Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following events occurred at Jack Company during its first year of business: a. To establish the company, the two owners contributed a total of

The following events occurred at Jack Company during its first year of business:

a. To establish the company, the two owners contributed a total of $60,000 in exchange for common stock.

b. Grooming service revenue for the first year amounted to $175,000, of which $50,000 was on account.

c. Customers owe $15,000 at the end of the year from the services provided on account.

d. At the beginning of the year, a storage building was rented. The company was required to sign a three-year lease for $15,000 per year and make a $3,000 refundable security deposit. The first years lease payment and the security deposit were paid at the beginning of the year.

e. At the beginning of the year, the company purchased a patent at a cost of $120,000 for a revolutionary system to be used for dog grooming. The patent is expected to be useful for ten years. The company paid 20% down in cash and signed a four-year note at the bank for the remainder.

f. Operating expenses, including amortization of the patent and rent on the storage building, totaled $90,000 for the first year. No expenses were accrued or unpaid at the end of the year.

g. The company declared and paid a $25,000 cash dividend at the end of the first year.

REQUIRED:

1. Prepare an income statement for the first year.

2. Prepare a statement of cash flows for the first year using the direct method in the Operating Activities section. 3.Did the company generate more or less cash flow from operations than it earned in net income? Explain why there is a difference.

4. Prepare a balance sheet as of the end of the first year.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

What is specific performance?

Answered: 1 week ago

Question

Define induction and what are its objectives ?

Answered: 1 week ago

Question

Discuss the techniques of job analysis.

Answered: 1 week ago

Question

How do we do subnetting in IPv6?Explain with a suitable example.

Answered: 1 week ago

Question

Explain the guideline for job description.

Answered: 1 week ago

Question

What is job description ? State the uses of job description.

Answered: 1 week ago