Question

Prepare Google's statement 2010. P1-5 Financial statements, including statement of cash flows Gemstones Corporation began operations on January 1, 2013, as an online re- tailer of computer software and hardware. The following financial statement data were taken from Gemstones' records at the end of its first year of operations. December 31, 2013 $ 20,000 110,000 252,000 Accounts payable Accounts receivable Capital stock Cash Cash payments for operating activities Cash receipts from operating activities Cost of sales Dividends Income tax expense Income taxes payable Interest expense Inventories Note payable (due in 2019) Property, plant, and equipment Retained earnings Sales Selling and administrative expenses 657,000 690,000 435,000 30,000 53,000 8,000 2,000 115,000 50,000 265,000 800,000 80,000 Instructions 1. Prepare an income statement for the year ended December 31, 2013. 2. Prepare a retained earnings statement for the year ended December 31, 2013. 3. Prepare a balance sheet as of December 31, 2013. 4. Prepare a statement of cash flows for the year ended December 31, 2013.

Answer 1

1)
GEMSTONES CORPORATION
Income Statement
For the Year Ended December 31, 2013
Sales	$ 800,000.00
Less: Cost of Good sold	$ 435,000.00
Gross Profit	$ 365,000.00
Less: selling and Administrative Expense	$   80,000.00
Operating Income	$ 285,000.00
Less: Interest Expense	$     2,000.00
Earning Before Tax	$ 283,000.00
Less: Tax	$   53,000.00
Net Income	$ 230,000.00
2)
Statement of Retained Earnings
Retained earnings, January 1, Year 2013		0
Add: Net Income	$ 230,000.00
Less: Dividends	$   30,000.00
Increase in retained earnings		$  200,000.00
Retained earnings, December 31, Year 2013		$  200,000.00
3)
Gemstones corporation
Balance Sheet
31-Dec
Assets
Current Assets
Cash	$   40,000.00
Accounts Receivables	$ 110,000.00
Inventories	$ 115,000.00
Total Current Assets	$ 265,000.00
Property Plant and equipment	$ 265,000.00
Total Assets	$ 530,000.00
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable	$   20,000.00
Income Tax Payable	$     8,000.00
Total Current Liabilities	$   28,000.00
Notes Payable	$   50,000.00
Total Liabilities	$   78,000.00
Shareholders' Equity
Capital Stock	$ 252,000.00
Add: Retained Earnings	$                -
Total Shareholders' Equity	$ 252,000.00
Total Liabilities and Shareholders' Equity	$ 330,000.00
4)
Gemstones corporation
Statement of Cash Flows
For the Year Ended December 31, 2013
Cash flows from operating activities:
Cash receipts from operating Activities	$ 690,000.00
Cash payments for operating Activities	$ 657,000.00
Net cash flows from operating activities		$    33,000.00
Cash flows used for investing activities
Investments in property, plant, and equipment		$ (265,000.00)
Cash flows from financing activities:
Cash receipt from issuance of note payable	$   50,000.00
Cash receipt from issuance of capital stock	$ 252,000.00
Cash payments for dividends	$ (30,000.00)
Net cash flows from financing activities		$  272,000.00
Net increase in cash during Year		$    40,000.00
Cash as of January 1, Year 2013		$                 -
Cash as of December 31, Year 2013		$    40,000.00