ch04 - Chapter 5 1 CHAPTER 4 THE MECHANICS OF FINANCIAL...

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Chapter 5 1 CHAPTER 4 THE MECHANICS OF FINANCIAL ACCOUNTING EXERCISES E4–1 Assets = Liabilities + Stockholders' Equity (1) + 30,000 + 30,000 (2) 20,000 + 20,000 (3) + 9,000 +9,000 (4) + 8,000 + 8,000 (5) 5,500 5,500 (6) 500 500 Total 41,000 9,000 32,000 Note: Transactions (4), (5), and (6) are initially recorded in temporary accounts and are closed into the Retained Earnings account, which is part of stockholders' equity. E4–2 Assets = Liabilities + Stockholders' Equity Accounts Notes Contributed Retained Cash + Receivable + Land = Payable + Capital + Earnings (1) + 30,000 +30,000 (2) – 20,000 +20,000 (3) + 9,000 +9,000 (4) +8,000 + 8,000 (5) 5,500 5,500 (6) 500 500 Total 13,000 8,000 20,000 9,000 30,000 2,000 Note: Transactions (4), (5), and (6) are initially recorded in temporary accounts and are closed into the Retained Earnings account, which is part of stockholders' equity. E4–3 X Company Income Statement For the Year Ended Revenues. ................................................................................................. $ 8,000 Operating expenses. ................................................................................. 5,500 Net income. ............................................................................................... $ 2,500 X Company Statement of Stockholders’ Equity For the Year Ended Contributed Retained
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Capital Earnings Beginning balance $ 0 $ 0 Net income 2,500 Dividends (500) Owner contribution 30,000 _______ Ending balance $ 30,000 $ 2,000 X Company Balance Sheet As of Assets Liabilities and Stockholders' Equity Cash . .................................... $ 13,000 Notes payable. ........................ $ 9,000 Accounts receivable. ............. 8,000 Contributed capital. ................. 30,000 Land . .................................... 20,000 Retained earnings. ................. 2,000 Total liabilities and Total assets. .......................... $41,000 stockholders' equity. .......... $ 41,000 E4–3 Concluded X Company Statement of Cash Flows For the Year Ended Cash flows from operating activities: Cash payments for expenses. .................................... $ (5,500) Cash flows from investing activities: Purchase of land. ....................................................... (20,000) Cash flows from financing activities: Cash contributions from owners. ............................... $ 30,000 Proceeds from bank loan. .......................................... 9,000 Payments of cash dividend. ....................................... (500 ) Net cash flow from financing activities. ................. 38,500 Net increase in cash. ...................................................... $ 13,000 Beginning cash balance. ................................................. 0 Ending cash balance.
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ch04 - Chapter 5 1 CHAPTER 4 THE MECHANICS OF FINANCIAL...

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