Question

Principles- Chapters 1-2.pdf

Answer 1

	Event	Balance sheet							Income statement
		Assets		=	Liabilities	+	Equity
		Cash	Land		Notes Payable		Common stock	Retained earnings	Revenues	-	Expenses	=	Net income	Cashflow	Type
	1	20			20									Yes	FA
	2	80					80							Yes	FA
	3	35						35	35				35	Yes	OA
	4	-15	15											Yes	IA
	5	-10						-10			10		-10	Yes	OA
	6	-5						-5						Yes	FA
	Total	105	15		20		80	20	35		10		25
		Income statement
			$
	Revenues		35
	Less: Expenses		10
	Net income		25
			Statement of changes in stockholder's equity
							$	$
	Beginning common stock						0
	Add: Issuances						80
	Ending common stock							80
	Beginning retained earnings						0
	Add: Net income						25
	Less: dividends						5
	Ending retained earnings							20
	Total stockholder's equity							100
			Balance sheet
							$	$
	Assets: Cash						105
	Land						15
	Total assets							120
	Liabilities: Notes payable							20
	Equity: Common stock						80
	Retained earnings						20
	Total stockholder's equity							100
	Total liabilities and equity							120
			Statement of cashflows
								$	$
	Operating activities:		Cash receipt from customers					35
			Cash payment for expenses					-10
			Net cashflow-operating						25
	Investing activities:		Cash to purchase land					-15
			Net cashflow-investing						-15
	Financing activities:		Cash from borrowing					20
			Cash from the issuance of stock					80
			Cash used to pay dividends.					-5
			Net cashflow-Financing						95
			Net increase in cash						105
			Beginning cash balance						0
			Ending cash balance						105