Using Financial Reports: Analyzing Changes in Accounts and Preparing Financial StatementsP...
Using Financial Reports: Analyzing Changes in Accounts and Preparing Financial Statements
Pete's Painting Service was organized as a corporation on January 20, 201 1, by three individuals, each receiving 5,000 shares of stock from the new company. The following is a schedule of the cumulative account balances immediately after each of the first 10 transactions ending on January 31, 2011.
Accounts | CUMULATIVE BALANCES | |||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |
Cash | $75.000 | 570,000 | 585.000 | 571,000 | $61.000 | $64.000 | $60.000 | $49.000 | $44.000 | $60.000 |
Accounts Receivable |
|
| 12.000 | 12,000 | 12.000 | 26.000 | 26,000 | 26.000 | 26.000 | 10.000 |
Office Fixtures |
| 22,000 | 22,000 | 22.000 | 22.000 | 22,000 | 22.000 | 22.000 | 22.000 | 22.000 |
Land |
|
|
| 18,000 | 18.000 | 18.000 | 18,000 | 18.000 | 18.000 | 18.000 |
Accounts Payable |
|
|
|
| 3.000 | 3.000 | 3,000 | 10.000 | 5.000 | 5.000 |
Note Payable (long-term) |
| 17,000 | 17.000 | 21.000 | 21.000 | 21.000 | 21,000 | 21.000 | 21.000 | 21.000 |
Contributed Capital | 75.000 | 75,000 | 75.000 | 75,000 | 75.000 | 75.000 | 75.000 | 75.000 | 75.000 | 75,000 |
Retained Earnings |
|
|
|
|
|
| (4,000) | (4.000) | (4.000) | (4,000) |
Paint Revenue |
|
| 27.000 | 27.000 | 27.000 | 44.000 | 44,000 | 44.000 | 44.000 | 44.000 |
Supplies Expense |
|
|
|
| 5.000 | 5.000 | 5.000 | 8.000 | 8.000 | 8.000 |
Wages Expense |
|
|
|
| 8.000 | 8.000 | 8.000 | 23.000 | 23.000 | 23.000 |
Required:
1. Analyze the changes in this schedule for each transaction; then explain the transaction. Transaction (o) is an example:
a. Cash increased $75.000. and Contributed Capital (stockholders' equity) increased $75.000. Therefore, transaction (a) w as an issuance of the capital stock of the corporation for $75.000 cash.
2. Based only on the preceding schedule after transaction (/). prepare an income statement, a statement of stockholders' equity, and a balance sheet.
3. For each of the transactions, indicate the type of effect on cash flows (O for operating. I for investing, or F for financing) and the direction (+ for increase and - for decrease) and amount of the effect.If there is no effect, w rite none. The first transaction is provided as an example.
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