E11 Reporting Amounts on the Four Basic Financial Statements

E1-1 Reporting Amounts on the Four Basic Financial Statements [LO 1-2) Using the following table and the eqtations underlying each of the four basic financial statements, show (a) that the balance sheet is in balance, (b) that net income is properly calculated, (c) what caused changes in the retained earnings account, and (d) what caused changes in the cash account. (Cash outflows should be indicated with a minus sign.) $19,900 14,600 . Assets Stockholders\' Equity 5,300 12,200 10,050 2,150 Net Income Dividends Beginning Retained Earnings Ending Retained Eamings Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities Beginning Cash Ending Cash 5,200 6,500 3,300 (2,700) (1,750) 2,700 1,550 b. d.

Solution

a Assets = Liabilities+Stockholder\'s equity =14600+5300 Assets reported = 19900 b Net income = Revenue-Expenses =12200-10050 Net income reported = 2150 c Ending Retained earnings = Beginning Retained Earnings+Net income-Dividends =5200+2150-850 = 6500 d Ending Cash = Beginning Cash+Cash Flows from Operating Activities+Cash Flows from Investing Activities+Cash Flows from Financing Activities =2700+3300+(2700)+(1750)=1550