Question
Malco Enterprises issued $16,000 of common stock when the company was started. In addition, Malco borrowed $48,000 from a local bank on July 1, Year
Malco Enterprises issued $16,000 of common stock when the company was started. In addition, Malco borrowed $48,000 from a local bank on July 1, Year 1. The note had a 7 percent annual interest rate and a one-year term to maturity. Malco Enterprises recognized $78,500 of revenue on account in Year 1 and $92,400 of revenue on account in Year 2. Cash collections of accounts receivable were $63,700 in Year 1 and $73,900 in Year 2. Malco paid $45,000 of other operating expenses in Year 1 and $51,000 of other operating expenses in Year 2. Malco repaid the loan and interest at the maturity date.
Required
- Organize the information in accounts under an accounting equation.
- What amount of net cash flow from operating activities would be reported on the Year 1 cash flow statement?
- What amount of interest expense would be reported on the Year 1 income statement?
- What amount of total liabilities would be reported on the December 31, Year 1, balance sheet?
- What amount of retained earnings would be reported on the December 31, Year 1, balance sheet?
- What amount of cash flow from financing activities would be reported on the Year 1 statement of cash flows?
- What amount of interest expense would be reported on the Year 2 income statement?
- What amount of cash flows from operating activities would be reported on the Year 2 cash flow statement?
- What amount of assets would be reported on the December 31, Year 2, balance sheet?
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