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2. To Prepare:
The income statement, statement of owner's equity and the
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Explanation of Solution
The income statement for Rivera Roofing Co for July month is as below:
Rivera Roofing Co | |||
Income Statement for the month July | |||
Details | Amount in S | ||
Revenue | |||
Income from services | $20,800 | ||
Expenses | |||
Rent expenses | 700 | ||
Salary expenses | 1,560 | ||
Utilities expenses | 295 | 2,555 | |
Net income | $18,245 |
The statement of owner's equity for Rivera Roofing Co is as below:
Rivera Roofing Co | ||
Statement of owner's equity for the month of July | ||
Details | Amount in S | |
Opening equity | 0 | |
Add: Equity introduced in form of cash | 80,000 | |
Add: Net income for the year | 18,245 | |
Less: Cash withdrawals | -1,800 | |
Closing equity as on July 31 | $96,445 |
The balance sheet as of July 31 is as below;
Rivera Roofing Company | ||
Balance Sheet as on July 31 | ||
Details | Amount in S | |
Liabilities | ||
Equity | $96,445 | |
Account payable | $7,100 | |
Total | $103,545 | |
Assets | ||
Cash | $87,545 | |
| $5,000 | |
Office Equipments | $2,300 | |
Office Supplies | $3,700 | |
Total | $103,545 |
3. To Prepare:
A statement of
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Explanation of Solution
The statement of cash flows for the month of July is prepared as below.
Rivera Roofing Company | |||
Statement of Cash flow for the month of July | |||
Amount in S | |||
Opening cash balance | 0 | ||
Cash flow from operating activities | |||
Rent paid in cash | -700 | ||
Revenue received in cash | 7,600 | ||
Cash received from customer | 8,200 | ||
Salary paid in cash | -1,560 | ||
Utilities expenses paid in cash | -295 | 13,245 | |
Cash flow from financing activities | |||
Cash paid to supplier of equipment | -1,000 | ||
Cash paid to supplier of office supplies | -600 | ||
Cash paid to supplier of equipment | -2,300 | -3,900 | |
Cash flow from investing activities | |||
Cash received from Owner | 80,000 | ||
Cash withdrawals by owner | -1,800 | 78,200 | |
Cash Balance as on July 31 | 87,545 |
4. To Compute:
The dollar effect of the given assumption on the month end amount for
a) Total assets
b) Total liabilities
c) Total equity.
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Explanation of Solution
The dollar effect of given assumption on month end is as below
a) Total assets: Total asset increased by $1,000.
b) Total liabilities: Total liabilities decreased by $4,000.
c) Total equity: Total equity increased by $1,000
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Chapter 1 Solutions
Connect Access Card For Fundamental Accounting Principles
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