Question

Using the information given, complete following financial statements for August and September 2014.

ABC s

tarted its business on August 1, 2014.

August					September
Investment by stockholders			70		Investment by stockholders			60
(Cash investment)					(Cash investment)
Revenue			130		Revenue			90
(Out of 130 revenue, 30 is sales on credit.)					(Out of 90 revenue, 20 is sales on credit. )
					(25 of cash for credit sales made in August is collected.)
Expense			90		Expense			100
(Our of 90 expense, 20 is purchase on credit.)					(Out of 100 expense, 30 is purchase on credit.)
					(20 of cash for credit purchase made in August is paid.)
Dividends			20		Dividends			0
(Dividens are declared and paid.)					(Dividens are declared and paid.)
ABC					ABC
Income Statement					Income Statement
ABC					ABC
Retained earnings statement					Retained earnings statement
ABC					ABC
Balance Sheet					Balance Sheet
Assets					Assets
Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
ABC					ABC
Statement of Cash Flows					Statement of Cash Flows
Net increase (decrease) in cash					Net increase (decrease) in cash
Cash at the beginning of the period					Cash at the beginning of the period
Cash at the end of the period					Cash at the end of the period
								Show work for how you computed each number

Answer 1

Financial statements for August and September 2014 is as prepared below:

August					September
Investment by stockholders			70		Investment by stockholders			60
(Cash investment)					(Cash investment)
Revenue			130		Revenue			90
(Out of 130 revenue, 30 is sales on credit.)					(Out of 90 revenue, 20 is sales on credit. )
					(25 of cash for credit sales made in August is collected.)
Expense			90		Expense			100
(Our of 90 expense, 20 is purchase on credit.)					(Out of 100 expense, 30 is purchase on credit.)
					(20 of cash for credit purchase made in August is paid.)
Dividends			20		Dividends			0
(Dividens are declared and paid.)					(Dividens are declared and paid.)
ABC					ABC
Income Statement					Income Statement
Sales	130				Sales	90
Less:					Less:
Expense	90				Expense	100
Net Income	40				Net Income	-10
ABC					ABC
Retained earnings statement					Retained earnings statement
Opening Balance	0				Opening Balance	20
Add: Net Income	40				Add: Net Income	-10
Less: Dividend	20				Less: Dividend	0
Closing Balance	20				Closing Balance	10
ABC					ABC
Balance Sheet					Balance Sheet
Assets					Assets
Cash	80				Cash	145
Accounts Receivable	30				Accounts Receivable	25
Total Assets	110				Total Assets	170
Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Accounts payable	20				Accounts payable	30
Common Stock	70				Common Stock	130
Retained Earnings	20				Retained Earnings	10
	110					170
ABC					ABC
Statement of Cash Flows					Net Income	-10
Net Income	40				Decrease in account receivable	5
Increase in account receivable	-30				Increase in account payable	10
Increase in account payable	20				Issue of Common Stock	60
Issue of Common Stock	70				Payment of Dividend	0
Payment of Dividend	-20				Net increase (decrease) in cash	65
Net increase (decrease) in cash	80
					Cash at the beginning of the period	80
Cash at the beginning of the period	0
					Cash at the end of the period	145
Cash at the end of the period	80