Question

a. Molly started the business by depositing $5,000 in a business checking account on April 1 in exchange for common stock.

b. The company provided services to clients and received $4,215 in cash.

c. The company borrowed $1,200 from the bank for the business by signing a note.

d. The company paid $1,125 of operating expenses.

e. The company purchased a new computer for $3,000 cash to use to keep track of its? customers, starting next month.

f. The company distributed $1,050 to the owner as dividends.

1.	Enter the transactions into the accounting equation.
2.	What are the total assets of the company at the end of April? 30, 2012?
3.	Prepare a statement of cash flows for the month ended April? 30, 2012.
4.	What was net income for the month ended April? 30, 2012?

Answer 1

ans 1 Accounting equation
	Assets		Liabilities	Stockholder equity			Income statement
	Cash	Computer	Notes payable	Common stock	Retained earnings	Cash dividend	Revenue	Expenses	Net Income
a	$5,000			5000
b	4125				4125		4125		4125
c	1200		1200
d	-1125				-1125			1125	-1125
e	-3000	3000
f	-1050					1050
bal	$5,150	$3,000	$1,200	$5,000	$3,000	$1,050	$4,125	$1,125	$3,000
ans 2
Total assets are $5150+3000			$8,150
ans 3
Statement of cash flow
Cash flows from operating activities
Collection from customers	4125
Payment of operating expeses	-1125
		3000
Net cash from operating activities		3000
Cash flows from investing activities
Purchase of computer	-3000
		-3000
Net cash used investing activities		(3,000.00)
Cash flows from financing activities
Borrowing of Notes Payable	1200
Issue of Common stock	5,000.00
Payment of Dividend	-1050
		5,150.00
Net cash used financing activitie		5,150.00
Net Increase in cash and cash equivalents		5,150.00
Cash and cash equivalents at beginning of period		-
Ending Balance		5,150.00
ans 4 Net Income	$3,000
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