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P2.22 Smith & Co. experienced the following six events in its first year of operations: 1. Shareholders contributed $60,000 cash. 2. Purchased land for $40,000
| P2.22 | |||||||||
| Smith & Co. experienced the following six events in its first year of operations: | |||||||||
| 1. Shareholders contributed $60,000 cash. | |||||||||
| 2. Purchased land for $40,000 cash. | |||||||||
| 3. Borrowed $18,000 in cash from a bank. | |||||||||
| 4. Provided services for $16,000, which will be paid to Smith & Co. next year. | |||||||||
| 5. Paid $11,000 cash for miscellaneous operating expenses. | |||||||||
| 6. Paid a $1,000 cash dividend to shareholders. | |||||||||
| Smith & Co. | |||||||||
| Transaction: | 1 | 2 | 3 | 4 | 5 | 6 | Totals | ||
| Assets | |||||||||
| Cash | |||||||||
| Accounts receivable | |||||||||
| Land | |||||||||
| Total assets | |||||||||
| Liabilities | |||||||||
| Loan Payable | |||||||||
| Total liabilities | |||||||||
| Shareholders' equity | |||||||||
| Common stock | |||||||||
| Retained earnings | |||||||||
| Revenue | |||||||||
| Operating expense | |||||||||
| Dividends | |||||||||
| Total shareholders equity | |||||||||
| SMITH & CO. INCOME STATEMENT | STATEMENT OF RETAINED EARNINGS | ||||||||
| REVENUE | BEG. RET. EARNINGS | ||||||||
| NET INCOME | |||||||||
| OPERATING EXPENSES | DIVIDENDS | ||||||||
| ENDING RET. EARNINGS | |||||||||
| NET INCOME | |||||||||
| BALANCE SHEET | Smith & Co. Statement of Cash Flows | ||||||||
| For Year 1 | |||||||||
| ASSETS | Operating activities | ||||||||
| Cash | Cash flow from Ops | Hint: First year so net income / loss | |||||||
| Acc. Receivable | |||||||||
| Land | Investing activities | ||||||||
| TOTAL ASSETS | Cash flow from Invest | ||||||||
| LIABILITIES | Financing activities | ||||||||
| Loan Payable | Bank loan | ||||||||
| Common stock | |||||||||
| EQUITY | Dividend payment | ||||||||
| Common Stock | Cash flow from Fin | ||||||||
| Retained Earnings | |||||||||
| Change in cash | |||||||||
| TOTAL LIAB. AND EQUITY | Cash, beginning of year | 0.00 | |||||||
| Cash, end of year | |||||||||
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