
Concept Introduction:
Financial Statements: Financial statements are reports of the financial condition of a company or entity. In the financial statements, the management presents the financial performance and position of the company at a point in time. Financial statements disclose the financial effects of business transactions. Financial statements include a
Balance Sheet: The balance sheet provides details of the firm’s assets, liabilities and owner’s equity for a given date. The balance sheet gives a snapshot of what the company owns and owes as well as the amount invested in equity. The balance sheet follows the below rule
Income Statement: It is also called the profit & loss statement. Income statement provides a snapshot of revenue, expenses and net income of the organization for a given period.
Statement of Cash Flows: It is a financial statement that shows the movements of cash and Bank balance during a period. It describes the amount of cash generated by a company during a period and the use of the cash.
Statement of change in equity: It is a financial statement that shows the movements of the equity capital during a period.
1.
To prepare: A table in the required format for the given data

Explanation of Solution
The required table for the given data is prepared as below
Assets | Liabilities | + | Equity | ||||||||||||||||
Date | Cash | + | Accounts Receivable | + | Office Supplies | + | Office equipment | + | Roofig equipment | = | Account Payable | + | R.Rivra Capital | - | R.Rivera withdrawals | + | Revenues | - | Expenses |
1 | 80,000 | 80,000 | |||||||||||||||||
2 | -700 | -700 | |||||||||||||||||
3 | -1000 | 5,000 | 4,000 | ||||||||||||||||
6 | -600 | 600 | |||||||||||||||||
8 | 7,600 | 7,600 | |||||||||||||||||
10 | 2,300 | 2,300 | |||||||||||||||||
15 | 8,200 | 8,200 | |||||||||||||||||
17 | 3,100 | 3,100 | |||||||||||||||||
23 | -2,300 | -2,300 | |||||||||||||||||
25 | 5,000 | 5,000 | |||||||||||||||||
28 | 8,200 | -8,200 | |||||||||||||||||
30 | -1,560 | -1,560 | |||||||||||||||||
31 | -295 | -295 | |||||||||||||||||
31 | -1,800 | -1,800 | |||||||||||||||||
87,545 | + | 5,000 | + | 3,700 | + | 2,300 | + | 5,000 | = | 7,100 | + | 80,000 | - | -1,800 | + | 20,800 | - | -2,555 |
2.
To Prepare: The income statement, statement of owner’s equity and the balance sheet from the given data.

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 | |
Account receivable | $5,000 | |
Office Equipments | $2,300 | |
Office Supplies | $3,700 | |
Total | $103,545 |
3.
To Prepare: A statement of cash flows for the month of July.

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.

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
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