The Woodstock Shop experienced the following events during its first year of operations, Year 1: 1. Acquired
Question:
The Woodstock Shop experienced the following events during its first year of operations, Year 1:
1. Acquired $38,000 cash by issuing common stock.
2. Earned $30,000 revenue on account.
3. Paid $25,000 cash for operating expenses.
4. Borrowed $15,000 cash from a bank.
5. Collected $25,000 of the balance in accounts receivable.
6. Paid a $2,000 cash dividend.
Required
a. Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example.
b. Would the accounts receivable account appear in the assets, liabilities, or stockholders’ equity section of the December 31, Year 1, balance sheet?
c. Determine the balance of the accounts receivable account that would appear on the December 31, Year 1, balance sheet.
d. Determine the amount of net income that would appear in the Year 1 income statement.
e. Determine the amount of the cash flow from operating activities that would appear in the Year 1 statement of cash flows.
f. Explain why the amount determined in Requirement d differs from the amount determined in Requirement e.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
Introductory Financial Accounting for Business
ISBN: 978-1260299441
1st edition
Authors: Thomas Edmonds, Christopher Edmonds