Question

Assets Cash Accounts Receivable Land Total $35,000 9,000 51,000 $95,000 Liabilities and Equity Accounts Payable Common Stock Retained Earnings Total $ 7,500 40,000 47,500 $ 95,000 The following accounting events apply to Waddell Company's Year 2 fiscal year: Jan. Feb. Mar. Apr. May July Sept. Oct. Dec. 1 Acquired $20,000 cash from the issue of common stock. 1 Paid $6,000 cash in advance for a one-year lease for office space. 1 Paid a $2,000 cash dividend to the stockholders. 1 Purchased additional land that cos 1 Made a cash payment on accounts payable of $5,500. 1 Received $9,600 cash in advance as a retainer for services to be performed monthly over the coming year. 1 Sold land for $30,000 cash that had originally cost $30,000. 1 Purchased $2,500 of supplies on account. 31 Earned $58,000 of service revenue on account during the year. 31 Received cash collections from accounts receivable amounting to $46,000. 31 Incurred other operating expenses on account during the year that amounted to $28,000. 31 Recognized accrued salaries expense of $6,500. 31 Had $50 of supplies on hand at the end of the period. 31 The land purchased on April i had a market value of $20,000. Required Based on the preceding information, answer the following questions for Waddell Company. All questions pertain to the Year 2 financial statements. (Hint: Enter items in general ledger accounts under the accounting equation before answering the questions.) a. What amount would Waddell report for land on the balance sheet? b. What amount of net cash flow from operating activities would be reported on the statement of cash flows? c. What amount of rent expense would be reported on the income statement? d. What amount of total liabilities would be reported on the balance sheet? e. What amount of supplies expense would be reported on the income statement? f. What amount of unearned revenue would be reported on the balance sheet? g. What amount of net cash flow from investing activities would be reported on the statement of cash flows? h. What amount of total expenses would be reported on the income statement? i. What total amount of service revenue would be reported on the income statement? j. What amount of cash flows from financing activities would be reported on the statement of cash flows? k. What amount of net income would be reported on the income statement? 1. What amount of retained earnings would be reported on the balance sheet?

Answer 1

Answer-a: Amount to be reported for land = $ 51,000 + $ 15,000 - $ 30,000 = $ 36,000.

Answer-b: Net cash flow from operating activities = $9,600 + 46,000 - 6,000 - 5,500 = $44,100

Answer-c: Rent expense to be reported on the income statement = $6,000 / 12 *11 = $5,500

Answer-d: Total liabilities to be reported on the balance sheet = ($7,500 - 5,500) + 9,600 + 2,500 + 28,000 + 6,500 =$48,600

Answer-e: Supplies expense to be reported on the income statement = $2,500 - 50 = $2,450

Answer-f: Total unearned revenue to be reported on the balance sheet = $9,600

Answer-g: Net cash flow from investing activities = $30,000 - 15,000 = $15,000

Answer-h: Total expense to be reported on the income statement = $2,450 + 28,000 + 6,500 + 5,500 = $42,450

Answer-i: Total service revenue to be reported on the income statement = $58,000

Answer-j: Net cash flow from financing activities = $20,000 - 2,000 = $18,000

Answer-k: Net income to be reported on the income statement = $58,000 - 42,450 = $15,550

Answer-l: Total retained earning to be reported on the balance sheet = $61,050