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

beginning balance in retained earning	retained earnings = total assets-liabilities-common stock	32000-13000-7000	12000
Income statement
revenue from services	27000+11750	38750
less cash expenses		27000
net income	9550+2200	11750
less dividend		2200
transfer to reatined earning		9550
statement of change in shareholders equity
common stock	7000+7200	14200
retained earning	12000+9550	21550
year end balance in stockholders equity		35750
balance sheet
assets
cash		41550
total assets		41550
Liabilities and shareholders equity
liabilities	13000-7000	6000
shareholders equity
common stock	7000+7200	14200
retained earning		21550
Liabilities and shareholders equity		41750
cash account
beginning balance		32000
cash from issuance of common stock		7200
cash from services performed		38750
total cash available			77950
cash paid
dividend paid		2200
cash expense		27000
cash paid to debt		7000
total cash paid			36200
available cash at year end			41750
cash flow statement
cash flow from operating activities
net income		11750
cash flow from operating activities			11750
cashh flow from Investing activities			0
cash flow from financing activities			-2000
issuance of common stock		7200
payment of bank loan		-7000
cash dividend		-2200
net cash flow during the year			9750
beginning cash balance			32000
Year end cash balance			41750