Question

Using the following table and the equations underlying each of the four basic financial statements, show (a) that the balance sheet is in balance, (b) that net income is properly calculated. (what caused changes in the retained earnings account, and (d) what caused changes in the cash account. (Cash outflows should be indicated with a minus sign.) Assets Liabilities Stockholders' Equity Revenue Expenses Net Income Dividends Beginning Retained Earnings Ending Retained Earnings Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities Beginning Cash Ending Cash $80.100 18,800 61,300 32,700 19.250 13.45e 5.200 21,100 29,350 16,300 (7,500) (5.600)

Answer 1

Answer with working is given below

Assets Liabilities Assets sono - Liabilities + Stockholders' stations : Equity Equity $61,300 $80,100 | = $18,800 b) Income $13,450 = Revenue = $32,700 - - Expenses $19,250 Net Income Dividend Ending Retained Earnings $29,350 Opening Retained Earnings $21,100 $13,450 $5,200 Change in Retained earnings is caused by addition of net income and deduction of dividend paid Change in Cash Account Cash flows from Operating Activities $16,300 Cash flows + from Investing Activities + Cash flows from Financing Activities $5,600 $2,900 = + $7,800 + Changes in Cash Account is caused by Cash flows from Operating activities, Investing activities and Financing activities