Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Textbook Question
Chapter 2, Problem 2.3P
P2-3 Financial statements The following amounts were taken from the accounting records of Padget Home Services, Inc.. as of December 31, 20Y7. Padget Home Services began its operations on January 1, 20Y7.
Instructions
Prepare an income statement for the year ending December 31. 2017.
Prepare a statement of stockholdessrs’ equity for the year ending December 31, 2017.
Prepare a
Prepare a statement of
Expert Solution
To determine
Concept Introduction:
Financial statements:
Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner's equity and Cash flows statements.
Requirement-1:
To Prepare:
The Income Statement for the year ending Dec 31, 20Y7
Answer to Problem 2.3P
The Income Statement for the year ending Dec 31, 20Y7 is as follows:
| Padget Home Services | ||
| Income Statement | ||
| For the Year ending Dec. 31, 20Y7 | ||
| Revenue: | ||
| Fees Earned | $ 620,000 | |
| Total Revenue | $ 620,000 | |
| Less: Expenses: | ||
| Salaries Expense | $ 272,000 | |
| Rent Expense | $ 70,000 | |
| Interest Expense | $ 4,800 | |
| Misc. Expense | $ 10,200 | |
| Tax Expense | $ 43,000 | |
| Utilities Expense | $ 85,000 | |
| Total Expenses | $ 485,000 | |
| Net Income (Loss) | $ 135,000 | |
Explanation of Solution
The Income Statement for the year ending Dec 31, 20Y7 is prepared as follows:
| Padget Home Services | ||
| Income Statement | ||
| For the Year ending Dec. 31, 20Y7 | ||
| Revenue: | ||
| Fees Earned | $ 620,000 | |
| Total Revenue | $ 620,000 | |
| Less: Expenses: | ||
| Salaries Expense | $ 272,000 | |
| Rent Expense | $ 70,000 | |
| Interest Expense | $ 4,800 | |
| Misc. Expense | $ 10,200 | |
| Tax Expense | $ 43,000 | |
| Utilities Expense | $ 85,000 | |
| Total Expenses | $ 485,000 | |
| Net Income (Loss) | $ 135,000 | |
Expert Solution
To determine
Concept Introduction:
Financial statements:
Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner's equity and Cash flows statements.
Requirement-2:
To Prepare:
The Statement of stockholder's equity for the year ending Dec 31, 20Y7
Answer to Problem 2.3P
The Statement of stockholder's equity for the year ending Dec 31, 20Y7 is as follows:
| Padget Home Services | |
| Statement of Stockholder's Equity | |
| For the Year ending Dec. 31, 20Y7 | |
| Common Stock | $ 75,000 |
| Retained earnings (135000-15000) | $ 120,000 |
| Total Stockholders' Equity | $ 195,000 |
Explanation of Solution
The Statement of stockholder's equity for the year ending Dec 31, 20Y7 is prepared as follows:
| Padget Home Services | |
| Statement of Stockholder's Equity | |
| For the Year ending Dec. 31, 20Y7 | |
| Common Stock | $ 75,000 |
| Retained earnings (135000-15000) | $ 120,000 |
| Total Stockholders' Equity | $ 195,000 |
Expert Solution
To determine
Concept Introduction:
Financial statements:
Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner's equity and Cash flows statements.
Requirement-3:
To Prepare:
The Balance Sheet as on Dec 31, 20Y7
Answer to Problem 2.3P
The Balance Sheet as on Dec 31, 20Y7 is as follows:
| Padget Home Services | ||
| Balance Sheet | ||
| As on Dec. 31, 20Y7 | ||
| ASSETS: | ||
| Cash | $ 60,000 | |
| Land | $ 215,000 | |
| TOTAL | $ 275,000 | |
| LIABILITIES: | ||
| Notes Payable | $ 80,000 | |
| STOCKHOLDER'S EQUITY | $ 195,000 | |
| TOTAL | $ 275,000 | |
Explanation of Solution
The Balance Sheet as on Dec 31, 20Y7 is prepared as follows:
| Padget Home Services | ||
| Balance Sheet | ||
| As on Dec. 31, 20Y7 | ||
| ASSETS: | ||
| Cash | $ 60,000 | |
| Land | $ 215,000 | |
| TOTAL | $ 275,000 | |
| LIABILITIES: | ||
| Notes Payable | $ 80,000 | |
| STOCKHOLDER'S EQUITY | $ 195,000 | |
| TOTAL | $ 275,000 | |
Expert Solution
To determine
Concept Introduction:
Financial statements:
Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner's equity and Cash flows statements.
Requirement-4:
To Prepare:
The Statement of Cash Flows for the year ending Dec 31, 20Y7
Answer to Problem 2.3P
The Statement of Cash Flows for the year ending Dec 31, 20Y7 is as follows:
| Padget Home Services | ||
| Statement of Cash Flows-Direct Method | ||
| For the Year ending Dec. 31, 20Y7 | ||
| Cash flow from Operating activities: | ||
| Collection from Customers | $ 620,000 | |
| Payments of expenses | $(485,000) | |
| Net Cash Provided by Operating activities | $ 135,000 | |
| Cash flow from Investing activities: | ||
| Cash Payment for Acquisition of land | $(215,000) | |
| Net Cash Used by Investing activities | $(215,000) | |
| Cash flow from Financing activities: | ||
| Cash Receipts from Issuance of Common Stock | $ 75,000 | |
| Cash received from Long Term notes payable | $ 80,000 | |
| Payment of Dividends | $ (15,000) | |
| Net Cash Provided by Financing activities | $ 140,000 | |
| Net Cash Flows | $ 60,000 | |
| Add: Beginning Cash Balance | $ - | |
| Ending Cash Balance | $ 60,000 | |
Explanation of Solution
The Statement of Cash Flows for the year ending Dec 31, 20Y7 is prepared as follows:
| Padget Home Services | ||
| Statement of Cash Flows-Direct Method | ||
| For the Year ending Dec. 31, 20Y7 | ||
| Cash flow from Operating activities: | ||
| Collection from Customers | $ 620,000 | |
| Payments of expenses | $(485,000) | |
| Net Cash Provided by Operating activities | $ 135,000 | |
| Cash flow from Investing activities: | ||
| Cash Payment for Acquisition of land | $(215,000) | |
| Net Cash Used by Investing activities | $(215,000) | |
| Cash flow from Financing activities: | ||
| Cash Receipts from Issuance of Common Stock | $ 75,000 | |
| Cash received from Long Term notes payable | $ 80,000 | |
| Payment of Dividends | $ (15,000) | |
| Net Cash Provided by Financing activities | $ 140,000 | |
| Net Cash Flows | $ 60,000 | |
| Add: Beginning Cash Balance | $ - | |
| Ending Cash Balance | $ 60,000 | |
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Chapter 2 Solutions
Survey of Accounting (Accounting I)
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