Question

Cascade Company was started on January 1, 2018, when it acquired $159,000 cash from the owners. During 2018, the company earned cash revenues of $86,800 and incurred cash expenses of $69,900. The company also paid cash distributions of $10,500. 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.)

Answer 1

Answer:

The statements required have been prepared below

Explanation:

The income statement extract:

Revenue                  $86,800

Cash expenses      ($69,900)

Net income              $16,900

Statement of changes in equity extract:

                      Retained Earnings       Capital           Total

                                   $                           $                   $

Bal b/f                          nil                         nil               nil

paid in capital                                         159,000      159,000

net income                16,900                         -               16,900

Dividends                  (10,500)                      -                (10,500)

Balance c/f                  6,400                     159,000      165,400    

Balance sheet extract  

Assets

Cash (159000+86800-69900-10500)                           165,400

Total assets                                                                      165400

Shareholders' equity

Share capital                                                                     159,000

Retained earnings                                                                6,400

Total shareholders' fund                                                   165,400

Cash flow extract:

operating cash  flow

Net income                                                                         16,900

financing activities

share capital                                                                       159,000  

dividends                                                                            (10,500)

Increase in cash and cash equivalent in the year             165,400