Question

10 In Year 1, Lee Inc. billed its customers $57,400 for services performed. The company collected $41,200 of the amount billed. Lee incurred $36,700 of other operating expenses on account. Lee paid $24,000 of the accounts payable. Lee acquired $27,000 cash from the issue of common stock. The company invested $12,000 cash in the purchase of land. Required (Hint: Identify the six events described in the paragraph and record them in general ledger accounts under an accounting equation before attempting to answer the questions. Use the preceding information to answer the following questions: a. What amount of revenue will Lee report on the Year 1 income statement? b. What amount of cash flow from revenue will be reported on the statement of cash flows? c. What is the net income for the period? d. What is the net cash flow from operating activities for the period? f. What is the amount of net cash flow from investing activities? g. What is the amount of net cash flow from financing activities? h. What amounts of total assets, liabilities, and equity will be reported on the year-end balance sheet? Complete this question by entering your answers in the tabs below. Accounting Equation Reg A to H (Hint: identify the six events described in the paragraph and record them in general ledger accounts under an accounting equation before attempti answer the questions.) Use the preceding information to answer the following questions: (Enter any decreases to account balances with a minus si LEE INC Effect of Events on the General Ledger Accounts Assets Liabilities Accounts Cash Receivable Land Accounts Payable Event Stockholders' Equity Common Retained Stock Earnings 1. Sales on account 2. Collected accounts receivable 3. incurred expense 4. Pald accounts payable 5. Issue of stock + + + +

Answer 1

a) Account equation

		Assets	=	Liabilities	+	Stockholder's equity
		Cash	Account receivable	Land	=	Account payable	+	Common Stock	+	Retained earnings
1.	Sales on Account		57400							57400
2	Collection of account receivable	41200	-41200
3	Incurred expense					36700				-36700
4	Paid expense	-24000				-24000
5	Issue common Stock	27000						27000
6	Purchase land	-12000		12000
	Total	32,200	16,200	12000		12700		27000		20700

a) Revenue recognized = 57400

b) Cash flow from revenue = 41200

c) Net income = 57400-36700 = 20700

d) Cash flow from operating activities = 41200-24000 = 17200

f) Net cash flow from investing activities =-12000

g) Net cash flow from financing activities = 27000

h) Total assets = 32,200+16200+12000 = 60400

Total liabilities = 12700

Total equity = 27000+20700 = 47700