Question

Sanyu Sony started a new business and completed these transactions during December.
Dec.
1 Sanyu Sony transferred $65,000 cash from a personal savings account to a checking account in the name of Sony Electric in exchange for its common stock.
2 The company rented office space and paid $1,000 cash for the December rent.
3 The company purchased $13,000 of electrical equipment by paying $4,800 cash and agreeing to pay the $8,200 balance in 30 days.
5 The company purchased office supplies by paying $800 cash.
6 The company completed electrical work and immediately collected $1,200 cash for these services.
8 The company purchased $2,530 of office equipment on credit.
15 The company completed electrical work on credit in the amount of $5,000.
18 The company purchased $350 of office supplies on credit.
20 The company paid $2,530 cash for the office equipment purchased on December 8.
24 The company billed a client $900 for electrical work completed; the balance is due in 30 days.
28 The company received $5,000 cash for the work completed on December 15.
29 The company paid the assistant's salary of $1,400 cash for this month.
30 The company paid $540 cash for this month's utility bill.
31
The company paid $950 cash in dividends to the owner (sole shareholder).

Prepare an income statement, statement of rettained earings, balance sheet, and statement of cash flows for the current month.

Answer 1

Answer:

             Sanyu Sony  

         Income Statement  

For the month ended December 31  

 

Revenue                            $7,100

Less: Operating expenses     2,940

Net Income                             $4,160

               Sanyu Sony  

  Statement of Retained earnings  

For the month ended December 31  

 

December 1          $        -

Add: Net Income    4,160

Less: Dividends      950

December 31                  $3,210

               Sanyu Sony

            Balance Sheet

          As of December 31

               

                     Asset  

Current Assets  

Cash                      $59,180

Acounts receivable     900

Office supplies            1,150

Total current assets      $61,230

Non-current assets  

Equipment                 15,530

 

Total assets               $76,760

  Liabilities and Owner's Equity

Current liability  

Accounts Payable     $350

 

Non-current liability  

Note Payable                    8,200

 

Total liabilities          $8,550

Owner's Equity  

 

Common Stock        $65,000

Retained earnings             3,210

Total equity                $68,210

 

Total liabilities and Equity  $76,760

                                Sanyu Sony  

                      Statement of Cash Flows  

             For the month ended December 31  

 

Net Income                                                           $4,160

Changes in working capital:  

Increase in:  

 Accounts receivable   (900)

 Office supplies          (1,150)

   Increase in:    

 Accounts payable   350                                              

Net cash provided by operating activities    $2,460

Cash flow used in investing activity  

Acquisition of equipment    (15,530)

Increase in Notes payable     8,200

Payment in dividends       (950)                                        

Cash flow used in investing activities                  (8,280)

Cash flow from financing activity  

Collection of subscriptions receivable           65,000

CASH AT END OF DECEMBER                   $59,180

Explanation:

Balance sheet is a statement of financial position that consists of 3 sections; Assets, liabilities and equity. It summarizes the financial balances of the company's accounts. All real accounts will be reflected in balance sheet.

Income statement shows the nominal accounts of the company. It shows how well the company performs during the period thru its revenue and expenses summary that is reflected in this statement.

Statement of Retained earnings shows the balances of the retained earnings for the period.

Statement of cash flows has 3 sections; operating, investing and financing activities.

Answer 2

Income Statement

Service Revenue $7,100

Less  : Operating Expense $2,940

Net Profit $4,160

Balance Sheet

Assets :

Cash $59,180

Accounts Receivable $900

Office Supplies $1,150

Equipment $15,530

Total Assets $76,760

Liabilities :

Accounts Payable $350

Notes Payable $8,200

Equity :

Common Stock $65,000

Retained Earnings $3,210

Total Equity and Liabilities $76,760

Statement of Retained earnings :

Net Income $4,160

Less : Dividends $950

Retained Earnings at end $3,210

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