Question

Astro Corporation was started with the issue of 5,300 shares of $11 par stock for cash on January 1, 2018. The stock was issued at a market price of $20 per share. During 2018, the company earned $58,050 in cash revenues and paid $38,894 for cash expenses. Also, a $3,300 cash dividend was paid to the stockholders.

Required:

Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Astro Corporation’s 2018 fiscal year.

Answer 1

Income statement

Cash revenues	58,050
Less: Cash expenses	- 38,894
Net income	$19,156

Retained earnings = Net income - Cash dividend paid

= 19,156 - 3,300

= $15,856

Statement of changes in stockholders’ equity

Common stock in the begining:
Par value	58,300
Additional paid in capital	47,700
Retained earnings	15,856
Shareholders' equity at the end	$121,856

Balance sheet

Assets	$	Liabilities and Equity
Current assets		Shareholders' equity:
Cash and cash equivalents	121,856	Common shares- par value	58,300
		Additional paid in capital	47,700
		Retained earnings	15,856
	121,856		121,856

Statement of cash flows

I. Cash flows from operating activities
Cash revenues	58,050
Cash expenses	-38,894
Net cash flows from operating activities		19,156
II. Cash flows from investing activities		0
III. Cash flows from financing activities
Issue of common shares	106,000
Dividend paid	-3,300
Net cash flows from financing activities		102,700
Net increase in cash (I + II + III)		121,856

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