Question

Please prepare a balance sheet, income statement, statement of owners equity and a statement of cash flows.

202 Owners' Equity Homework Froblem 1° The following balances are from the Cheyenne's Accounting Company 2018 20,000 50,000 3,000 190,000 60,000 70,000 5,000 2017 10,000 42,000 4,000 180,000 50,000 40,000 10,000 Cash Accounts Receivable Prepaid Rent Equipment Accumulated Depreciation Accounts Payable Salaries Payable Taxes Payable Note Payable Common Stock ($1 Par) Paid In Capital Retained Earnings Accounting Fees Salary Expense Rent Expense Interest Expense Depreciation Expense 100,000 500 4,500 31,000 70,000 2,000 18,000 35,000 100,000 40,000 24,000 6,000 10,000 The common stock outstanding was 500 shares on January 1 and then 1,500 shares were sold on June 30. During 2018, the company paid a dividend of No equipment was sold during the year. The tax rate is 30% and 1/2 of 2018 were paid in 2018 and the rest will be paid in 2019. The Note Payable requires an annual payment of $30,000 principal plus interest at 6% on December 31 of each year. (Note- this is a service company- no COGS!) For the year ended 2018 prepare a Balance Sheet, Income Statement, Statement of Owners' Equity and Statement of Cash Flows.

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

Cheyenne's
Income Statement	Amount $
Accounting Fees	100,000.00
Net Revenue	100,000.00
Less: Operating Expenses
Salaries Expense	40,000.00
Rent Expense	24,000.00
Depreciation Expense	10,000.00
Total Operating Expenses	74,000.00
Income before Interest and tax	26,000.00
Interest Expense	6,000.00
Income before tax	20,000.00
Tax at 30%	6,000.00
Net Income	14,000.00
Workings for Owners Equity Statement
Changes in Paid in capital
Closing Balance	18,000.00
Less: Opening Balance	4,500.00
Changes in Paid in capital	13,500.00
Dividend Paid
Opening Balance- Retained Earnings	31,000.00
Add: Net Income	14,000.00
Less: Closing Balance	35,000.00
Dividend Paid	10,000.00

Owners Equity Statement	Common Stock	Paid in capital	Retained Earnings	Total
Opening	500.00	4,500.00	31,000.00	36,000.00
Add: Shares issued during the year	1,500.00	13,500.00	-	15,000.00
Add: Net Income	-	-	14,000.00	14,000.00
Less: Dividend	-	-	10,000.00	10,000.00
Closing balance	2,000.00	18,000.00	35,000.00	55,000.00

Workings for Balance Sheet
Income Tax Payable
Income Tax Liability for 2018	6,000.00
Less: Paid in 2018 @ 50%	3,000.00
Income Tax Payable	3,000.00
Balance Sheet	Amount $	Amount $
Assets
Current Assets
Cash	20,000.00
Accounts Receivable	50,000.00
Prepaid Rent	3,000.00
Total Current Assets		73,000.00
Plant Property & Equipment
Equipment	190,000.00
Accumulated Depreciation	(60,000.00)	130,000.00
Total Assets		203,000.00
Liabilities & Owner's Equity
Liabilities
Current Liabilities
Accounts payable	70,000.00
Salaries Payable	5,000.00
Income Tax Payable	3,000.00
Note Payable- Current Portion	30,000.00
Total Current Liabilities		108,000.00
Non Current Liabilities
Note Payable- Non Current Portion	40,000.00
Total Non Current Liabilities		40,000.00
Total Liabilities		148,000.00
Owner's Equity
Common Stock	2,000.00
Paid in capital	18,000.00
Retained Earnings	35,000.00
Owner's Equity		55,000.00
Total Liabilities & Owner's Equity		203,000.00

Cashflow statement as on 31.12.2018			Workings
Indirect Method	Amount $	Amount $	Increase in Accounts Receivable
Particulars			Closing Balance (net)	50,000.00
Income before income taxes	20,000.00		Less: Opening Balance (net)	42,000.00
Adjustment to reconcile Net Income to Net Cash			Increase in Accounts Receivable	8,000.00
Add:
Depreciation Expense	10,000.00		Decrease in Prepaid Rent
Less:			Closing Balance	3,000.00
Income Tax paid	3,000.00		Less: Opening Balance	4,000.00
Cash flow from Operations		27,000.00	Decrease in Prepaid Rent	(1,000.00)
Changes in Current Assets/Current Liabilities
Increase in Accounts Receivable	(8,000.00)		Increase in Accounts Payable
Decrease in Prepaid Rent	1,000.00		Closing Balance	70,000.00
Increase in Accounts Payable	30,000.00		Less: Opening Balance	40,000.00
Decrease in Salaries Payable	(5,000.00)	18,000.00	Increase in Accounts Payable	30,000.00
Net cash provided by (Used for) operating activities		45,000.00
			Decrease in Salaries Payable
Cash flow from investing activities			Closing Balance	5,000.00
Equipment Purchased	(10,000.00)		Less: Opening Balance	10,000.00
Net cash provided by (Used for) investing activities		(10,000.00)	Decrease in Salaries Payable	(5,000.00)
Cash flow from financing activities			Equipment Purchased
Notes Payable paid	(30,000.00)		Closing Balance	190,000.00
Shares issued	15,000.00		Less: Opening Balance	180,000.00
Dividend paid	(10,000.00)		Equipment Purchased	10,000.00
Net cash provided by (Used for) financing activities		(25,000.00)
			Notes Payable paid
Net Increase/(Decrease) in cash		10,000.00	Closing Balance	70,000.00
Cash Balance, Jan 1, 2018		10,000.00	Less: Opening Balance	100,000.00
Cash Balance, Dec 31, 2018		20,000.00	Notes Payable paid	(30,000.00)