The financial statements at the end of Network Realty, Inc.'s first month of operation are shown below. NETWORK REALTY, INC. Income Statement For the Month Ended December 31, 20Y4 Fees earned $ (a) Operating expenses: Wages expense $33,120 Rent expense 18,000 Utilities expense (b) Interest expense 1,800 Miscellaneous expense 3,960 Total operating expenses 67,500 Net income $ (c) NETWORK REALTY, INC. Statement of Stockholders' Equity For the Month Ended December 31, 20Y4 Common Stock Retained Earnings Total Balances, Dec. 1, 20Y4 $ 0 $ (d) $ 0 Issued common stock 75,000 75,000 Net income 57,500 57,500 Dividends (e) (e) Balances, Dec. 31, 20Y4 $75,000 $ (f) $ (g) NETWORK REALTY, INC. Balance Sheet December 31, 20Y4 Assets Cash $ (h) Land 175,000 Total assets $225,500 Liabilities Notes payable $105,000 Stockholders’ Equity Common stock $(i) Retained earnings (j) Total stockholders’ equity (k) Total liabilities and stockholders’ equity $ (l) NETWORK REALTY, INC. Statement of Cash Flows For the Month Ended December 31, 20Y4 Cash flows from operating activities: Cash received from customers $125,000 Cash paid for expenses (67,500) Net cash flows from operating activities $ (m) Cash flows used in investing activities: Cash paid for purchase of land (175,000) Cash flows from financing activities: Cash received from issuing common $75,000 Cash received from issuing notes payable (n) Cash dividends paid to stockholders (12,000) Net cash flows from financing activities (o) Net increase in cash $ (p) December 1, 20Y4, cash balance (q) December 31, 20Y4, cash balance $ (r) By analyzing the interrelationships among the financial statements, fill in the proper amounts for (a) through (s). If your answer is zero enter "0". a. Fees earned $fill in the blank 1 b. Utilities expense $fill in the blank 2 c. Net income $fill in the blank 3 d. Retained earnings, December 1, 20Y4 $fill in the blank 4 e. Dividends $fill in the blank 5 f. Retained earnings, December 31, 20Y4 $fill in the blank 6 g. Stockholders’ equity, December 31, 20Y4 $fill in the blank 7 h. Cash $fill in the blank 8 i. Common stock $fill in the blank 9 j. Retained earnings $fill in the blank 10 k. Total stockholders' equity $fill in the blank 11 l. Total liabilities and stockholders' equity $fill in the blank 12 m. Net cash flows from operating activities $fill in the blank 13 n. Cash received from issuing notes payable $fill in the blank 14 o. Net cash flows from financing activities $fill in the blank 15 p. Net increase in cash $fill in the blank 16 q. December 1, 20Y4, cash balance $fill in the blank 17 r. December 31, 20Y4, cash balance $fill in the blank 18
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Missing Amounts From Financial Statements
The financial statements at the end of Network Realty, Inc.'s first month of operation are shown below.
| NETWORK REALTY, INC. Income Statement For the Month Ended December 31, 20Y4 |
||||
| Fees earned | $ (a) | |||
| Operating expenses: | ||||
| Wages expense | $33,120 | |||
| Rent expense | 18,000 | |||
| Utilities expense | (b) | |||
| Interest expense | 1,800 | |||
| Miscellaneous expense | 3,960 | |||
| Total operating expenses | 67,500 | |||
| Net income | $ (c) |
| NETWORK REALTY, INC. Statement of Stockholders' Equity For the Month Ended December 31, 20Y4 |
|||||||||||
| Common Stock | Total | ||||||||||
| Balances, Dec. 1, 20Y4 | $ 0 | $ (d) | $ 0 | ||||||||
| Issued common stock | 75,000 | 75,000 | |||||||||
| Net income | 57,500 | 57,500 | |||||||||
| Dividends | (e) | (e) | |||||||||
| Balances, Dec. 31, 20Y4 | $75,000 | $ (f) | $ (g) |
| NETWORK REALTY, INC. Balance Sheet December 31, 20Y4 |
|||||||
| Assets | |||||||
| Cash | $ (h) | ||||||
| Land | 175,000 | ||||||
| Total assets | $225,500 | ||||||
| Liabilities | |||||||
| Notes payable | $105,000 | ||||||
| Common stock | $(i) | ||||||
| Retained earnings | (j) | ||||||
| Total stockholders’ equity | (k) | ||||||
| Total liabilities and stockholders’ equity | $ (l) |
| NETWORK REALTY, INC. Statement of For the Month Ended December 31, 20Y4 |
|||
| Cash flows from operating activities: | |||
| Cash received from customers | $125,000 | ||
| Cash paid for expenses | (67,500) | ||
| Net cash flows from operating activities | $ (m) | ||
| Cash flows used in investing activities: | |||
| Cash paid for purchase of land | (175,000) | ||
| Cash flows from financing activities: | |||
| Cash received from issuing common | $75,000 | ||
| Cash received from issuing notes payable | (n) | ||
| Cash dividends paid to stockholders | (12,000) | ||
| Net cash flows from financing activities | (o) | ||
| Net increase in cash | $ (p) | ||
| December 1, 20Y4, cash balance | (q) | ||
| December 31, 20Y4, cash balance | $ (r) |
By analyzing the interrelationships among the financial statements, fill in the proper amounts for (a) through (s). If your answer is zero enter "0".
| a. Fees earned | $fill in the blank 1 |
| b. Utilities expense | $fill in the blank 2 |
| c. Net income | $fill in the blank 3 |
| d. Retained earnings, December 1, 20Y4 | $fill in the blank 4 |
| e. Dividends | $fill in the blank 5 |
| f. Retained earnings, December 31, 20Y4 | $fill in the blank 6 |
| g. Stockholders’ equity, December 31, 20Y4 | $fill in the blank 7 |
| h. Cash | $fill in the blank 8 |
| i. Common stock | $fill in the blank 9 |
| j. Retained earnings | $fill in the blank 10 |
| k. Total stockholders' equity | $fill in the blank 11 |
| l. Total liabilities and stockholders' equity | $fill in the blank 12 |
| m. Net cash flows from operating activities | $fill in the blank 13 |
| n. Cash received from issuing notes payable | $fill in the blank 14 |
| o. Net cash flows from financing activities | $fill in the blank 15 |
| p. Net increase in cash | $fill in the blank 16 |
| q. December 1, 20Y4, cash balance | $fill in the blank 17 |
| r. December 31, 20Y4, cash balance | $fill in the blank 18 |
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