Question

The following accounts and balances were drawn from the records of Barker Company at December 31, Year 2:

Supplies	$	670			Beginning retained earnings	$	20,000
Cash flow from investing act.		(7,100	)		Cash flow from financing act.		(5,200	)
Prepaid insurance		2,700			Rent expense		2,600
Service revenue		80,000			Dividends		4,700
Other operating expenses		41,000			Cash		12,300
Supplies expense		250			Accounts receivable		20,000
Insurance expense		1,100			Prepaid rent		5,100
Beginning common stock		1,100			Unearned revenue		7,100
Cash flow from operating act.		7,200			Land		35,000
Common stock issued		5,300			Accounts payable		11,920

Required

Use the accounts and balances from Barker Company to construct an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows (show only totals for each activity on the statement of cash flows).

Answer 1

1)

Barker Company
Income Statement
For the Year Ended Dec 31, Year 2
Revenue:
Service revenue		$80000
Expenses:
Supplies expense	250
Insurance expense	1100
Rent expense	2600
Other operating expenses	41000
Total expenses		(44950)
Net income		$35050

2)

Barker Company
Statement of Changes in Stockholders' Equity
For the Year Ended Dec 31, Year 2
Beginning common stock	$1100
Add: Common stock issued	5300
Ending common stock		6400
Beginning retained earnings	$20000
Add: Net income	35050
Less: Dividends	(4700)
Ending retained earnings		50350
Total stockholders' equity		$56750

3)

Barker Company
Balance Sheet
As Of Dec 31, Year 2
Assets
Cash	$12300
Accounts receivable	20000
Supplies	670
Prepaid insurance	2700
Prepaid rent	5100
Land	35000
Total assets		$75770
Liabilities and Stockholders' Equity
Liabilities
Accounts payable	11920
Unearned revenue	7100
Total liabilities		19020
Stockholders' Equity
Common stock	6400
Retained earnings	50350
Total stockholders' Equity		56750
Total liabilities and stockholders' Equity		$75770

4)

Barker Company
Statement of Cash Flows
For the Year Ended Dec 31, Year 2
Cash flows from operating activities	$7200
Cash  flow from investing activities	(7100)
Cash flow from financing activities	(5200)
Net decrease in cash	$(5100)
Add: Beginning balance of cash (5100+12300)	17400
Ending balance of cash	$12300

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