Question

Cordell Inc, experienced the following events in 2018, its first year of operation: 1. Received $43,000 cash from the issue of common stock. 2. Performed services on account for $71,000. 3. Paid a $4,300 cash dividend to the stockholders. 4. Collected $49,000 of the accounts receivable. 5. Pald $43,000 cash for other operating expenses. 6. Performed services for $14,500 cash. 7. Recognized $1,300 of accrued utilities expense at the end of the year. Required a. & c. Identify the events that result in revenue or expense recognition and those which affect the statement of cash flo Statement of Cash Flows column, use OA to designate operating activity, FA for financing activity, or IA for investin element is not affected by the event, leave the cell blank. b. Based on your response to Requirement a, determine the amount of net income reported on the 2018 Income sta d. Based on your response to Requirements, determine the amount of cash flow from operating activities reported statement of cash flows. e. What is the before and after-closing balance in the service revenue account? f. What is the balance of the retained earnings account that appears on the 2018 balance sheet? Print References Complete this question by entering your answers in the tabs below. Req A and C Reg B and D Based on your response to Requirement a and c, determine the amount of net income, cash flow from operating activities, before and after-closing balance in the service revenue account and balance of the Retained Earnings account reported on the 2018 b. Net income d. Net cash flow from operating activities e. Before closing balance After-closing balance 1. Balance of retained earnings < Req A and C Reg Band D to

Answer 1

a &c Revenue or Expense Cash Flow 2 Revenue Explanation Only fund is raised by issuing stock. There is no income. It is a source of finace to the company. Service are perfomed on credit. Thus there will be no cash inflow. It is a distribution of profit and not an expense. Cash inflow as it is collected. It is collected for the service rendered earlier which is an operating activity. Cash outflow for operating activity. Cash inflow for service rendered which is an operating activity. Expense is only recognised and not paid. 5 Expense 6 Revenue 7 Expense Service revenue (credit) Operating expense Service revenue (cash) Utilities expense Net income Explanation: 71,000 Net income = Revenue-Expense (Which belong to the accounting period, whether paid or not, received or not) (43,000) 14,500 (1,300) 41,200 Collection from debtors Operating expense paid Service revenue Net cash flow from operating activities 49,000 Net cash flow from operating activities - Cash inflow from OA - Cash outflow from OA (43,000) 14,500 20,500 Service revenue (credit) Service revenue (cash) Before closing balance After closing balance 71,000 (Before closing balance = Total revenue earned (whether cash or cedit) 14,500 85,500 - At closing, the entire balance in the service revenue account will be transferred to income summary to get the net inc Then net income will be transferred to retained earnings. Thus the after closing balance will be $0. 41,200 Retained earnings = Net income - Divdend (4,300) 36,900 Net income Dividend Balance of retained earnings $ Please give as many likes for the hard work.