Question

Squirrel Tree Services reports the following amounts on December 31. Assets Cash Supplies Prepaid insurance Building Liabilities and Stockholders' Equity $ 9,400 Accounts payable $ 14,800 3,500 Salaries payable 5,200 5,200 Notes payable 37,000 89,000 Common stock 40,000 Retained earnings 10,100 In addition, the company reported the following cash flows. Cash Inflows Customers Borrow from the bank (note) Sale of investments Cash Outflows $94.000 Employee salaries 37,000 Supplies 35,400 Dividends Purchase building $39,000 21,000 15,000 96,000 Required: 1. Prepare a balance sheet. SQUIRREL TREE SERVICES Balance Sheet Liabilities

Answer 1

Answer :-

1) The Balance Sheet of Squirrel Tree Services are as follows :-

SQUIRREL TREE SERVICES
Balance Sheet
Assets		Liabilities
Cash	$9,400	Account Payable	$14,800
Supplies	$3,500	Salaries Payable	$5,200
Prepaid Insurance	$5,200	Notes Payable	$37,000
Building	$89,000
		Total Liabilities	$57,000
		Stockholders' Equity
		Common stock	$40,000
		Retained Earnings	$10,100
		Total stockholders' Equity	$50,100
Total Assets	$107,100	Total liabilities and Stockholders' Equity (Note-1)	$107,100

Note 1 :-

Total liabilities and stockholders' Equity = Total Liabilities + Total stockholders Equity

Total liabilities and Stockholders' Equity = $57,000 + $50,100

TiTot liabilities and Stockholders' Equity = $107,100

2) The Statement of Cash flows of Squirrel Tree Services are as follows :-

SQUIRREL TREE SERVICES
Balance sheet
Cash Flows from Operating Activities
Cash received from Customer	$94,000
Cash paid for employees salaries	($39,000)
Cash paid for supplies	($21,000)
Net cash flows from operating activities		$34,000
Cash Flows from Investing Activities
Cash received from sales of Investment	35,400
Cash paid to purchase building	($96,000)
Net cash flows from investing activities		($60,600)
Cash Flows from Financing Activities
Cash received from bank borrow	$37,000
Cash paid for dividend	($15,000)
Net cash flow from Financing Activities		$22,000
Net increase (decrease) in cash (Net cash flow from Operating Activities + Net cash flow from Investing activities + Net cash flow from Financing Activities)		($4,600)
Cash at the beginning of the year ( Note - 2)		$14,000
Cash at the end of the year (Given in asset section of balance sheet)( Net decrease in cash + Cash at beginning of the year)		$9,400

Note 2 :-

To find out Beginning cash balance ,we first calculate the Total Cash inflows and Total Cash outflows ,

Particular	Amount
Cash Inflows :-
Customers	$94,000
Borrow from the bank (Note)	$37,000
Sales of Investment	$35,400
Total Cash Inflows	$166,400
Cash Outflows :-
Employee salaries	$39,000
Supplies	$21,000
Dividend	$15,000
Purchase Building	$96,000
Total Cash Outflows	$171,000

Ending Cash balance = Beginning Cash balance + Total Cash inflows - Total Cash outflow

Ending Cash balance = $ 9,400

$9,400 = Beginning Cash balance + $166,400 - $171,000

$9,400 + $171,000 - $166,400 = Beginning Cash balance

Beginning Cash balance = $14,000