Question

AT Corp. opened for business on April 1st. Listed below are the transactions for AT Corp. for the month of April:

April 1 Issued common stock in exchange for $250,000 cash.
April 1 Purchased office equipment for $17,500 cash.
April 1 Borrowed $20,000 from Venn Bank and signed a 10% note. Interest and principal to be paid in 12 months.
April 5 Paid $4,000 rent in advance for the art gallery for the next two months.
April 10 Purchased art supplies from Tacky Art Co. on account for $12,200.
April 12 Received $5,300 from a customer who commissioned a piece of custom art to be completed by the end of the year.
April 15 Paid miscellaneous office expenses totaling $285 in cash.
April 17 Billed customers $3,400 for art classes provided in March.
April 19 Paid $3,600 to Tacky Art Co.
April 25 Received $2,200 from customers on account.
April 30 Recorded $3,800 in salaries for the month of April. Paychecks will be disbursed to employees on May 2nd.

3) Prepare a statement of cash flows. Prepare closing entries.

4) In a one-page memo, provide an explanation to the management team on April's financial performance.

Answer 1

AT Corp. has made a loss in its first month of business.Its acceptable as first month is utilised to set the business , understand the market, convince the customers etc.The company is equity oriented as major business is run on common stock proceeds.Notes Payable is for a small amount of 20000.Main expense is in the nature of Salaries.Supplies expense are yet to be charged.