
| Transactions for2014 |
| 1. | Acquired $65,000by issuing common stock. |
| 2. | Received$115,000 cash for providing services to customers. |
| 3. | Borrowed $18,000cash from creditors. |
| 4. | Paid expensesamounting to $57,000. |
| 5. | Purchased landfor $40,000 cash. |
| Transactions for2015 |
| Beginningaccount balances for 2015 are: |
| Cash | $ | 101,000 | |
| Land | 40,000 | ||
| Notes payable | 18,000 | ||
| Common stock | 65,000 | ||
| Retained earnings | 58,000 | ||
| 1. | Acquired anadditional $23,000 from the issue of common stock. |
| 2. | Received$133,000 for providing services. |
| 3. | Paid $13,000 tocreditors to reduce loan. |
| 4. | Paid expensesamounting to $72,000. |
| 5. | Paid a $13,500dividend to the stockholders. |
| 6. | Determined thatthe market value of the land is $50,000. |
| Required | |
| a. | Record the effects of each accounting event under theappropriate headings for each year. Record the amounts of revenue,expense, and dividends in the Retained Earnings column. Provideappropriate titles for these accounts in the last column of thetable. (Enter any decreases to account balances with aminus sign. Select "NA" if there is no effect on the "AccountTitles for Retained Earnings".) |
| b-1. | Prepare an income statement for each year accounting period. |
| b-2. | Prepare a statement of changes instockholdersâ equity for each year accounting period. |
| b-3. | Prepare a year-end balance sheet for eachyear accounting period. |
| b-4. | Prepare a statement of cash flows for eachyear accounting period. (Amounts to be deducted should beindicated with a minus sign.) |
| c. | Determine theamount of cash that is in the retained earnings account at the endof 2014 and 2015. |
| e. | Determine the balance in the Retained Earnings accountimmediately after Event 2 in 2014 and in 2015 are recorded. |
Attached are the income statement and statement of stockholdersâ equity for Varney Corp for the year ended 12/31/2014 and the comparative balance sheet information at 12/31/2013 and 12/31/2014. The following additional information is provided:
During 2014 Varney purchased land and a building through a $200,000 cash purchase. There were no disposals of operating assets during 2014. The building is the only depreciable operating asset that Varney owned during 2014
During 2014, Varney issued 5,000 shares of its own common stock for $50,000
During 2014, Varney repurchased 2,000 shares of its own common stock for $18,000
The other operating expenses were paid in full during 2014
During 2014, $2,000 of dividends were paid to stockholders
An equity statement is not shown because all relevant information to the statement of cash flows has been provided
Required:
Prepare a statement of cash flows for Varney Corp. for the year ended 12/31/2014 using the âindirectâ method of presenting operating cash flows.
| Varney Corp. | |||||
| Income Statement | |||||
| Year Ended 12/31/2014 | |||||
| Revenues and Gains: | |||||
| Sales Revenue | $1,118,000 | ||||
| Expenses and Losses: | |||||
| Cost of Goods Sold | $ 614.600 | ||||
| Salaries and Wages Expense | 206,800 | ||||
| Rent Expense | 9,000 | ||||
| Depreciation Expense | 4,000 | ||||
| Other Operating Expenses | 123,180 | ||||
| Interest Expense | 2,000 | 963,580 | |||
| Net Income | $ 158,420 | ||||
| Varney Corp. | |||||
| Comparative Balance Sheet Information | |||||
| 12/31/2013 & 12/31/2014 | |||||
| Assets: | 12/31/2013 | 12/31/2014 | Change | ||
| Cash | $ 85,800 | $136,900 | $ +51,100 | ||
| Accounts Receivable | 73,500 | 115,520 | +42,020 | ||
| Inventory | 40,000 | 15,400 | - 24,600 | ||
| Prepaid Rent | 3,000 | 0 | -3,000 | ||
| Operating Assets (Net) | 0 | 196,000 | +196,000 | ||
| Total Assets | $202,300 | $463,820 | $+261,520 | ||
| Liabilities and Stockholdersâ Equity: | |||||
| Accounts Payable | $ 51,500 | $120,000 | $ +68,500 | ||
| Salaries & Wages Payable | 900 | 6,000 | + 5,100 | ||
| Interest Payable | 500 | 0 | - 500 | ||
| Notes Payable | 50,000 | 50,000 | 0 | ||
| Paid-in Capital | 75,000 | 125,000 | +50,000 | ||
| Retained Earnings | 24,400 | 180,820 | +156,420 | ||
| Treasury Stock | 0 | (18,000) | -18,000 | ||
| Total Liabilities & Stockholdersâ Equity | $202,300 | $463,820 | $+261,520 | ||
