Question

Units Unit Cost 300 25 January 1st February 8th March 1st March 31st April 1st April 10th Mar 15th May 30th June 1st June 30th 300 38 Tul 25th Common stock is issued in exchange for cash in the amount of ....................... ............. 350,000 The company purchases and pays for 300 units of computer replacement parts at a price of $25 per unit ........ 7,500 The company pays cash for a one-year insurance policy in the amount of ........... ....................... 10,752 Rent on a retail space for 12 months is paid in the amount of ........... 10,512 Diagnostic tools and testing equipment with a useful life of 2 years is purchased for cash in the amount of ...... 23,460 PC tuning supplies purchased on account in the amount of ... 4,250 The company purchases and pays for another 300 units of computer replacement parts at a price of $38 per uni 11,400 PC repair services are performed on account in the amount of ........... ............. 10,538 The company pays for advertisements to be run for the next 12 months in the amount of ...................... 1,540 The company issues a 5-year notes payable with their bank for $100,000 and interest at an annual rate of 8%. Interest is due on June 30th each year and the principal vill be paid is full at the end of the 5 year period 100,000 Software installation & upgrade services are performed on account in the amount of 10,759 120 units of computer replacement parts are sold for $75 per unit with terms 2/10, n/30. The sale is recorded using the gross method in the amount of (see note c for cost flow assumptions) .. 9,000 Hardware replacement services are provided on account in the amount of .............................. 9,820 The company receives full payment from the customer for the July 31st sale ............... 8,820 Virus removal services are performed on account in the amount of .......... 6,295 Customer payments are received for services previously provided in the amount of .... 1,520 136 units of computer replacement parts are sold for $75 per unit with terms 2/10,n/30. The sale is recorded using the gross method in the amount of ..... 10,200 The company receives payment for half of the October 13th sale ......... ...................................... 5,100 Equipment originally purchased on April 1st for $3,000 is sold for $1,500 cash A bookkeeper is hired to help the company with daily accounting taxes and annual tax preparation The bookkeeper is paid $4,500 for the previous month's services 4,500 July 31st -120 3 8 August 2nd August 6th September 15th September 29th October 13th -136 38 October 29th November 1st November 15th December 15th

YOUR COMPANY
Income Statement
For the year ended January 31, 2019
Sales revenue (net)		55,432
Cost of goods sold		-9,778
Gross profit		45,704
Operating expenses:
Selling expenses	2,598
General & administrative expenses	25,869
Depreciation expense	8,548
Total operating expenses		38,015
Operating Income		9,089
Other items:
Interest expense	-3,253
Loss on sale of equipment	625	3,878
Net Income		4,811

YOUR COMPANY
Statement of Cash Flows
For the year ended January 31st, 2019
Cash Flows from Operating Activities
Net Income
Adjustments for noncash effects:
Depreciation expense
Bad debt expense
Loss on sale of equipment
*  Changes in current assets and current liabilities:
Increase/Decrease in accounts receivable
Increase/Decrease in inventory
Increase/Decrease in supplies
Increase/Decrease in prepaid insurance
Increase/Decrease in prepaid rent
Increase/Decrease in prepaid advertising
Increase/Decrease in accounts payable
Increase/Decrease in interest payable
Increase/Decrease in salaries payable
Net cash flows for operating activities
Cash Flows from Investing Activities
Purchase of equipment
Proceeds from sale of equipment
Net cash flows for investing activities
Cash Flows from Financing Activities
Issuance of common stock
Proceeds from notes payable
Payment of dividends
Net cash flows from financing activities
Net increase in cash
Beginning cash balance, Jan. 1
Ending cash balance, December 31st

Answer 1

YOUR COMPANY
Statement of Cash Flows				Amount
For the year ended January 31st, 2019
Cash Flows from Operating Activities
Net Income				8064
Adjustments for noncash effects:
Depreciation expense				8548
Bad debt expense				1025
Loss on sale of equipment				625
* Changes in current assets and current liabilities:
Increase/Decrease in accounts receivable				-40992
Increase/Decrease in inventory				-13072
Increase/Decrease in supplies				-2550
Increase/Decrease in prepaid insurance				-1792
Increase/Decrease in prepaid rent				-2728
Increase/Decrease in prepaid advertising				-642
Increase/Decrease in accounts payable				4250
Increase/Decrease in interest payable				4000
Increase/Decrease in salaries payable				4500
Net cash flows for operating activities				-30764
Cash Flows from Investing Activities
Purchase of equipment				-23460
Proceeds from sale of equipment				1500
Net cash flows for investing activities				-21960
Cash Flows from Financing Activities
Issuance of common stock				350000
Proceeds from notes payable				108425
Payment of dividends				0
Net cash flows from financing activities				458425
Net increase in cash				405701
Beginning cash balance, Jan. 1				0
Ending cash balance, December 31st				405701