Waddell Company had the following balances in its accounting records as of Decem
ID: 2340249 • Letter: W
Question
Waddell Company had the following balances in its accounting records as of December 31, Year 1: Liabilities and Equity 2 Assets 45,e00 Accounts Payable 43,80 Common Stock 31,000 Retained Earnings Accounts Receivable $119,80 Total $119,00e The following accounting events apply to Waddell Company's Year 2 fiscal year: Jan. 1 Acquired $40,000 cash from the issue of common stock Feb. 1 Paid $5,400 cash in advance for a one-year lease for office space Mar. 1 Paid a $1,900 cash dividend to the stockholders Apr. 1 Purchased additional land that cost $31,000 cash May 1 Made a cash payment on accounts payable of $19,000 July Received $7,280 cash in advance as a retainer for services to be performed monthly over the coming year Sept 1 Sold land for $20,000 cash that had originally cost $20,000 Oct. 1 Purchased $1,880 of supplies on account Dec. 31 Earned $57,0 of service revenue on account during the year 31 Received cash collections from accounts receivable amounting to $64,000 31 Incurred other operating expenses on account during the year that amounted to $13,000 31 Recognized accrued salaries expense of $5,3ea 31 Had $150 of supplies on hand at the end of the period 31 The land purchased on April 1 had a market value of $44,000 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 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? I. What amount of retained earnings would be reported on the balance sheet?Explanation / Answer
a. Amount to be reported for land = $ 31,000 + $ 31,000 - $ 20,000 = $ 42,000.
b. Cash flows from operating activities = $ 46,800.
c. Rent expense to be reported on the income statement = $ 4,950
d. Total liabilities to be reported on the balance sheet = $ 23,980.
e. Amount of supplies expense to be reported on the income statement = $ 1,080 - $ 150 = $ 930.
f. Unearned revenue to be reported on the balance sheet = $ 7,200 - $ 3,600 = $ 3,600.
g. Net cash flows from Investing Activities = $ ( 11,000).
h. Total expenses to be reported on the income statement = $ 24,180
i. Service revenue to be reported on the income statement = $ 60,600.
j. Cash flows from financing activities = $ 38,100.
k. Net income to be reported on the income statement = $ 60,600 - $ 24,180 = $ 36,420
l. Retained earnings to be reported on the balance sheet = $ 50,520
Workings:
Waddell Company Accounting Equation Year 2 Assets Liabilities Stockholders Equity Revenues Expenses Cash Accounts Receivable Supplies Prepaid Rent Land Accounts Payable Unearned Revenue Salaries Payable Common Stock Retained Earnings Bginning balances 45,000 43,000 0 0 31,000 20,000 0 0 83,000 16,000 Jan 1 40,000 40,000 Feb 1 (5,400) 5,400 Mar 1 (1,900) (1,900) Apr. 1 (31,000) 31,000 May 1 (19,000) (19,000) July 1 7,200 7,200 Sep 1 20,000 (20,000) Oct 1 1,080 1,080 Dec 31 57,000 57,000 Dec 31 64,000 (64,000) Dec 31 13,000 13,000 Dec 31 5,300 5,300 Dec 31 (930) 930 Dec 31 (4,950) 4,950 Dec 31 (3,600) 3,600 Dec 31 60,600 24,180 Dec 31 36,420 0 0 Ending balances 118,900 36,000 150 450 42,000 15,080 3,600 5,300 123,000 50,520Related Questions
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