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Effect of business structure on financial statements problem 8-20 LO 8-1 pany was started on January 1, 2018, when it acquired $60,000 cash from the owners. earned cash revenues of $35,000 and incurred cash expenses of $18,100. CHECK FIGURES a. Net Income: $16 the company ,900 oman also paid cash distributions of $4.000. The b. Cascade Capital: $72,900 ed 2018 income statement, capital statement (statement of changes in equity). balance sheet. satement of cash flows under each of the following assumptions. (Consider each assumption Prepare a Cascade is a sole proprietorship owned by Carl Cascade. Cascade is a partnership with two partners, Carl Cascade and Beth Cascade. Carl Cascade in- vested $24,000 and Beth Cascade invested $36,000 of the $60,000 cash that was used to start the business. Beth was expected to assume the vast majority of the responsibility for operating the business. The partnership agreement called for Beth to receive 60 percent of the profits and Carl to get the remaining 40 percent. With regard to the $4,000 distribution, Beth withdrew $2.400 from the business and Carl withdrew $1,600. :. Cascade is a corporation. It issued 5,000 shares of $5 par common stock for $60.000 cash to start the business.

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Answer 1

Part-1)

Income Statement
Revenues	35,000
Expenses	-18,100
Net income	16,900

Capital Statement
Beginning Capital Balance	0
Plus: Capital Acquired from Owners	60,000
Plus: Net Income	16,900
Less: Withdrawals by Owners	-4,000
Ending Capital Balance	72,900

Balance Sheet
Assets
Cash	72,900
Total Assets		72,900
Liabilities
Equity
Carl Cascade, Capital	72,900
Total Liabilities and Equity		72,900

Statement of Cash Flows
Cash Flows From Operating Activities
Receipts from Revenues	35,000
Paid for Expenses	-18,100
Net Cash Flow from Operating Activities		16,900
Cash Flows From Investing Activities
Cash Flows From Financing Activities
Proceeds from Owner	60,000
Paid for Owner’s Withdrawals	-4,000
Net Cash Flow from Financing Activities		56,000
Net Change in Cash		72,900
Plus: Beginning Cash Balance		0
Ending Cash Balance		72,900

PART-2)

Income Statement
Revenues	35,000
Expenses	-18,100
Net income	16,900

Capital Statement
Beginning Capital Balance	0
Plus: Capital Acquired from Owners	60,000
Plus: Net Income	16,900
Less: Withdrawals by Owners	-4,000
Ending Capital Balance	72,900

Accounts:
	C. Cascade	B. Cascade	Total
Beginning Capital	0	0	0
Investments	24,000	36,000	60,000
Net Income	6,760	10,140	16,900
	$16,900 x 40% = $6,760	$16,900 x 60% = $10,140
Withdrawals	-1,600	-2,400	-4,000
Ending Capital Balances	29,160	43,740	72,900

Balance Sheet
Assets
Cash	72,900
Total Assets		72,900
Liabilities
Equity
Carl Cascade, Capital	29,160
Beth Cascade, Capital	43,740
Total Liabilities and Equity		72,900

Statement of Cash Flows
Cash Flows From Operating Activities
Receipts from Revenues	35,000
Paid for Expenses	-18,100
Net Cash Flow from Operating Activities		16,900
Cash Flows From Investing Activities
Cash Flows From Financing Activities
Proceeds from Owner	60,000
Paid for Owner’s Withdrawals	-4,000
Net Cash Flow from Financing Activities		56,000
Net Change in Cash		72,900
Plus: Beginning Cash Balance		0
Ending Cash Balance		72,900

Part-3)

Income Statement
Revenues	35,000
Expenses	-18,100
Net income	16,900

Beginning Common Stock
Plus: Issuance of Common Stock	60,000
Ending Common Stock		60,000
Beginning Retained Earning	0
Plus: Net Income	16,900
Less: Dividends	-4,000
Ending Retained Earnings		12,900
Total Stockholders’ Equity		72,900

Balance Sheet
Assets
Cash	72,900
Total Assets		72,900
Liabilities
Stockholders’ Equity
Common Stock, $5 par value, 5,000 shares	25,000
issued and outstandinG
Paid-In Capital in Excess of Par	35,000
Total Paid-In Capital		60,000
Retained Earnings		12,900
Total Liabilities and Stockholders’ Equity		72,900