Question

Question 1 - 8

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

Answer 1

August					September
ABC					ABC
Income Statement					Income Statement
Revenue			130		Revenue			90
Expenses			90		Expenses			100
Net Income			40		Net Income/(Loss)			-10

ABC					ABC
Retained earnings statement					Retained earnings statement
Retained Earning at August 1, 2014			0		Retained Earning at September 1, 2014			20
Add: Net Income earned in August			40		Add: Net Income earned in August			-10
Subtotal			40		Subtotal			10
Less: Devidends Declared			20		Less: Devidends Declared			0
Retained Earning at August 31, 2014			20		Retained Earning at September 30, 2014			10

ABC					ABC
Balance Sheet					Balance Sheet
Assets					Assets
Current Assets					Current Assets
Debtors			30		Debtors			25
Cash			80		Cash			145
Total Asets			110		Total Asets			170
Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Share Capital			70		Share Capital			130
Retained Income			20		Retained Income			10
Current Liabilities					Current Liabilities
Creditors			20		Creditors			30
Total Liabilities			110		Total Liabilities			170

ABC			ABC
Statement of Cash Flows			Statement of Cash Flows
Net increase (decrease) in cash			Net increase (decrease) in cash
Add			Add
Cash Investment	70		Cash Investment	60
Cash Sales in August	100		Cash Sales in August	70
Sub Total	170		Cash collected from Debtors	25
Less			Sub Total	155
Cash Expenses incurred	70		Less
Dividend Paid	20		Cash Expenses incurred	70
Sub Total	90		Cash paid to creditors	20
			Sub Total	90
Cash at the beginning of the period	0
			Cash at the beginning of the period	80
Cash at the end of the period	80
			Cash at the end of the period	145