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On January 1, 2016, the following information was drawn from the accounting records of Carter Company:...

On January 1, 2016, the following information was drawn from the accounting records of Carter Company: cash of $350; land of $2,250; notes payable of $650; and common stock of $1,300.

Income statement dated December 31, 2016.

Revenue $620

Expenses -$360

Net Income $260

a. Prepare a statement of changes in stockholders’ equity dated December 31, 2016.

b. Prepare a balance sheet dated December 31, 2016.

c. Prepare a statement of cash flows dated December 31, 2016. (Amounts to be deducted should be indicated with a minus sign.)

d. What is the balance in the Revenue account on January 1, 2016?

Solutions

Expert Solution

Balance Sheet as on Jan. 1, 2016
Liabilities Amount Assets Amount
Common Stock 1300 Cash 350
Notes Payable 650 Land 2250
1950 2600
Note: Difference of $650 of Assets and Liabilities has been considered as opening balance of reserve & surplus
a. Statement of change in Stockholder's equity
Common Stock 1300
Add: Opening Reserve & Surplus 650
Add: Net Income 260
stockholder's equity 2210
b. Balance Sheet as on Dec. 31, 2016
Liabilities Amount Assets Amount
Common Stock 1300 Cash (See point no. c. below) 610
Net Income 260 Land 2250
Notes Payable 650
Reserve & Surplus 650
2860 2860
c. Cash Flow Statement dt: Dec. 31, 2016
Opening cash 350
Add: Cash receipt from Revenue 620
Less: Expenses paid -360
Closing Cash Balance 610
d. Balance in Reserve & Surplus account as on January 1, 2016 is $ 650. Calculations has already been given above.

ekkarill92 answered 2 years ago
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