company was slarted In addltion, Malco borrowed $37 000 from a local bank on Jul
ID: 2574414 • Letter: C
Question
company was slarted In addltion, Malco borrowed $37 000 from a local bank on July 1, 2016. The note had a 5 percent annual interest rate and a one-year term to maturty Malco Enterprises recognized $73.600 of revenue on account in 2016 and 586 200 of revenue on account in 2017. Cash collections of accounts receivable were $62.300 in 2016 and $72 ,500 in 2017 Malco paid $39,900 of other operating expenses in 2016 and $46,000 of other operating expenses in 2017 Malco repaid the loan and interest at the maturity date Required: Based on this information, answer the following questions (Hint Record the events in the accounting equation belore answering the questions ) (Enter any decreases to account balances with a minus sign.) Eftect of Events on the Financial Statements Belance Sheet Assets Events Cash InterestC 2016 2 Loan 3 Rev 5 Op Exp 6 Int. Acc End Bal Beg Bal 2 Coll AR . op Exp 4 Int. Acc Pay Int &Pin; a. What amount of inberest expense would Malco r report on the 2016 Income statement cash fows? ThinkCentreExplanation / Answer
MALCO ENTERPRISES Effect of Events on the Financial Statements Balance Sheet Assets = Liabilities + Stockholder's Equity Events Cash + Accounts Receivable = Notes Payable + Interest Payable + Common Stock + Retained Earnings 2016 1 11000 + = + + 11000 + 2 Loan 37000 + = 37000 + + + 3 Rev. + 73600 = + + + 73600 4 Coll. AR 62300 + -62300 = + + + 5 Op. Exp. -39900 + = + + + -39900 6 Int. Acc. + = + 925 + + -925 End. Bal. 70400 + 11300 = 37000 + 925 + 11000 + 32775 2017 Beg. Bal. 70400 + 11300 = 37000 + 925 + 11000 + 32775 1 Rev. + 86200 = + + + 86200 2 Coll. AR 72500 + -72500 = + + + 3 Op. Exp. -46000 + = + + + -46000 4 Int. Acc. + = + + + 5 Pay Int. & Prin. -38850 + = -37000 + -925 + + -925 End. Bal. 58050 + 25000 = 0 + 0 + 11000 + 72050 a. Interest expense $925 b. Net cash flow from operating activities $22400 ($62300 - $39900) c. Total liabilities $37925 d. Retained earnings $32775 e. Net cash flow from financing activities $48000 ($11000 + $37000) f. Interest expense $925 g. Net cash flow from operating activities $24650 ($72500 - $46000 - $1850 Interest paid) h. Total assets $83050 i. Net cash flow from investing activities $0 j. Retained earnings balance $69950 ($72050 - $2100)
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