Question
Malco Enterprises issued $10,000 of common stock when the company was started. In addition, Malco borrowed $36,000 from a local bank on July 1, Year
Malco Enterprises issued $10,000 of common stock when the company was started. In addition, Malco borrowed $36,000 from a local bank on July 1, Year 1. The note had a 6 percent annual interest rate and a one-year term to maturity. Malco Enterprises recognized $72,500 of revenue on account in Year 1 and $85,200 of revenue on account in Year 2. Cash collections of accounts receivable were $61,300 in Year 1 and $71,500 in Year 2. Malco paid $39,000 of other operating expenses in Year 1 and $45,000 of other operating expenses in Year 2. Malco repaid the loan and interest at the maturity date. Required Based on this information given above, record the events in the accounting equation
and answer the following questions.
a. What amount of interest expense would Malco report on the Year 1 income statement? b. What amount of net cash flow from operating activities would Malco report on the Year 1 statement of cash flows? c. What amount of total liabilities would Malco report on the December 31, Year 1, balance sheet? d. What amount of retained earnings would Malco report on the December 31, Year 1, balance sheet? e. What amount of net cash flow from financing activities would Malco report on the Year 1 statement of cash flows? f. What amount of interest expense would Malco report on the Year 2 income statement? g. What amount of net cash flow from operating activities would Malco report on the Year 2 statement of cash flows? h. What amount of total assets would Malco report on the December 31, Year 2, balance sheet? i. What amount of net cash flow from investing activities would Malco report on the Year 2 statement of cash flows? j. If Malco Enterprises paid a $2,000 dividend during Year 2, what retained earnings balance would it report on the December 31, Year 2, balance sheet?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started