Computing the cash effectRouse Exercise Equipment, Inc. reported the following financial statements for 2018:RequirementsCompute the amount of Rouse Exercises acquisition of plant assets. Assume the acquisition was for cash. Rouse Exercise disposed of plant assets at book value. The cost and accumulated depreciation of the disposed asset was $47,900. No cash was received upon disposal.Compute new borrowing or payment of long-term notes payable, with Rouse Exercise having only one long-term notes payable transaction during the year.Compute the issuance of common stock with Rouse Exercise having only one common stock transaction during the year.Compute the payment of cash dividends. ROUSE EXERCISE EQUIPMENT, INC.Income StatementYear Ended December 31, 2018Net Sales Revenue$ 713,000Cost of Goods Sold342,000Gross Profit371,000Operating Expenses:Depreciation Expense$ 54,000Other Operating Expenses210,000Total Operating Expenses264,000Net Income$ 107,000 ROUSE EXERCISE EQUIPMENT, INC.Comparative Balance SheetDecember 31, 2018 and 201720182017AssetsCurrent Assets:Cash$ 17,000$ 16,000Accounts Receivable57,00046,000Merchandise Inventory79,00090,000Long-term Assets:Plants Assets260,500216,400Accumulated Depreciation-Plant Assets(38,500)(32,400)Investments96,00073,000Total Assets$ 471,000$ 409,000LiabilitiesCurrent Liabilities:Accounts Payable$ 72,000$ 71,000Salaries Payable3,0005,000Long-term Liabilities:Notes Payable61,00069,000Total Liabilities136,000145,000Stockholders' EquityCommon Stock, no par45,00034,000Retained Earnings290,000230,000Total Stockholders' Equity335,000264,000Total Liabilities and Stockholders' Equity$ 471,000$ 409,000

Answered: ROUSE EXERCISE EQUIPMENT, INC. Income…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Computing the cash effect

Rouse Exercise Equipment, Inc. reported the following financial statements for 2018:

Requirements

Compute the amount of Rouse Exercises acquisition of plant assets. Assume the acquisition was for cash. Rouse Exercise disposed of plant assets at book value. The cost and accumulated depreciation of the disposed asset was $47,900. No cash was received upon disposal.
Compute new borrowing or payment of long-term notes payable, with Rouse Exercise having only one long-term notes payable transaction during the year.
Compute the issuance of common stock with Rouse Exercise having only one common stock transaction during the year.
Compute the payment of cash dividends.

ROUSE EXERCISE EQUIPMENT, INC.
Income Statement
Year Ended December 31, 2018
Net Sales Revenue
$ 713,000
Cost of Goods Sold
342,000
Gross Profit
371,000
Operating Expenses:
Depreciation Expense
$ 54,000
Other Operating Expenses
210,000
Total Operating Expenses
264,000
Net Income
$ 107,000

ROUSE EXERCISE EQUIPMENT, INC.
Comparative Balance Sheet
December 31, 2018 and 2017
2018
2017
Assets
Current Assets:
Cash
$ 17,000
$ 16,000
Accounts Receivable
57,000
46,000
Merchandise Inventory
79,000
90,000
Long-term Assets:
Plants Assets
260,500
216,400
Accumulated Depreciation-Plant Assets
(38,500)
(32,400)
Investments
96,000
73,000
Total Assets
$ 471,000
$ 409,000
Liabilities
Current Liabilities:
Accounts Payable
$ 72,000
$ 71,000
Salaries Payable
3,000
5,000
Long-term Liabilities:
Notes Payable
61,000
69,000
Total Liabilities
136,000
145,000
Stockholders' Equity
Common Stock, no par
45,000
34,000
Retained Earnings
290,000
230,000
Total Stockholders' Equity
335,000
264,000
Total Liabilities and Stockholders' Equity
$ 471,000
$ 409,000

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