Extra Credit Acct 204-104 Fall 2017 In 2016, founder and CEO Samantha Phillip co

Question

Extra Credit Acct 204-104 Fall 2017 In 2016, founder and CEO Samantha Phillip commenced business as Samil, Inc. The first employee she hired was Brittany Smith, CPA to head her accounting department. In order to prepare the companyýs Financial Statements, Ms. Smith has asked you to assist her with the following transactions. 1) Sami Inc. was started when it acquired $10,000 cash by issuing common stock 2) The company borrowed $20,000 from The First Bank of Montclair 3) Sami, Inc. provided services to its only customer, Bavazzano International and received $28,000. 4) The company paid operating expenses of $7,400 5) Sami, Inc. paid $8,000 down on their loan. 6) The company paid S5,000 rent to Cecere Really 7) Bought $7,500 of Rocio Ltd., an up and coming coffee house chain, as an investment. 8) Paid cash for $3,000 in dividends to its stockholders 9) According to the company's investment broker, the Rocio Ltd. securities were worth $9.000 as of December 31, 2016 Required: statements model, reflecting their effect on the different financial statemen a) Record the above transactions on a horizontal b) Prepare Sami Inc.'s income statement, balance sheot and statement of cash flows for the year ended December 31, 2016.

Explanation / Answer

Horizontal Worksheet Balance Sheet Income Statement Stat. of Cash Flows Assets Liabilities + Stockholders' equity Income Statement Events Cash + Investments + Inventory Land - Bank Loan Comm. Stock + Ret. Ear. Rev. - Exp. = Net Income 1 $10,000 + + - $10,000 + - = $0 $10,000 2 $20,000 + + - $20,000 + - = $0 $20,000 3 $28,000 + + - + $28,000 $28,000 - = $28,000 $28,000 4 ($7,400) + + - + ($7,400) - $7,400 = ($7,400) ($7,400) 5 ($8,000) + + - ($8,000) + - = $0 ($8,000) 6 ($5,000) + + - + ($5,000) - $5,000 = ($5,000) ($5,000) 7 ($7,500) + $7,500 + - + - = $0 ($7,500) 8 ($3,000) + + - + ($3,000) - = $0 ($3,000) 9 + + - + - = Bal. $27,100 + $7,500 + $0 $0 - $12,000 $10,000 + $12,600 $28,000 - $12,400 = $15,600 $27,100 Sami, Inc. Statement of Cash Flows As of December 31, 2016 Cash received from operating activities         Inflows from customers $28,000         Outflows for operating expenses ($7,400)         Outflows for rent expense ($5,000) Net Cash Flow from Operating Act. $15,600 Cash Outflows for Investing activities ($7,500) ($7,500) Cash flows from Financing activities         Inflows from bank loans $20,000         Outflows for bank loans ($8,000)         Inflows from issuance of comm. Stk. $10,000         Outflows for Dividends paid ($3,000) Net Cash Flow from Financing Act. $19,000 Net change in Cash $27,100 Plus: Beginning Cash Balance $0 Ending Cash Balance $27,100 Sami, Inc. Income Statement For the Year Ended December 31, 2016 Revenue $28,000 Rent Expense $5,000 Operating Expenses $7,400 $12,400 Net Income $15,600 Sami, Inc. Balance Sheet As of December 31, 2016 Assets       Cash $27,100       Marketable Securities $7,500       Inventory $0       Land $0 Total Assets $34,600 Loan Payable $12,000 Total Liabilities $12,000 Stockholders' Equity        Common Stock $10,000        Retained Earnings $12,600 Total Stockholders' Equity $22,600 Total Liab. And Stockholders' Equity $34,600

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