Question

In: Accounting

Waddell Company had the following balances in its accounting records as of December 31, 2015:   ...

Waddell Company had the following balances in its accounting records as of December 31, 2015:
  
  Assets   Liabilities and Equity
     Cash $ 55,000      Accounts Payable $ 27,000
     Accounts Receivable 53,000      Common Stock 89,000
     Land 28,000      Retained Earnings 20,000
  
  Total $ 136,000      Total $ 136,000
  
The following accounting events apply to Waddell Company's 2016 fiscal year:
Jan. 1 Acquired $56,000 cash from the issue of common stock.
Feb. 1 Paid $5,700 cash in advance for a one-year lease for office space. The rent will be expensed from April 1.
Mar. 1 Paid a $1,700 cash dividend to the stockholders.
April 1 Purchased additional land that cost $28,000 cash.
May 1 Made a cash payment on accounts payable of $22,000.
July 1

Received $7,400 cash in advance as a retainer for services to be performed monthly
over the coming year.
Sept. 1 Sold land for $19,000 cash that had originally cost $19,000.
Oct. 1 Purchased $960 of supplies on account.
Dec. 31 Earned $61,000 of service revenue on account during the year.
31 Received cash collections from accounts receivable amounting to $64,000.
31 Incurred other operating expenses on account during the year that amounted to $13,000.
31 Recognized accrued salaries expense of $5,300.
31 Had $120 of supplies on hand at the end of the period.
31 The land purchased on April 1 had a market value of $34,000.
31 Recognized $118 of accrued interest revenue.
Required

Based on the preceding information, answer the following questions for Waddell Company. All questions pertain to the 2016 financial statements. (Hint: Enter items in general ledger accounts under the accounting equation before answering the questions.) (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.)
What amount would Waddell report for land on the balance sheet?

       

c.

What amount of net cash flow from operating activities would be reported on the statement of cash flows? (Enter cash outflows as negative amounts.)

       

d.

What amount of rent expense would be reported on the income statement? (Do not round intermediate calculations.)

       

e. What amount of total liabilities would be reported on the balance sheet?

       

f. What amount of supplies expense would be reported on the income statement?

       

g.

What amount of unearned revenue would be reported on the balance sheet? (Do not round intermediate calculations.)

       

h.

What amount of net cash flow from investing activities would be reported on the statement of cash flows? (Enter cash outflows as negative amounts.)

       

i.

What amount of total expenses would be reported on the income statement? (Do not round intermediate calculations.)

       

j.

What amount of service revenue would be reported on the income statement? (Do not round intermediate calculations.)

       

k.

What amount of cash flows from financing activities would be reported on the statement of cash flows? (Enter cash outflows as negative amounts.)

       

l.

What amount of net income would be reported on the income statement? (Do not round intermediate calculations.)

       

m.

What amount of retained earnings would be reported on the balance sheet? (Do not round intermediate calculations.)

       

Solutions

Expert Solution

Working
Balance Sheet
Assets 01-Jan 01-Feb 01-Mar 01-Apr 01-May 01-Jun 01-Sep 01-Oct 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec
Cash      55,000.00 56,000.00 (5,700.00) (1,700.00) (28,000.00) (22,000.00) 7,400.00    19,000.00    64,000.00 144,000.00
Prepaid rent    1,425.00        1,425.00
Accrued Interest        118.00           118.00
Accounts Receivable      53,000.00 61,000.00 (64,000.00)      50,000.00
Inventory     120.00           120.00
Land      28,000.00    28,000.00 (19,000.00) 6,000.00      43,000.00
Total 136,000.00 238,663.00
                   -  
                   -  
Liabilities                    -  
Accounts Payable      27,000.00 (22,000.00)     960.00    13,000.00      18,960.00
Advance service income 7,400.00        7,400.00
Accrued Salary    5,300.00        5,300.00
Common Stock      89,000.00 56,000.00 145,000.00
Revaluation Reserve 6,000.00        6,000.00
Retained Earnings      20,000.00 36,003.00      56,003.00
Total 136,000.00 238,663.00
Cash flow statement
Cash flow from operating activities
Operating income      37,703.00
Adjustment for working capital
Prepaid rent      (1,425.00)
Accrued Interest          (118.00)
Accounts Receivable        3,000.00
Inventory          (120.00)
Accounts Payable      (8,040.00)
Advance service income        7,400.00
Accrued Salary        5,300.00
    43,700.00
Cash flow from financing activities
Common Stock 56,000.00      56,000.00
Dividend (1,700.00)      (1,700.00)
    54,300.00
Cash flow from investing activities
Land (28,000.00)    19,000.00      (9,000.00)
     (9,000.00)
Net Cash Flow     89,000.00
Opening cash balance     55,000.00
Closing cash balance 144,000.00
Income statement
Sale 61,000.00      61,000.00
Purchase    (960.00)          (960.00)
Inventory     120.00           120.00
Office rent (4,275.00)      (4,275.00)
Operating exp (13,000.00)    (13,000.00)
Salary (5,300.00)      (5,300.00)
Interest Income        118.00           118.00
Dividend (1,700.00)      (1,700.00)
Retained earning for the year 2016     36,003.00
Balance Sheet
Assets
Cash 144,000.00
Prepaid rent        1,425.00
Accrued Interest           118.00
Accounts Receivable      50,000.00
Inventory           120.00
Land      43,000.00
Total 238,663.00
                   -  
                   -  
Liabilities                    -  
Accounts Payable      18,960.00
Advance service income        7,400.00
Accrued Salary        5,300.00
Common Stock 145,000.00
Revaluation Reserve        6,000.00
Retained Earnings      56,003.00
Total 238,663.00
Cash flow statement
Cash flow from operating activities
Operating income      37,703.00
Adjustment for working capital
Prepaid rent      (1,425.00)
Accrued Interest          (118.00)
Accounts Receivable        3,000.00
Inventory          (120.00)
Accounts Payable      (8,040.00)
Advance service income        7,400.00
Accrued Salary        5,300.00
    43,700.00
Cash flow from financing activities
Common Stock      56,000.00
Dividend      (1,700.00)
    54,300.00
Cash flow from investing activities
Land      (9,000.00)
     (9,000.00)
Net Cash Flow     89,000.00
Opening cash balance     55,000.00
Closing cash balance 144,000.00
Income statement
Sale      61,000.00
Purchase          (960.00)
Inventory           120.00
Office rent      (4,275.00)
Operating exp    (13,000.00)
Salary      (5,300.00)
Interest Income           118.00
Operating Profit     37,703.00
Dividend      (1,700.00)
Retained earning for the year 2016     36,003.00
b) Land Value : $ 43,000.00
c) Net cash flow from operating activities : $ 43,700.00
d) Amount of rent expense: $ 4,275.00
e) Amount of total liabilities: $ 238,663.00
f) Amount of supplies expense: $ 960.00
g) Amount of unearned revenue: $ 6,000
Appreciation of the value of land from $28,000.00 to $34,000.00
h) Net cash flow from investing activities : $ (9,000.00)
i) Total expense : $ 23,535.00
j) service revenue:$61,000
k) cash flows from financing activities:$ 54,300.00
l) net income: $36,003.00
m) retained earnings: $56,003.00

ekkarill92 answered 3 years ago
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