ACC 240 Lecture Notes - Lecture 5: Retained Earnings, Income Statement
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The balance sheet for Plasma Screens Corporation along with additional information, are provided below:
| PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017 | ||||
| 2018 | 2017 | |||
| Assets: | ||||
| Current assets: | ||||
| Cash | $ | 82,000 | $ | 120,000 |
| Accounts receivable | 72,000 | 96,000 | ||
| Inventory | 65,000 | 80,000 | ||
| Prepaid rent | 5,000 | 4,000 | ||
| Long-term assets: | ||||
| Land | 500,000 | 500,000 | ||
| Equipment | 800,000 | 600,000 | ||
| Accumulated depreciation | (380,000) | (300,000) | ||
| Total assets | $ | 1,144,000 | $ | 1,100,000 |
| Liabilities and Stockholders' Equity: | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 78,000 | $ | 82,000 |
| Interest payable | 5,000 | 9,000 | ||
| Income tax payable | 9,000 | 7,000 | ||
| Long-term liabilities: | ||||
| Notes payable | 75,000 | 150,000 | ||
| Stockholders' equity: | ||||
| Common stock | 600,000 | 600,000 | ||
| Retained earnings | 377,000 | 252,000 | ||
| Total liabilities and stockholders' equity | $ | 1,144,000 | $ | 1,100,000 |
Additional Information for 2018:
1. Net income is $160,000.
2. The company purchases $200,000 in equipment.
3. Depreciation expense is $80,000.
4. The company repays $75,000 in notes payable.
5. The company declares and pays a cash dividend of $35,000.
Prepare the statement of cash flows using the indirect method.
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The balance sheet for Plasma Screens Corporation, along with additional information, are provided below:
| PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017 | ||||
| 2018 | 2017 | |||
| Assets: | ||||
| Current assets: | ||||
| Cash | $ | 142,950 | $ | 154,000 |
| Accounts receivable | 76,800 | 90,500 | ||
| Inventory | 92,000 | 77,300 | ||
| Prepaid rent | 3,400 | 1,700 | ||
| Long-term assets: | ||||
| Land | 465,000 | 465,000 | ||
| Equipment | 762,000 | 655,000 | ||
| Accumulated depreciation | (421,000) | (262,000) | ||
| Total assets | $ | 1,121,150 | $ | 1,181,500 |
| Liabilities and Stockholders' Equity: | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 96,000 | $ | 82,300 |
| Interest payable | 6,750 | 13,500 | ||
| Income tax payable | 7,400 | 4,700 | ||
| Long-term liabilities: | ||||
| Notes payable | 112,500 | 225,000 | ||
| Stockholders' equity: | ||||
| Common stock | 685,000 | 685,000 | ||
| Retained earnings | 213,500 | 171,000 | ||
| Total liabilities and stockholders' equity | $ | 1,121,150 | $ | 1,181,500 |
Additional Information for 2018:
1. Net income is $66,000.
2. The company purchases $107,000 in equipment.
3. Depreciation expense is $159,000.
4. The company repays $112,500 in notes payable.
5 .The company declares and pays a cash dividend of $23,500.
Required:
Prepare the statement of cash flows using the indirect method.
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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 | |
| Stockholdersâ Equity | ||
| Common stock | $ | |
| Retained earnings | ||
| Total stockholders' equity | ||
| Total liabilities and stockholdersâequity | $ | |
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 | $ | |
