Question

Financial Statements The following amounts were taken from the accounting records of Padget Home Services, Inc., as of December 31, 20Y7. Padget Home Services began its operations on January 1, 20Y7. Cash $ 60,000 Common stock 75,000 Dividends 15,000 Fees earned 620,000 Interest expense 4,800 Land 215,000 Miscellaneous expense 10,200 Notes payable 80,000 Rent expense 70,000 Salaries expense 272,000 Taxes expense 43,000 Utilities expense 85,000 After its second year of operations, the following amounts were taken from the accounting records of Padget Home Services, Inc., as of December 31, 20Y8. Cash ? Common stock $110,000 Dividends 50,000 Fees earned 886,000 Interest expense 7,200 Land 340,000 Miscellaneous expense 13,800 Notes payable 120,000 Rent expense 100,000 Salaries expense 380,000 Taxes expense 65,000 Utilities expense 120,000 Instructions: 1. Prepare an income statement for the year ending December 31, 20Y8.

2. Prepare a statement of stockholders’ equity for the year ending December 31, 20Y8. Note: The retained earnings at January 1, 20Y8, was $120,000. If your answer is zero enter "0".

3. Prepare a balance sheet as of December 31, 20Y8.

4. Prepare a statement of cash flows for the year ending December 31, 20Y8. Use the minus sign to indicate cash out flows, decreases in cash, or cash payments.

Answer 1

Answer :-

1 ) :-

Padget Home Services Income statement
Revenues :-
Fees earned		$620,000
Expenses :-
Interest expense	$ 4,800
Miscellaneous expense	$10,200
Rent expense	$70,000
Salaries expense	$272,000
Taxes expense	$ 43,000
Utilities expense	$85,000
Total expenses		= $ 4,800 + $10,200 + $70,000 + $272,000 + $ 43,000 + $85,000 = $485,000
Net income		= $620,000 - $485,000 = $135,000

3 ) :-

Padget Home Services Balance sheet
Assets	Amount	Liabilities	Amount
Land	$215,000	Notes payable	$80,000
Cash	$ 60,000
		Equity :
		Capital stock	$75,000
		Retained earnings
	= $215,000 + $60,000 = $275,000		= $120,000 = $275,000