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Cordell Inc. experienced the following events in 2018, its first year of operation: 1.   Received $40,000...

Cordell Inc. experienced the following events in 2018, its first year of operation:
1.   Received $40,000 cash from the issue of common stock.

2.   Performed services on account for $82,000.

3.   Paid a $6,000 cash dividend to the stockholders.

4.   Collected $76,000 of the accounts receivable.
5.   Paid $53,000 cash for other operating expenses.

6.   Performed services for $19,000 cash.

7.   Recognized $3,500 of accrued utilities expense at the end of the year.

Required
a.   Identify the events that result in revenue or expense recognition.

b.   Based on your res ponse to Requirement a, determine the amount of net income reported on the 2018 income statement.

c.   Identify the events that affect the statement of cash flows.

d.   Based on your response to Requirement c, determine the amount of cash flow from operatingactivities reported on the 2018 statement of cash flows.

Solutions

Expert Solution

a.   Identify the events that result in revenue or expense recognition.

events that result in revenue recognition.

2.   Performed services on account for $82,000.

6.   Performed services for $19,000 cash.

events that result in expense recognition.

5.   Paid $53,000 cash for other operating expenses.

7.   Recognized $3,500 of accrued utilities expense at the end of the year.

b.   Based on your res ponse to Requirement a, determine the amount of net income reported on the 2018 income statement.

Net income reported = (82000 + 19000) - (53000 + 3500) = 101000 - 56500 = 44500

c.   Identify the events that affect the statement of cash flows.

1.   Received $40,000 cash from the issue of common stock.

3.   Paid a $6,000 cash dividend to the stockholders.

4.   Collected $76,000 of the accounts receivable.

5.   Paid $53,000 cash for other operating expenses.

6.   Performed services for $19,000 cash.

d.   Based on your response to Requirement c, determine the amount of cash flow from operatingactivities reported on the 2018 statement of cash flows.

Cash flow from operating activity

Cash service performed 19000
Cash collected from accounts receivables 76000
Less: Cash paid for operating expenses 53000
Cashflow from operating activity 42000

ekkarill92 answered 1 year ago
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