NLKT
NLKT
P1.2
a) Tabular
Date Assets = Liabilities + Equity Total
July 31 Cash 5,000 + AR 1,500 + AP 4,200 Share capital 4,000 + RE 13,000
Supplies 500 + Equipment 4,800
6,000
Augus Analyze: Cash + 1,200 and AR - 1,200
t1 Cash 6,200 + AR 300 + AP 4,200 Share capital 4,000 + RE 13,000
Supplies 500 + Equipment 4,800
6,000
2 Analyze: Cash - 2,800 and AP - 2,800
Cash 3,400 + AR 300 + AP 1,400 Share capital 4,000 + RE 10,200
Supplies 500 + Equipment 4,800
6,000
3 Analyze: Service Revenue +7,500 and cash +4,000 and AR +3,500
Cash 7,400 + AR 3,800 + AP 1,400 Share capital 4,000 + RE 17,700
Supplies 500 + Equipment 4,800 + Service
6,000 Revenue 7,500
4 Analyze: Equipment +2,000 and Cash -400 and AP +1,600
Cash 7,000 + AR 3,800 + AP 3,000 Share capital 4,000 + RE 19,300
Supplies 500 + Equipment 4,800 + Service
8,000 Revenue 7,500
5 Analyze: Cash – 4,100, SW expense +2,800, Rent expense +900, and Advertising
expense +400
Cash 2,900 + AR 3,800 + AP 3,000 Share capital 4,000 + RE 15,200
Supplies 500 + Equipment 4,800 + Service
8,000 Revenue 7,500 – SW
expense 2,800 – Rent
expense 900 –
Advertising expense
400
6 Analyze: Dividends + 700 and Cash -700
Cash 2,200 + AR 3,800 + AP 3,000 Share capital 4,000 + RE 14,500
Supplies 500 + Equipment 4,800 + Service
8,000 Revenue 7,500 – SW
expense 2,800 – Rent
expense 900 –
Advertising expense
400 – Dividends 700
7 Analyze: Note payable +2,000 and Cash +2,000
Cash 4,200 + AR 3,800 + AP 3,000 + Note Share capital 4,000 + RE 16,500
Supplies 500 + Equipment payable 2,000 4,800 + Service
8,000 Revenue 7,500 – SW
expense 2,800 – Rent
expense 900 –
Advertising expense
400 – Dividends 700
8 Analyze: Utilities expense + 270 and Account payable +270
Cash 4,200 + AR 3,800 + AP 3,270 + Note Share capital 4,000 + RE 16,500
Supplies 500 + Equipment payable 2,000 4,800 + Service
8,000 Revenue 7,500 – SW
expense 2,800 – Rent
expense 900 –
Advertising expense
400 – Dividends 700 –
Utilities expense 270
b) Prepare an income statement for August, a retained earnings statement for August, and a
statement of financial position at August 31.
Income statement
Ai Fang Co
For August, 2020
Monetary unit: ¥ 000
Revenues
Service revenue 7,500
Total revenue 7,500
Less: Expenses
SW expense 2,800
Rent expense 900
Advertising expense 400
Utilities expense 270
Total expenses 4,370
Net income 3,130
P1.3
a) Prepare an income statement and a retained earnings statement for the month of May and a
statement of financial position at May 31.
Income statement
Park Flying School Ltd.
Revenues
Less Expenses
RE statement
Park Flying School Ltd.
RE, May 1 0
Balance sheet
Park Flying School Ltd.
Assets
Cash 4,500
Equipment 64,000
Equity
Liabilities
b) Additional information
(1) 900 worth of services were performed and billed but not collected at May 31
Income statement
Park Flying School Ltd.
Revenues
Less Expenses
RE statement
Park Flying School Ltd.
for the month of May,2020
RE, May 1 0
P1.4
a) Matt Stiner started a delivery service, Stiner Deliveries Ltd., on June 1, 2020. The
following transactions occurred during the month of June.
Income statement
Stiner Deliveries Ltd.
for the month of June, 2020
Monetary unit: £
Revenues
Less Expenses
Monetary unit: £
Assets
Cash 8,100
Equipment 14,000
Supplies 150
Liabilities
P1.5
Equity change in year = additional investment – dividend + revenues – expense
Equity at the year beginning + Equity change in year = Equity at the year ending
Equity at the year beginning + additional investment – dividend + revenues – expense = Equity
at the year ending
Crosby
a = equity = Assets – liabilities = 900,000-650,000=250,000
b = assets = liabilities + equity = 550,000+400,000 = 950,000
c = additional investment = Equity at the year ending + dividend - revenues + expense - Equity
at the year beginning = 400,000 + 100,000 – 3,500,000 + 3,300,000 – 250,000 = 50,000
Stills
d = liabilities = Assets – equity = 1,100,000 – 500,000 = 600,000
e = equity = Assets – liabilities = 1,370,000 – 750,000 = 620,000
f = dividends = Equity at the year beginning + additional investment + revenues – expense -
Equity at the year ending = 500,000 + 150,000 + 4,200,000 - 3,850,000 - 620,000 = 380,000
Nash
g = assets = liabilities + equity = 750,000 + 450,000 = 1,200,000
h = liabilities = Assets – equity = 2,000,000 – 1,300,000 = 700,000
i = Total revenues = Equity at the year ending - Equity at the year beginning - additional
investment + dividend + expense - = 1,300,000 - 450,000 - 100,000 + 140,000 + 3,420,000 =
4,310,000
Young
J = liabilities = Assets – equity = 1,500,000 – 1,000,000 = 500,000
K = assets = liabilities + equity = 800,000 +1,400,000 = 2,200,000
L = total expenses = Equity at the year beginning + additional investment – dividend + revenues
- Equity at the year ending = 1,000,000 + 150,000 - 100,000 +5,000,000 – 1,400,000 = 4,650,000
b. Prepare the retained earnings statement for Stills Company. Assume beginning
retained earnings was HK$200,000.
c. Write a memorandum explaining the sequence for preparing financial statements and the
interrelationship of the retained earnings statement to the income statement and statement
of financial position.
Key point:
The sequence for preparing financial statements is income statement, retained earnings
statement, and statement of financial position.
The interrelationship:
- net income/loss from the income statement is reported in the retained earnings statement
- ending retained earnings reported in the retained earnings statement is the amount
reported for retained earnings on the statement of financial position.