Question

Financial Statements, including Statement of Cash Flows

Pendray Systems Corporation began operations on January 1, 20Y5, as an online retailer of computer software and hardware. The following financial statement data were taken from Pendray's records at the end of its first year of operations, December 31, 20Y5.

Accounts payable		$40,000
Accounts receivable		88,000
Cash		?
Cash payments for operating activities		896,000
Cash receipts from operating activities		1,087,000
Common stock		120,000
Cost of sales		650,000
Dividends		90,000
Income tax expense		87,000
Income taxes payable		15,000
Interest expense		3,000
Inventories		111,000
Note payable (due in ten years)		80,000
Property, plant, and equipment		265,000
Retained earnings		?
Sales		1,175,000
Selling and administrative expenses		100,000

Instructions:

1. Prepare an income statement for the year ended December 31, 20Y5.

Pendray Systems Corporation
Income Statement
For the Year Ended December 31, 20Y5
Revenue:
		$
Expenses:
	$
		$

2. Prepare a statement of stockholders’ equity for the year ended December 31, 20Y5. If your answer is zero enter "0".

Pendray Systems Corporation
Statement of Stockholders’ Equity
For the Year Ended December 31, 20Y5
	Common Stock	Retained Earnings	Total
Balances, January 1, 20Y5	$	$	$
Balances, December 31, 20Y5	$	$	$

3. Prepare a balance sheet as of December 31, 20Y5.

Pendray Systems Corporation
Balance Sheet
December 31, 20Y5
Assets
		$
Total assets		$
Liabilities
	$
Total liabilities		$
Stockholders' Equity
	$
Total stockholders' equity
Total liabilities and stockholders' equity		$

4. Prepare a statement of cash flows for the year ended December 31, 20Y5. Use the minus sign to indicate cash out flows, decreases in cash, or cash payments. If your answer is zero enter "0".

Pendray Systems Corporation
Statement of Cash Flows
For the Year Ended December 31, 20Y5
Cash flows from operating activities:
	$
		$
Cash flows from investing activities:
Cash flows from financing activities:
	$
		$
		$

1 more Check My Work uses remaining.

Answer 1

1.

PENDRAY SYSTEMS CORPORATION
Income Statement
For the Year Ended December 31, 20Y5
Revenue:
Sales		1,175,000
Expenses:
Cost of sales	650,000
Selling and administrative expenses	100,000
Income tax expense	87,000
Interest expense	3,000	840,000
Net income		335,000

Calculation:

All the amounts are directly given in the question. So we need to populate the exact values and use the below formula to find net income.

Net Income = Sales - Sum of Expenses =  1,175,000 - 840,000 = 335,000

2.

Answer:

PENDRAY SYSTEMS CORPORATION
Statement of Stockholders’ Equity
For the Year Ended December 31, 20Y5
	Common Stock	Retained Earnings	Total
Balance, 1/1/20Y5	-	-	-
Issuance of Common Stock	120,000		120,000
Net income		335,000	335,000
Dividends		-90,000	-90,000
Balance, 12/31/20Y5	120,000	245,000	365,000

Explanation

All the amounts are directly given in the question. So we need to populate the exact values and total it inorder to find the retained earnings and ending stock holder equity balance.

Retained Earnings Balance =  245,000

3.

Answer:

PENDRAY SYSTEMS CORPORATION
Balance Sheet
December 31, 20Y5
Assets
Cash		36,000
Accounts receivable		88,000
Inventories		111,000
Property, plant, and equipment		265,000
Total assets		500,000
Liabilities
Accounts payable	40,000
Income taxes payable	15,000
Note payable (due in ten yers)	80,000
Total liabilities		135,000
Stockholders’ Equity
Common stock	120,000
Retained earnings	245,000
Total stockholders’ equity		365,000
Total liabilities and stockholders’ equity		500,000

Calculation:

All the amounts are directly given in the question. So we need to populate the exact values.

So to find the cash =

Total Liabilites and  stockholders’ equity = Total assets = 500,000

So Cash = 500,000 - (265,000+111,000+88,000) = 36,000

4.

Answer:

PENDRAY SYSTEMS CORPORATION
Cash flow Statement
For the Year Ended December 31, 20Y5
Cash flows from operating activities:
Cash receipts from operating activities	1,087,000
Cash payments for operating activities	-896,000
Net cash flows from operating activities		191,000
Cash flows used for investing activities:
Investments in property, plant, and equipment		-265,000
Cash flows from financing activities:
Cash receipt from issuance of note payable	80,000
Cash receipt from issuance of capital stock	120,000
Cash payments for dividends	-90,000
Net cash flows from financing activities		110,000
Net increase in cash during Year 1		36,000
Cash as of January 1, Year 1		0
Cash as of December 31, Year 1		36,000

Explanation:

All the amounts are directly given in the question. So we need to populate the exact values.

And here we could cross check if the ending cash balance we already calculated for balance sheet is right.