Question

Accounts Payable	$	53,000
Accounts Receivable		30,800
Cash (balance on January 1, 2013)		108,900
Cash (balance on September 30, 2013)		93,000
Common Stock		149,000
Dividends		0
Equipment		144,700
Income Tax Expense		10,900
Interest Expense		30,300
Inventory		18,000
Notes Payable		30,900
Prepaid Rent		7,800
Office Expense		15,100
Retained Earnings (beginning)		10,300
Salaries and Wages Expense		36,500
Service Revenue		153,800
Utilities Expense		25,900
Salaries and Wages Payable		16,000

Other cash flow information:
Cash from issuing common stock	$	29,000
Cash paid to reacquire common stock		32,900
Cash paid for income taxes		11,800
Cash paid to purchase long-term assets		60,400
Cash paid to suppliers and employees		92,800
Cash received from customers		153,000

1.	Prepare an income statement for 2013.

2.	Prepare a statement of retained earnings for 2013.

3.	Prepare a balance sheet for 2013.

4.	Prepare a statement of cash flows for 2013. (Amounts to be deducted should be indicated by a minus sign.)

1-a.	What amount of total assets have been financed by the creditors and by the stockholders?

1-b.	Did OpenReservation rely more on creditors or stockholders for its financing at September 30, 2013?
	Creditors Stockholders

1-c.	What is your information source?
	Income Statement Statement of Retained Earnings Balance Sheet Statement of Cash Flows

2-a.	What is the amount of retained earnings as of September 30, 2013?

2-b.	Did the retained earnings at September 30, 2013, arise primarily from current year earnings or earnings retained from prior years?
	Arise primarily from current year earnings. Earnings retained from prior years. Approximately equal amounts of both.

2-c.	What is your information source?
	Income Statement Statement of Retained Earnings Balance Sheet Statement of Cash Flows

Answer 1

Solution 1:

Income Statement - 2013
Particulars	Amount
Service Revenue	$153,800.00
Less: Expenses
Salaries and Wages Expense	$36,500.00
Utility expense	$25,900.00
Office Expense	$15,100.00
Earning Before Interest and Tax (EBIT)	$76,300.00
Less: Interest Expense	$30,300.00
Earning Before Tax	$46,000.00
Less: Income Tax Expense	$10,900.00
Earning After Tax	$35,100.00

Solution 2:

Statement of Retained Earnings - 2013
Particulars	Amount
Opening Balance	$10,300.00
Add: Current profits	$35,100.00
Closing Balance	$45,400.00

Solution 3:

Balance Sheet - 2013
Particulars	Details	Amount
Shareholder Funds:
Common Stock	$149,000.00
Retained Earnings	$45,400.00	$194,400.00
Non Current Liabilities:
Notes Payable	$30,900.00	$30,900.00
Current Liabilities:
Accounts Payable	$53,000.00
Salaries and Wages Payable	$16,000.00	$69,000.00
Total Liabilities (A)		$294,300.00
Fixed Assets:
Equipment	$144,700.00	$144,700.00
Current Assets:
Accounts Receivables	$30,800.00
Cash	$93,000.00
Inventory	$18,000.00
Prepaid Rent	$7,800.00	$149,600.00
Total Assets (B)		$294,300.00

Solution 4:

Ambrose Company - Statement of Cash flows for the year ended 31.12.2017
Particulars	Details	Amount
Cash flow from Operating Activites:
Cash received from customers	$153,000.00
Cash paid to supplier and employees	-$92,800.00
Cash paid for income tax	-$11,800.00
Net cash provided by operating activities		$48,400.00
Cash flow from Investing Activites:
Purchase of long term assets	-$60,400.00
Net cash provided by investing activites		-$60,400.00
Cash flow from Financing Activites:
Issuance of common stock	$29,000.00
Repurchase of common stock	-$32,900.00
Net cash provided by financing activites		-$3,900.00
Net Increase / (Decrease) in Cash		-$15,900.00
Cash at beginning of period		$108,900.00
Cash at end of period		$93,000.00