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ACC 100 Chapter Notes - Chapter 4: Flowchart, Cash Flow, Retained Earnings

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graytiger892
13 Oct 2016
School
Ryerson University
Department
Accounting
Course
ACC 100
Professor
Lior Yitzhaky

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Document Summary

There are four financial statements, three of them are created using our understanding of the elements. The 3 financial statement showed are: balance sheet, statement of retained earnings, and income statement. This flowchart is only used when a business is in the 1st year of operations. In the 2nd year, additional info would be provided, such as opening retained earnings. In what order should we produce the financial statements: income statement, statement of retained earnings, balance sheet, statement of cash flows. The statement of cash flows is a statement which explains something rather than producing a number which is used in another statement. It describes the inflows and outflows of cash during the period. It sho(cid:449)s the (cid:271)usi(cid:374)ess"s p(cid:396)ofita(cid:271)ilit(cid:455), (cid:449)hethe(cid:396) the (cid:396)e(cid:448)e(cid:374)ues a(cid:396)e highe(cid:396) tha(cid:374) the e(cid:454)pe(cid:374)ses and by how much. The lo(cid:374)g te(cid:396)(cid:373) su(cid:396)(cid:448)i(cid:448)al of a(cid:374)(cid:455) (cid:271)usi(cid:374)ess is depe(cid:374)de(cid:374)t o(cid:374) its" p(cid:396)ofit (cid:271)e(cid:272)ause it"s the o(cid:374)l(cid:455) consistent source of cash over the long term.

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Related Questions

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Missing Amounts from Financial Statements

The financial statements at the end of Atlas Realty's firstmonth of operations follow:

Required:

Analyze the interrelationships among the four financialstatements and enter the missing amounts. If an amount is zero,enter "0".

AtlasRealty
IncomeStatement
For the MonthEnded May 31, 2018
Fees earned $400,000
Expenses:
Wages expense $
Rent expense 48,000
Supplies expense 17,600
Utilities expense 14,400
Miscellaneous expense 4,800
Total expenses 288,000
Net income $
AtlasRealty
RetainedEarnings Statement
For the MonthEnded May 31, 2018
Retained earnings, May 1, 2018 $
Net income $
Dividends
Change in retained earnings
Retained earnings, May 31, 2018 $
AtlasRealty
BalanceSheet
May 31,2018
Assets
Cash $123200
Supplies 12,800
Land
Total assets $
Liabilities
Accounts payable $48,000
Stockholders’ Equity
Common stock $
Retained earnings
Total stockholders' equity
Total liabilities and stockholders’equity $

Use the minus sign to indicate cash outflows, decreases in cash,and cash payments.

AtlasRealty
Statement ofCash Flows
For the MonthEnded May 31, 2018
Cash flows from operating activities:
Cash received from customers $
Cash payments for expenses and payments tocreditors -252,800
Net cash flows from operatingactivities $
Cash flows from investing activities:
Cash payments for acquisition of land -120,000
Cash flows from financing activities:
Cash received from issuing commonstock $160,000
Cash dividends -64,000
Net cash flows from financingactivities
Net increase (decrease) in cash and May 31,2018, cash balance $

Mami SA contributes $170,000 cash and Nasrin Company brings innet assets valued at $170,000 to form Mazda Inc. Mami, SA andNasrin Company each receive 50 percent equity interest in MazdaInc. The financial statements of Mazda Inc. for its first year ofoperations are as follows:

Mazda Inc.

Income Statement

YEAR 1

______________________________________________________________________________

Revenues $80,000

Expenses 50,000

________

Income beforetax 30,000

TaxExpense 10,000

________

NetIncome $20,000

________

Mazda Inc.

Balance Sheet

December 31, Year 1

______________________________________________________________________________

Cash $40,000 Liabilities $60,000

Inventory 60,000

Property, Plant,and CommonStock 340,000

Equipment(net) 320,000 Retained Earnings 20,000

_________ ________

TotalAssets $420,000 $420,000

_________ ________

Mami SA’s financial statements for the year ended December 31,Year 1 and before making any accounting entries related to itsinvestment in Mazda, Inc., are as follows:

Mami SA

Income Statement for Year 1

______________________________________________________________________________

Revenues $800,000

Expenses 450,000

________

Income beforetax 350,000

TaxExpense 100,000

________

NetIncome $250,000

________

Mami SA

Balance Sheet for the year ended on December 31, Year1

______________________________________________________________________________

Cash $130,000 Liabilities $250,000

Inventory 200,000

Property, Plant,and CommonStock 600,000

Equipment(net) 650,000 Retained Earnings 300,000

Investment in

Mazda Inc. (at cost) 170,000

___________ __________

TotalAssets $1,150,000 $1,150,000

___________ __________

Restate Mami, SA’s Year 1 financial statements to properlyaccount for its investment in Mazda Inc. under the proportionateconsolidation method and equity method.