Question

0 Required information The following information applies to the questions displayed below. Prat Corp. started the 2018 accounting period with $32,000 of assets (all cash). $13,000 of liabilities, and $7,000 of common stock. During the year, the Retained Earnings account increased by $9,550. The bookkeeper reported that Prat paid cash expenses of $27,000 and paid a $2,200 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 $7,000 cash to reduce the liability owed to the bank, and the business acquired $7,200 of additional cash from the issue of common stock 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. Req A1 Req A2 Req A3 Req A4 Prepare an income statement for the 2018 accounting period Prat Corp. Prev 1 2 of 9 l Next >

Answer 1

	Beginnig retained earnigs:
	Assets=Liabilities+ Stockholder's equity
	32000=13000+Stockholder's equity
	Stockholder's equity=32000-13000=$ 19000
	Stockholder's equity=common stock+retained earnings
	19000=7000+retained earings
	Retained earnings=19000-7000=$ 12000
	Cash received from performing services:
	Let's assume that increase in retained earnigs=Net income=$ 9550
	Cash expenses=$ 27000
	Net income=Sales-expenses
	9550=Sales-27000
	Sales=9550+27000=$ 36550
a-1.			Income statement
					$
	Sales				36550
	Less: Expenses				27000
	Net income				9550
a-2.		Statemet of chages in stockholder's equiry
					Common stock	Retained earnings
	Beginning balance				7000	12000
	Net income					9550
	Dividend					-2200
	Issue of common stock				7200
	Ending balace				14200	19350
a-3.		Balance sheet
					$
	Assets:
	Cash			(Note:1)	39550
	Total assets				39550
	Liabilities and stockholder's equity
	Liabilities		(13000-7000)		6000
	Stockholder's equity:
	Common stock				14200
	Retained earnigs				19350
	Total stockholder's equity				33550
	Total liabilities and stockholder's equity				39550
	Note:1
	Cash
					$	$
	Beginning balance					32000
	Add:
	Cash sales				36550
	Issue of common stock				7200	43750
						75750
	Less:
	Expenses				27000
	Dividend				2200
	Liability reduced				7000	36200
	Ending balance					39550
a-4.			Statemet of cashflows
					$	$
	Cashflow from operating activities:
	Net income					9550
	Adj:
	Non-cash expenses				0
	Change in current assets and liabilities				0	0
	Net cash from operating activities					9550
	Cashflow from investing activities					0
	Cashflow from financing activities:
	Dividend paid					-2200
	Cash paid to reduce liability					-7000
	Issue of common stock					7200
	Net cash used in financing activities					-2000
	Net increase in cash					7550
	Add: Beginning balance of cash					32000
	Ending balance of cash					39550