Chapter 1 An Introduction to Financial Statements 13 YOUR TURN! 1.3 Khloe, Inc. began operations on January 1, 2015 with the following opening balance sheet: KHLOE, INC. Balance Sheet January 1, 2015 Assets Cash Inventory... Other assets... Total assets..... $ 6,000 15,000 40,000 $61,000 $25,000 25.000 Liabilities Note payable... Total liabilities Equity Contributed capital.. Total equity............. Total liabilities and equity........... 36,000 36.000 $61,000 Khloe is organized as a corporation with a business model seeking to sell an urban line of clothing. The following events occurred during the first month of operations: a. Sold $18,000 worth of merchandise that had a cost to Khloe of $9,000. Khloe received cash of $13,000 and was still owed $5,000 from customers who bought on account. b. Khloe purchased an additional $7,000 of inventory, paying cash of $4,000 and receiving credit terms for the remaining $3,000. C. Other assets include depreciable property. Depreciation expense for the month is $1,000. d. Repaid $2,000 principal balance on the note payable. e. Paid $3,000 cash for other expenses. f. Assume no taxes or interest expense for this problem. Required: Complete an income statement, balance sheet, and statement of cash flows using the templates that follow. continued 14 Chapter 11 An Introduction to Financial Statements KHLOE, INC. Income Statement For the Month of January 2015 Sales revenue Less expenses Cost of goods sold Depreciation. Other expenses Total expenses... Net income... KHLOE, INC. Balance Sheet January 1, 2015 and January 31, 2015 January 1 January 31 $ 6,000 Assets Cash. Accounts receivable.... Inventory... Other assets.. Total assets. 15,000 40.000 $61,000 25,000 25,000 Liabilities Accounts payable... Note payable.... Total liabilities. Equity Contributed capital. ... Earned capital... Total equity ............ Total liabilities and equity.. 36,000 . 36.000 $61,000 KHLOE, INC. Statement of Cash Flows For the Month of January 2015 Sources of cash Payments from customers...... Uses of cash Payments to vendors .. Loan payment.. Payments for other expenses.... Total uses of cash..... Net cash inflow... Cash, January 1, 2015........... Cash, January 31, 2015.... The solution is on pages 42-43