Question

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.)

       

Answer 1

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