Question

Prat Corp. started the 2018 accounting period with $33,000 of assets (all cash). $13,500 of liabilities, and $8,000 of common stock. During the year, the Retained Earnings account increased by $10,550. The bookkeeper reported that Prat paid cash expenses of $27,500 and paid a $2,300 cash dividend to the stockholders, but she could not find a record of the amount of cash that Prat received for performing services. Prat also paid $6,000 cash to reduce the liability owed to the bank, and the business acquired $7,400 of additional cash from the issue of common stock. Problem 1-34 Part a Required (Hint: Determine the amount of beginning retained earnings before considering the effects of the current period events. It also might help to record all events under an accounting equation before preparing the statements.) a-1. Prepare an income statement for the 2018 accounting period. a-2. Prepare a statement of changes in stockholders' equity for the 2018 accounting period. a-3. Prepare a period-end balance sheet for the 2018 accounting period. a-4. Prepare a statement of cash flows for the 2018 accounting period. Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Reg A3 Reg A4 Prepare an income statement for the 2018 accounting period. Prat Corp. Income Statement For the Year Ended December 31, 2018

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Answer 1

ANSWER

Event Opening Bal. Expenses Dividend Liability Issued Stock Revenue Closing Balance Asset Liabilities + Common Stock Retained Earnings $ 33,000.00 $13,500.00 $ 8,000.00 $ 11,500.00 $(27,500.00) $ (27,500.00) $ (2,300.00) $ (2,300.00) $ (6,000.00) $ (6,000.00) $ 7,400.00 $ 7,400.00 $ 40,350.00 $ 40,350.00 $ 44,950.00 $ 7,500.00 $ 15,400.00 $ 22,050.00 INCOME STATEMENT Revenue Expenses Net Income $ 40,350.00 $(27,500.00) $ 12,850.00 STOCK HOLDER EQUITY STATEMENT Opening Common Stock Issued Closing Common Stock Opening Retained Earnings Plus: Net Income Less: Dividend Closing Retained Earnings Total Stockholders Equity $ 8,000.00 $ 7,400.00 $ 15,400.00 $ 11,500.00 $ 12,850.00 $ (2,300.00) $ 22,050.00 $ 37,450.00 BALANCE SHEET Assets Total Liabilities Total Stockholders Equity Total $ 44,950.00 $ 44,950.00 $ 7,500.00 $ 37,450.00 $ 44,950.00 CASHFLOW STATEMENT Cashflow from Operating Activities Cash receipts from Revenue Cash payment for Expenses Net cashflow from Operating Act. $ 40,350.00 $(27,500.00) $ 12,850.00 Cashflow from Investment Activities $ Cashflow from Finance Activities Cash receipts from stock issue Cash payment to Creditors Dividend paid Net Cashflow from Finance Activities Net Increase in Cash Plus: Beg. Balance Ending Cash Balance $ 7,400.00 $ (6,000.00) $ (2,300.00) S (900.00) $ 11,950.00 $ 33,000.00 $ 44,950.00

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