Effect of events on financial statements
Reed Company had the following balances in its accounting records as of December 31, 2012.
Assets | Claims | ||
Cash | $ 75,000 | Accounts Payable | $ 32,000 |
Accounts Receivable | 45,000 | Common Stock | 90,000 |
Land | 30,000 | Retained Earnings | 28,000 |
Totals | $150,000 |
| $150,000 |
The following accounting events apply to Reed’s 2012 fiscal year:
Jan.1 | Acquired an additional $50,000 cash from the issue of common stock. |
April1 | Paid $8,400 cash in advance for a one-year lease for office space. |
June 1 | Paid a $4,000 cash dividend to the stockholders. |
July 1 | Purchased additional land that cost $15,000 cash. |
Aug.1 | Made a cash payment on accounts payable of $28,000. |
Sept.1 | Received $9,600 cash in advance as a retainer for services to be performed monthly during the next eight months. |
Sept.30 | Sold land for $12,000 cash that had originally cost $12,000. |
Oct.1 | Purchased $1,500 of supplies on account. |
Dec.31 | Earned $75,000 of service revenue on account during the year. |
31 | Received $70,000 cash collections from accounts receivable. |
31 | Incurred $24,000 other operating expenses on account during the year. |
31 | Recognized accrued salaries expense of $8,000. |
31 | Had $400 of supplies on hand at the end of the period. |
31 | The land purchased on July 1 had a market value of $21,000. |
Required
Based on the preceding information, answer the following questions. All questions pertain to the 2012 financial statements. (Hint: Record the events in general ledger accounts under an accounting equation before answering the questions.)
a.What two transactions need additional adjusting entries at the end of the year?
b. What amount would be reported for land on the balance sheet?
c. What amount of net cash flow from operating activities would Reed report on the statement of cash flows?
d. What amount of rent expense would be reported in the income statement?
e. What amount of total liabilities would be reported on the balance sheet?
f. What amount of supplies expense would be reported on the income statement?
g. What amount of unearned revenue would be reported on the balance sheet?
h. What amount of net cash flow from investing activities would be reported on the statement of cash flows?
i. What amount of total expenses would be reported on the income statement?
j. What total amount of service revenues would be reported on the income statement?
k. What amount of cash flows from financing activities would be reported on the statement of cash flows?
l. What amount of net income would be reported on the income statement?
m. What amount of retained earnings would be reported on the balance sheet?
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