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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
![Check Mark](/static/check-mark.png)
Explanation of Solution
The required table for the given data is prepared as below
Assets | Liabilities | + | Equity | ||||||||||||||||
Date | Cash | + | + | 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.
![Check Mark](/static/check-mark.png)
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.
![Check Mark](/static/check-mark.png)
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.
![Check Mark](/static/check-mark.png)
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
Loose Leaf for Fundamentals of Accounting Principles and Connect Access Card
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