Question

Problem 8-20 Effect of business structure on financial statements LO 8-1

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Cascade Company was started on January 1, 2018, when it acquired $167,000 cash from the owners. During 2018, the company earned cash revenues of $98,300 and incurred cash expenses of $63,100. The company also paid cash distributions of $12,500.

Required

Prepare a 2018 income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows under each of the following assumptions. (Consider each assumption separately.)

Prepare a statement of changes in stockholders’ equity for 2018. (Negative amount should be indicated by a minus sign.)

Prepare a balance sheet for 2018.

Prepare a statement of cash flows for 2018. (Negative amount and deductible amount should be indicated by a minus sign.)

Answer 1

Income statement Revenues Less: Expenses Net income $ 98,300 $ 63,100 $ 35,200 Capital statement Beginning, capital Add: Net income Less: Withdrawals Ending capital $ 167,000 $ 35,200 -$ 12,500 $ 189,700

Balance sheet Assets: Cash Total assets $ 189,700 $ 189,700 Liabilities and owners' equity Liabilites Equity: Cascade Capital Total liabilities and owners' equity $ 189,700 $ 189,700 Statement of cash flows Cash flow from operating activities: Cash collected from customers $ 98,300 Cash paid for expenses -$ 63,100 S 35.200 Net cash flow from operating activities Cash flow from investing activities: Cash flow from financing activities: Issue of common stock / Capital raised Cash distribution Net cash flow from operating activities Net increase in cash during the year $167,000 $ 12,500 $ 154,500 $ 189,700