
Concept explainers
a.
Record the eight events in the
a.

Explanation of Solution
The eight events are recorded using
Table (1)
b.
Prepare an income statement, statement of changes in equity, year-end
b.

Explanation of Solution
Income statement: Income statement is the financial statement of a company which shows all the revenues earned and expenses incurred by the company over a period of time.
Income statement for the Year 2018 is prepared as follows:
Company D | |
Income Statement | |
For the Year Ended December 31, 2018 | |
Particulars | Amount ($) |
Service Revenue | $20,000 |
Utilities Expense | (1,000) |
Operating Expense | ($15,000) |
Net Income | 4,000 |
Table (2)
Statement of changes in stockholders' equity: Statement of changes in stockholders' equity records the changes in the
Statement of changes in equity for the Year 2018 is prepared is as follows:
Company D | ||
Statement of Changes in Stockholders’ Equity | ||
For the Year Ended December 31, 2018 | ||
Particulars | Amount ($) | Amount ($) |
Beginning Common Stock | 6,000 | |
Add: Common Stock Issued | 30,000 | |
Ending Common Stock | 36,000 | |
Beginning | 8,000 | |
Add: Net Income | 4,000 | |
Less: Dividends | (2,000) | |
Ending Retained Earnings | 10,000 | |
Total Stockholders’ Equity | $46,000 |
Table (3)
Balance sheet: Balance Sheet is one of the financial statements that summarize the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.
Balance sheet for the Year 2018 is prepared as follows:
Company D | ||
Balance Sheet | ||
As of December 31, 2018 | ||
Particulars | Amount ($) | Amount ($) |
Assets: | ||
Cash | 32,000 | |
Land | 24,000 | |
Total Assets | $56,000 | |
Liabilities: | ||
Notes Payable | 10,000 | |
Total Liabilities | 10,000 | |
Stockholders’ Equity: | ||
Common Stock | 36,000 | |
Retained Earnings | 10,000 | |
Total Stockholders’ Equity | 46,000 | |
Total Liabilities and Stockholders’ Equity | $56,000 |
Table (4)
Statement of cash flows: Statement of cash flows is one among the financial statement of a Company statement that shows aggregate data of all
Statement of cash flows for the Year 2018 is prepared as follows:
Company D | ||
Statement of Cash Flows | ||
For the Year Ended December 31, 2018 | ||
Particulars | Amount ($) | Amount ($) |
Cash Flows From Operating Activities: | ||
Cash Receipts from Customers | 20,000 | |
Cash Payment for Utilities Expense | (1,000) | |
Cash Payments for Other Operating Expense | (15,000) | |
Net Cash Flow from Operating Activities | 4,000 | |
Cash Flows From Investing Activities: | ||
Cash Paid to Purchase Land | (12,000) | |
Net Cash Flow from Investing Activities | (12,000) | |
Cash Flows From Financing Activities: | ||
Cash Receipts from Stock Issue | 30,000 | |
Cash Receipts from Loan | 10,000 | |
Cash Payments for Dividends | (2,000) | |
Net Cash Flow from Financing Activities | 38,000 | |
Net Increase in Cash | 30,000 | |
Add: Beginning Cash Balance | 2,000 | |
Ending Cash Balance | $32,000 |
Table (5)
c.
Ascertain the percentage of assets provided by the retained earnings and find out the amount of cash in the retained earnings account.
c.

Explanation of Solution
Retained earnings: Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.
Calculate the percentage of assets provided by retained earnings:
Retained earnings are used to purchase assets or to pay liabilities and therefore, the amount of cash in the retained earnings accounts cannot be determined.
Therefore, the percentage of assets provided by retained earnings is 17.9%.
Want to see more full solutions like this?
Chapter 1 Solutions
Survey Of Accounting
- 9 A B C D E 4 Ramsey Miller Style, Inc. manufactures a product which requires 15 pounds of direct materials at a cost of $8 5 per pound and 5.0 direct labor hours at a rate of $17 per hour. Variable overhead is budgeted at a rate of $3 per direct labor hour. Budgeted fixed overhead is $433,000 per month. The company's policy is to end each month with direct materials inventory equal to 45% of the next month's direct materials requirement, and finished 7 goods inventory equal to 60% of next month's sales. August sales were 13,400 units, and marketing expects 8 sales to increase by 500 units in each of the upcoming three months. At the end of August, the company had 9 95,850 pounds of direct materials in inventory, and 8,340 units in finished goods inventory. 10 11 August sales 12 Expected increase in monthly sales 13 Desired ending finished goods (units) 14 Selling price per unit 15 Direct materials per unit 16 Direct materials cost 17 Direct labor hours (DLHS) per unit 18 Direct labor…arrow_forwardSherrod, Incorporated, reported pretax accounting income of $84 million for 2024. The following information relates to differences between pretax accounting income and taxable income: a. Income from installment sales of properties included in pretax accounting income in 2024 exceeded that reported for tax purposes by $3 million. The installment receivable account at year-end 2024 had a balance of $4 million (representing portions of 2023 and 2024 installment sales), expected to be collected equally in 2025 and 2026. b. Sherrod was assessed a penalty of $4 million by the Environmental Protection Agency for violation of a federal law in 2024. The fine is to be paid in equal amounts in 2024 and 2025. c. Sherrod rents its operating facilities but owns one asset acquired in 2023 at a cost of $88 million. Depreciation is reported by the straight-line method, assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight- line depreciation the…arrow_forwardProvide answerarrow_forward
- $ 36,000 204,000 The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation: Cash Noncash assets Liabilities Drysdale, loan $ 50,000 10,000 Total assets $ 240,000 Drysdale, capital (50%) Koufax, capital (30%) Marichal, capital (20%) Total liabilities and capital 70,000 60,000 50,000 $ 240,000 Required: a-1. Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2. a-2. Liquidation expenses are estimated to be $15,000. Prepare a predistribution schedule to guide the distribution of cash. b. Assume that assets costing $74,000 are sold for $60,000. How is the available cash to be divided? Complete this question by entering your answers in the tabs below.arrow_forwardCalculate GP ratio round answers to decimal placearrow_forwardWhat is the gross profit percentage for this periodarrow_forward
- The company's gross margin percentage is ?arrow_forwardProblem 19-13 (Algo) Shoney Video Concepts produces a line of video streaming servers that are linked to personal computers for storing movies. These devices have very fast access and large storage capacity. Shoney is trying to determine a production plan for the next 12 months. The main criterion for this plan is that the employment level is to be held constant over the period. Shoney is continuing in its R&D efforts to develop new applications and prefers not to cause any adverse feelings with the local workforce. For the same reason, all employees should put in full workweeks, even if that is not the lowest-cost alternative. The forecast for the next 12 months is MONTH FORECAST DEMAND January February March April 530 730 830 530 May June 330 230 July 130 August 130 September 230 October 630 730 800 November December Manufacturing cost is $210 per server, equally divided between materials and labor. Inventory storage cost is $4 per unit per month and is assigned based on the ending…arrow_forwardCompute 007s gross profit percentage and rate of inventory turnover for 2016arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning


